With endowments, everyone wins

April 04, 2004|by Brad Sell

A keepsake, according to Webster, is "anything kept, or given to be kept, as a token of friendship or affection; remembrance." Perhaps you have something from your parents or grandparents that you consider a keepsake. Seeing it or handling it stirs fond memories.

A bride may keep her wedding dress for years as a treasured keepsake, a remembrance of a special day in her life. A daughter may wear this same dress in her own wedding and keep it to pass down someday to her daughter. An athlete may keep a uniform as a remembrance of the glory days of competition and victory.

We all cherish our keepsakes.

Endowments are another kind of keepsake. Note Webster's phrase "anything ... given to be kept, as a token of friendship." This applies perfectly to endowment funds. These have been "given to be kept" in perpetuity as a "token of friendship" and support for the donor's charitable intent.


An endowment is a tangible reminder of the relationship that a donor had with a nonprofit organization and their desire to continue supporting that organization even after they are gone.

The principal of an endowment fund is held in a permanent pool of invested funds with only the net earnings, or a portion thereof, used to meet the purposes described in the endowment agreement. The balance is reinvested so the amount available to spend in future years will keep pace with inflation.

For example, an endowment designed to provide annual support of the operating budget of ABC Charity does just that.

Every year, these keepsakes keep reminding us of the friendship and loyalty of the donors who provided them.

Endowments can carry the name of the donors or the name of someone a donor wants to honor or memorialize. Endowments can provide annual "gifts" for the general purposes of ABC Charity, or for more specific things.

Endowments can be created with cash, securities, real estate or other assets of value. Endowments may be funded during life or at death, or by a combination of the two.

When a donor creates or supports an endowment fund, everybody wins. The donor achieves their charitable intent (and probably gets a nice tax savings), the charity gets steady, perpetual cash-flow to achieve their mission, and the entire community is positively impacted.

Brad Sell is executive director of the Washington County Foundation.

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