One of the most exciting gifts you can make to your favorite organization is a gift to their endowment. WHY? Because endowments provide payments each year to the charities they support forever. In this blog, we'll explain how endowments work to for charitable causes, forever and how you can start one for a charitable cause you care about.
So... What is an Endowment?
An endowment is a gift to a charitable organization, typically through a Foundation. The total amount of the gift is invested. Each year, only a portion of the income earned is spent while the remainder is added to the principal for growth. In this respect, an endowment is a perpetual gift. The fund's principal remains intact.
Every endowment should have a comprehensive investment policy that drives the management of the fund. At the Community Foundation, the Board of Directors established an investment policy and spending policy for the Community Foundation's investment pool. All of the funds, including endowments at the Community Foundation, follow these policies.
An endowment grows over time makes annual payments to the designated charity, which also grow over time, even exceeding the amount of the endowment's principal. In the example in the graphic above, the $100,000 endowment grows to more than $177,000 over 25 years and makes grants totaling more than $133,000. The fund will grow and continue to make payouts to the charity, forever.
At the Community Foundation, an endowment can be started with $10,000 for a nonprofit. The Community Foundation will invest the funds and encourage other members of our community to make gifts to the endowment to help it grow even faster.
To learn more about endowments, or any of the funds at the Community Foundation, contact us. We're here to help.
The Community Foundation of Jo Daviess County fosters giving and invests in communities in Northwest Illinois. At the Community Foundation of Jo Daviess County, we strengthen the communities in our county by inspiring community members to give, making grants to strengthen nonprofits, and investing in long-term community initiatives.