Library endowment

Posted: August 24, 2013

The Winchester Star

Mary Jane and James L. Bowman Library serves the Frederick County area near Stephens City. (Photo by Ginger Perry/The Winchester Star)
The Clarke County Library is housed in the Berryville-Clarke County Government Center.
The information desk at Bowman Library keeps residents abreast of latest arrivals and services. (Photo by Ginger Perry/The Winchester Star)

Winchester — Handley Regional Library’s endowment fund has grown more than 475 percent in the past two decades.

But Director Trish Ridgeway said it still could do better.

In recent years, the library has weathered cuts in government funding, employee furloughs and all the challenges involved in operating three locations: the Handley Library, the Mary Jane and James L. Bowman Library, and the Clarke County Library.

The Handley Regional Library Endowment is about $1.46 million, she said. It was $299,412 in 1992-93.

Finding a balance between raising funds for operating costs and building up an endowment fund can be difficult, Ridgeway said. Meeting salaries and staying open are obviously essential, but the endowment is a “wonderful way to support the library forever.”

“It is like a homeowner — first you have to pay your mortgage, but then you have to sock away for retirement,” Ridgeway said. “Fortunately for us, we have donors who want to contribute to both.”

The endowment is a combination of restricted funds, designated for specific purposes, and unrestricted funds, which can be used when library officials see a need.

Restrictions

The endowment is not a piggy bank the library leaders can dip into whenever they wish, Ridgeway said.

The funds can only be used toward expenses, such as books, audio-visual items, library materials, and Internet databases. They are not designated for furniture, salaries or regular operating costs.

In addition, the library board is “very cognizant of the fact that once you tap into it, you don’t have it as a revenue source,” she said.

The board has been even more aware of the restrictions on the endowment in recent years as the library struggled to meet operating costs, said Jim Riley of Winchester, former chairman and past board member for eight years.

Cutting library hours and staff furloughs are a couple challenges the library has faced because of decreases in revenue.

“It is critical to understand the difference between the operating income and the restricted endowment income,” said Riley. “If we could use the endowment income for other purposes, we would, but we can’t because it is restricted.”

Income sources

Handley’s proposed budget plan for 2013-14, which began July 1, is $2,130,795.

Of the annual budget, $107,508, about 5 percent of the library’s revenue, is income from the endowment fund.

Another $63,851 (3 percent) is projected to come from fundraisers, donations, the Friends of Handley Regional Library, and $20,000 (less than 1 percent) from Funds for Books.

Other sources of revenue are local governments, $1,373,503 (64 percent); state revenue, $353,627 (16.6 percent); fines, fees, copier revenue and other sources, $119,554 (5.6 percent), and a transfer from the previous fund balance, $92,877 (4 percent).

At the end of a fiscal year, according to board policy, the organization should have enough money to cover two to three months of operating costs in the next year “as a cushion,” Ridgeway said.

In the current budget plan, there is an $8,000 reduction in spending on books and audio-visual materials, she said. “The revenue sources for books and audiovisual sources are down.”

All three jurisdictions — Clarke County, the City of Winchester and Frederick County — have been “huge supporters of the library,” said Cary Claytor of Winchester, present board chairman. “We did have level funding last year, which was great. That hadn’t been the case in previous years.”

The downturn in the economy meant funding from the three local governments dropped from $1,644,120 in 2008-09 to $1,373,503 in 2013-14. That is a decrease of $270,617. The local governments have not cut finding since 2010-11.

The budget, monthly finance reports, and the last three annual audit reports, can be found at handleyregional.org.

Long-range plan

Most of the endowment funds have been built up since the early 1990s, when a long-range plan instituted by former library director Marianne Roos went into effect, Ridgeway said.

The three-part plan was in place when Ridgeway became director in 1993. It proposed building a library in Stephens City and a new building in Clarke County and renovating the Handley Library. (The three projects have been completed.)

Ridgeway and the board revised the plan to include raising enough money to stock the libraries, leading in 1997 to the start of the Funds for Books Campaign.

“One of the big plans was to get the library collection up to two books per capita” of the population, which was 121,521 in 2012, she said. “We were in the bottom quarter of the state libraries in terms of books per capita.”

The money would be used to stock the Bowman Library when it opened in 2001 and to improve materials at the other two libraries, Ridgeway said. The remaining amount of Funds for Books was then folded into the endowment.

