Frequently Asked Questions about Endowments

An endowment is a long-term fund invested for the future needs of an organization. The fund is intended to be held in perpetuity and a portion can be used each year to fulfill an organization’s charitable cause. An endowment is governed according to a specific purpose, spending policy and distribution schedule.

The most important benefits of an endowment include:

• Reinforcing your organization’s commitment to serving the community for years to come.
• Receiving a steady revenue source, thereby helping your organization weather the ups and downs of other funding sources.
• Raising your organization’s credibility by conveying stability, fiscal responsibility and prudent planning. This can attract donors seeking a legacy.

Endowments are initiated in many ways. An organization may have reserves dedicated for the future. A donor campaign may inspire endowment funds. Or an endowment may be created in honor of someone or to leave a legacy. But there are other considerations to help ensure your organization is ready to create and grow an endowment.

Many nonprofits choose a community foundation to steward their endowment rather than investment and banking organizations.

That’s because foundations are tapped into the unique needs of the nonprofit industry and share a commitment to the welfare of the community. This can assure you that a foundation’s goal is to serve you and your cause.

Nonprofit endowment funds at the Foundation are commingled to create a very large investment pool. This gives the fund extensive buying power, access to institutional investments and lower fees that benefit our Nonprofit Endowment Partners.

Annual fees are based on a fund’s balance and computed monthly:

• 1.00% on the first $1 million, 0.75% on the second million, and 0.50% on the remaining balance.
• The minimum annual fee is $200.