Five Reasons to Take the Endowment Path
There are many ways to establish an endowment fund.
Some donors get started during life and build their endowment over time.
Others might initiate their fund with a distribution from their estate.
Still others might work from both ends — starting their endowment now and adding to it later with a bequest.
Why do people choose to make endowment gifts? It depends. Here are five factors that I’ve seen motivate donors:
- Personal Satisfaction. Making a real difference by doing something important and lasting is highly satisfying. I’ve been told many times by gratified donors that having their family name on a fund fulfills one of their highest personal ambitions, and it also honors loved ones.
- Strengthening a charity that the donor truly cares about. All non-profits need funds to sustain their facilities, programs, and personnel. There’s always pressure to prioritize the “here and now.” Annual income from an endowment eases some of that financial pressure. Having a strong endowment allows charities to have a financially stable future.
- Your Name Lives On. A donor’s name can be attached to an endowment fund, and because the funds are permanent, this legacy will carry that name in perpetuity and perhaps influence future generations in the family.
- Continue Annual Gifts. People recognize that their regular gifts each year will be missed once they can no longer be made. To continue the pattern, they create an estate gift that is 25 times the amount they currently give each year. For example, a couple who gives $1,000 annually can endow these contributions by making a one-time gift of $25,000.
- Permanence. Many friends see a connection between their retirement funds and their endowment funds. Both are protected and managed separately, so the principal attains its purpose. Endowment are managed like a retirement account, providing needed income in a predictable way. Actually, people often designate unused retirement money to charities to establish an endowment. To learn more about [charity]’s endowment, send in this form with your information. We will mail or email you free information on endowments with no obligation.
Although the specific use may vary greatly, endowment funds have a common objective: to provide support not just for one year, or even one generation, but in perpetuity. An endowment fund is a permanent fund in which the spendable amounts are available for a designated purpose. Creating an endowment allows you to fulfill your own personal philanthropic goals while helping support the needs and mission of your most favored charities. They also offer benefits in the form of tax benefits under both state and federal laws. Depending on the type of asset given, and the type of gift arrangement selected, it is possible to enjoy current savings on income taxes and gift/estate taxes. Feel free to contact me for additional information at 614-338-2365 or firstname.lastname@example.org to discuss how you can take the endowment path.
Article appears as originally published in the Ohio Jewish Chronicle, Thursday June 30, 2016.
Jackie Jacobs is the Chief Executive Office of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.