The library system now has 320,000 items in its collection, divided among its three locations, though most can be transferred, Ridgeway said. About 2,500 of those are books in Spanish with a few audio-visuals.

The materials include print and electronic books, periodicals, and library-owned and downloadable audio and video resources. Ridgeway said that the system’s holdings are divided this way: Handley Library, 42.2 percent; Bowman Library, 45.6 percent; and Clarke County Library, 12.2 percent.

In 1997, Bowman was expected to open in two years, and a fundraising goal of $3 million was set, Ridgeway said. But construction was postponed several years because of building delays and the realization by library officials that “we just weren’t ready.”

The goal was adjusted to $2.15 million in 1999, because book donations and state aid had increased, allowing the library to purchase new books. “We realized we wouldn’t need as much,” Ridgeway said.

The $2.15 million was broken down into two parts — $1.4 million to purchase new books for the system and $750,000 for an endowment fund, with “the interest to be used to purchase books in the future,” she said.

However, the board at that time said it would not spend any interest from the endowment until the total reached $1 million.

In 2005, a bequest of $300,000 by local author and philanthropist Nancy Larrick Crosby pushed the fund over the $1 million goal, so the interest from the funds could be used to purchase books, Ridgeway said.

The board designated $180,000 of the donated funds to spend on books and materials, which the library has been doing since 2005, she said. That fund has $26,000 left and is projected to be depleted in this fiscal year or the next.

In the eight years Riley was a board member, the endowment principal didn’t grow dramatically because the board wasn’t involved in any aggressive fundraising campaign.

“In general, the principal of the fund has been fairly stable during the period I have been there,” he said. “The real aggressive fundraising period was prior to that.”

Donations

After the Handley Library Board began managing the library in 1960, it received its first trust fund in 1977, Ridgeway said.

It was less than $9,000 — the remaining money from the estate of Edwin L. Stine, who died in 1951, leaving the bulk of his estate to his wife, if she could be found, or to the library, if she could not be located. By the 1990s, the fund was worth $41,000 and helped to establish the endowment fund.

Since then, 15 major donations — from $10,000 to more than $500,000 — came to the library in memory of loved ones or through bequests, she said. Some of the funds were designated to be spent, while others continue to provide interest income.

Through the years, the board has found it useful to take donors’ gifts and “park it in the endowment,” Ridgeway said.

“We try to use these things so they will benefit us for a while,” she said. “If we park it in the endowment fund, hopefully, the interest will be more than if we put it in a money market fund or certificate of deposit.”

For instance, a donation of $100,000 made by Harold Briggs to the library six years ago was placed in the endowment fund, she said. His daughter said he loved large-print western novels, so the board decided to use about $10,000 each year toward the purchase of new large-print books. About $38,000 is left in the Briggs Fund, which is held in the endowment.

The most recent example occurred late last year, when the library received a bequest of $200,000 from J. Clayton Cochran Jr., who died Aug. 17, 2012, Ridgeway said. Cochran was a volunteer in the Stewart Bell Jr. Archives, and the money, which will be held in the endowment, will be called the Clayton Cochran Fund.

The income from the fund will be used to further the objectives and purposes of the archives and will be administered by the Joint Archives Committee, she said.

Not all bequests go to the endowment, though, Ridgeway said.

John D. Mahaney’s mother left an endowment of $108,762 in memory of her son, and the library receives earnings from the funds each year, Ridgeway said.

The interest from the Mahaney Trust, a separate endowment fund, is used for special projects and equipment that encourage library use and improve the quality of library services.

The fund has supported studies and projects for the library and provides monies for staff development, she said. It has a balance of $327,484.

Longtime volunteer Ben Tennyson left a bequest of $20,000 to the library, released in 2012 after the sale of his home, Ridgeway said. The library board voted to use the fund to offset furlough days last year and this year, “depending on what else happens.”

The board members want to keep the library doors open on the current schedule, Claytor said, adding that she would not like any further reduction in library hours.

“If we could just try to maintain what we have now, that would definitely be the number-one goal,” she said. “The question is, how can we fund extra time for the doors to stay open? That is what this long-range plan is about — helping to fundraise for the library.”

Much of the income flow problem is caused by drastic cuts in government spending, Ridgeway said. Regular local government revenue decreased by $275,925 from 2008-09 to 2011-12, and state revenue by $45,260.

“We haven’t been doing endowment fundraising lately. We have been struggling with the general fund,” she said.

— Contact Laura McFarland at lmcfarland@winchesterstar.com