10.04 Friends of the Pequot Lakes Library Request

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• At the time of incorporation as a 501(c)3,the FoPLCL was advised (as it turns out incorrectly) that it could not directly invest monies it received as donations. Exactly who provided the incorrect information has been lost to history. • Given the guidance,the FoPLCL asked the City if it would be willing to invest Endowment and non-endowment monies in CDs or other investments for them. The City agreed to this request. • Over time,the FoPLCL had the City purchase 6 CDs. 4 were specifically identified as Endowment Funds and 2 were termed Rainy Day Funds (monies that could be used for day-to-day expenses of the Library). • In September 2015,due to low CD rates,the FoPLCL requested the City to place an additional$40,000 of its Endowment Funds in the City's Wells Fargo account. The City agreed to do this. • As Endowment CDs matured in the last two years,the FoPLCL requested the City to invest these funds in the City's Wells Fargo account. The City agreed to do this. • Thomas Adams became Treasurer toward the end of 2015 and,among other things, began to look into why 501(c)3s were not able to invest donated funds. After discussing the issue with Brainerd Community Action (a local organization that works to assist"not for profit"groups),we learned that earlier information regarding investment restrictions was incorrect. • At that point,the FoPLCL requested that the City return to the Friends of the Pequot Lakes Community Library the Endowment funds they agreed to hold and invest on our behalf. The Auditors have stated that returning the funds cannot be done. They have stated that any funds donated to a City/County entity by state law cannot be returned. • The FoPLCL Board has given this issue considerable thought. It is our belief that the Auditor does not fully understand how the funds were accepted by the City. Specifically the FoPLCL has sent two types of funds to the City: • Donated Funds-The FoPLCL makes periodic donations to the City to support the ongoing day-to-day expenses of the Library. In addition,early in its existence,it collected and donated sufficient money to fully pay for the building the Library currently occupies. • Endowment Funds-These are funds given by donors to the FoPLCL with the idea of building a long-term endowment ultimately to be used in support of the Pequot Lakes Library. As noted above,only after asking the City if they would invest the funds on behalf of the FoPLCL were the monies sent to the City. At no time did the FoPLCL"give"or"donate"these funds to the City of Pequot Lakes. They were sent to the City only after asking if the Library could invest FoPLCL funds in various City investments(i.e.CDs or the Wells Fargo account). These funds remain Endowment funds belonging to the FoPLCL.