Endowments Are Forever
Far from being new-fangled ways to support worthy charities, endowments have been around for a long time.
Endowments are created by the transfer of money or property to charitable organizations such as academic institutions (e.g., colleges, universities, private schools), cultural organizations (e.g., museums, libraries, theaters, hospitals), and religious establishments.
Endowments come with stipulations regarding their use—as a general rule, they must remain intact in perpetuity. Only the income is spent. Protecting the initial gift from being spent assures that the donation has an impact over a long period of time.
The lasting power of endowments is readily exemplified at the Universities of Oxford and Cambridge. In 1502, Lady Margaret Beaufort (grandmother to the future king Henry VIII) created their first endowed chairs for the Lady Margaret Professors of Divinity. Fifty years later, Henry VIII established endowments, known as the Regius Professorships, to support subjects under study at both universities. One of the subjects was Hebrew. Today, the University of Glasgow has fifteen Regius Professorships.
Private individuals soon adopted the practice of endowing professorships. In 1669, Sir Isaac Newton held the Lucasion Chair of Mathematics at Cambridge. More recently, this seat was held by Stephen Hawking, the celebrated physicist.
Why do people choose to make endowment gifts? There are a number of reasons, of course. Here are four you may wish to consider:
- Durability - The idea of creating a perpetual stream of financial support makes sense to people who see a similarity between retirement funds and endowment provisions. They like the concept of a fund that is guarded and invested separately from other assets so the principal of the fund will stay intact. Only the income or a portion thereof is used.
- A Positive Legacy - When donors attach their names to an endowment fund, they create an enduring legacy that will outlive them and influence succeeding generations. Grandchildren, great-grandchildren and other family members and friends will be reminded of the person’s values and commitments. Endowment funds can also be used to honor the lives of others who have made a significant impact on the donor.
- Perpetuate Annual Gifts - Many donors see an endowment fund as a means to underwrite their own regular giving. For example, an endowment fund of $100,000 could create an annual “gift” of $4,000 – $5,000. It’s a great way to keep giving generation after generation.
- Stronger Charities - Each year charities must raise a certain number of dollars to meet operational costs to sustain facilities, program and personnel. Raising money for the “here and now” is always a priority.
Annual payouts from endowment funds relieve some of this pressure and permit the board and executive team to plan more confidently for the future. An organization with a strong endowment is simply more stable financially.
There is something wonderfully fulfilling about doing something good that lasts, something that really makes a difference. Other kinds of giving are important, but having your name on an endowment that will benefit others for centuries is truly satisfying.
Jackie Jacobs is the Executive Director of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.