Land trusts have a perpetual obligation to steward conservation agreements and manage lands they hold in fee for conservation purposes, and to defend these conservation lands. These ongoing obligations set land trusts apart from many non-profits and require that the land trust have a source of funds available to meet its responsibilities. The surest way to meet stewardship and defence costs is to set up a dedicated fund that is managed separately from the land trust’s operating budget. Some land trusts maintain a single fund for all purposes; others have separate funds for stewardship and defence. The choice is largely a matter of financial policy and organizational philosophy and may reflect donor wishes. Likewise, the choice of an internal board-designated fund or a formal endowment is also a matter of financial policy and philosophy. Land trusts with a secure source of annual operating income for stewardship and defence or a general endowment to support their stewardship responsibilities sometimes forgo a dedicated fund.

Like all Canadian charities, land trusts must spend 80% of their charitable receipts on charitable activities in each year (disbursement quota). Charities that exceed the 80% mark in their expenditures may carry the excess forward up to five years or back one year to offset a shortfall. Fundraising expenses are not included as charitable activities (see 5A). Funds applied to endowment funds or other dedicated funds that are established to earn interest over the long term are not included as charitable activities by the Canadian Revenue Agency. Therefore, land trusts who wish to develop these types of funds must either do so by using less than 20% of their incoming receipts, or by carrying over an excess into a future year, or by receiving funds through a bequest (considered exempt by CRA) or by having donors direct funds into a gift that must be retained by the organization for 10 years.

Whether the source of stewardship and enforcement funds is operating, dedicated or from a general endowment, the land trust must track its stewardship and enforcement expenses and periodically evaluate whether the funds it has are sufficient to fulfill its long-term responsibilities. Most land trusts are still building funds required for long-term stewardship. Thus, at a minimum, a land trust should have a strategy for raising the funds necessary for its stewardship and defence obligations, have a board commitment to raising these funds, and make demonstrable progress toward meeting the goals of the philanthropy and fundraising strategy. See also related practices 11A and 12A.