Building For The Future: Two Ways To Grow Endowments

The Community Foundation is honored to work with so many wonderful nonprofit organizations in our region that are improving quality of life every single day. We know that it’s important for you to grow endowment assets to create a permanent source of support for your mission.

You’ve likely made it a priority to provide ongoing education and information to your donors to help them understand how your endowment works and why it’s so important to the future of your organization. Occasionally, a donor may ask you about the difference between making a gift to support your endowment, or, in the alternative, establishing a separate endowment fund at the Community Foundation to support your organization.

Here’s a little background that may help you explain the differences to your donors. In either case, our team can help, so please do reach out.

Building your endowment fund. Many donors will want to support your endowment fund held at the Community Foundation. Your board of directors may from time to time elect to make transfers from your organization’s assets to the fund. Your organization’s endowment fund is sometimes referred to as “quasi-endowment” because your board of directors has some degree of flexibility to access the principal for certain stated purposes such as emergencies. Annual distributions to supplement your organization’s budget are often made from the endowment fund based on market value percentages.

Donor-designated endowment fund. Sometimes, a donor would like to support your organization by establishing a separate and permanent designated endowment at the Community Foundation, whether during lifetime or through a bequest. In that case, the board of directors and staff at the Community Foundation will oversee income payments to your organization and also ensure that the principal stays intact in perpetuity. In many cases, a donor will want to structure an endowment gift as a designated fund to benefit your organization while also leaning on the Community Foundation for support. The donor can name the fund whatever they’d like (e.g., the Smith Family Endowment Fund).

The Community Foundation team is experienced at managing the accounting, investment, and distribution aspects of all types of endowment funds. When you work with the Community Foundation, it’s convenient and rewarding to establish and grow your organization’s endowment, as well as offer donors the option to set up a separate named endowment fund. Both types of gifts help your mission stay strong and improve the quality of life for future generations.

​This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.