Policies and Procedures

Subject:  MCMA Grants

     Date:  June 2014 (Last updated June 2023) 

•   As a 501(c)(3) charitable organization, MCMA is required by law to annually make disbursements to qualifying charitable organizations.

•   By law, those organizations must also be 501(c)(3)s.

•   By MCMA guidelines, they must “support the mechanical arts and trades”, though broad latitude may be permitted in this application.

•   In general terms, the “minimum required amount” is five percent of our net worth … averaged monthly value of cash and investments for the previous year, plus our other assets (mainly, our building). Expenses applicable to the charitable portion of our operations count as contributions against the “minimum required amount”.

•   The “minimum required amount” is determined by our accountant, and the calculations are required as part of the preparation of our tax return documents, usually on May 15 of each year.

•   Failure to distribute the required minimum incurs an excise tax penalty of 30% on the “shortfall”, or “amount not contributed”.

•   Failure to distribute the required minimum can also trigger an increase in the tax on  our net investment income for that year (essentially it doubles, from 1% to 2%), though that computation is complex.

•   Additionally, any amounts by which we have “under-contributed” or “over-contributed” over the previous five years are taken into account in determining our required disbursement for the current year.

•   We require that organizations seeking an MCMA Grant submit their request in letter form by March 31, briefly explain what they want and how it will be used, and include any supplemental information needed to support the request or explain their organization. Requestors may (and often do) contact us with questions they may have, and limited time extensions (up to a few weeks) are freely granted when requested.

•   Typically, MCMA does not award cash grants. Rather, we prefer to fund the purchase of equipment or tools that will be used for a specific purpose related to skills development, vocational training, employment opportunities for physically or developmentally challenged individuals, etc.

•   All requests are compiled by the Secretary and shared with the Planning Committee Chairman, and a meeting of the full committee is called to review and discuss each request.

•   Generally, this meeting occurs by late-May, by which time all requests have been received and our required distribution amount has been determined.

•   Unless disapproved at this initial review, each request to receive further consideration must be visited by members of the committee.* Those visitations are assigned to members, and a date for a second meeting is chosen.

          *Due to the Covid-19 pandemic, remote visits were authorized in                            2020, and even in 2021 partial restrictions still applied at several locations.

•   At the follow-up meeting, the members who visited each of the “grant requestors” summarize their visits, explain each request in detail, and offer their own recommendations. The committee debates and ultimately decides how to apportion the available funds among the competing requests.

•   The Secretary then sends a written response to each requestor. If all or part of a request was approved, the organization is asked to make the approved purchase and provide documentation of that purchase to us for reimbursement. If the purchase is “beyond their means”, we instruct that they forward the invoice to MCMA for direct payment to the vendor, cautioning that the invoice must clearly state that the recipient of the item(s) purchased is the requestor, not MCMA.

•   Correspondence, particularly invoices, from the organizations receiving grants is to be maintained (for at least seven years) for tax purposes.

•   MCMA must disburse all grant funds during the calendar year in order for them to count as distributions for that calendar year (and avoid any potential tax penalties as described above).

•   Follow-up by the Secretary is required if organizations have not completed purchases by late-Fall, and plans for “alternative grants” may be necessary if continued follow-up indicates a real problem.

•   Given time constraints, “alternative grant” decisions, if needed, are to be made jointly by the Planning Committee Chairman and the Secretary.

MFJ, Secretary