What is an endowment fund?
An endowment is a fund from which only the interest is spent. Financial advisors often oversee endowment funds and help grow them by actively investing. Typically, only a small portion of the interest or earnings from the endowment can be spent annually to ensure that the original funds grow over time. Since the principal is not spent, an endowment is NOT a “rainy day” fund, but building good stewardship to be sure that Legacy continues doing good in our community for many years to come.
Why do nonprofits have endowments?
An endowment can help act as an insurance policy for a nonprofit of any size. Regardless of the current state of the economy, it can contribute to financial stability and reduce the yearly burden of fundraising. It is a tool to become sustainable well into the future.
Why do donors give to endowments?
Building an endowment is a long-term project. Many endowment gifts occur when a donor bequests the charity in his or her will or an individual receives an inheritance and chooses to donate a portion to charity. Earmarking the gift for endowment instead of contributing to the general budget allows these rare, but large, gifts to build a legacy well into the future, funding operating and programs beyond this budget cycle. It is important to these donors to help diversify the organization’s income and reduce its vulnerability to economic crisis. They view it as a long-term investment.
What about Legacy’s endowment?
Legacy has started an endowment fund, managed by Frontier Assets Management in Sheridan, WY. One unique financial tool through their Christian Worldview strategies is biblically responsible investing (BRI) which empowers the Christian to support companies that seek to uphold Biblical values and to avoid companies that don’t. Each fund is scrutinized to determine its involvement in abortion, pornography, anti-family entertainment, non-biblical lifestyle, tobacco, gambling, and alcohol. In this way, our endowment allows us to invest in companies that uphold the views and values of our Christian faith.
In order to allow it to grow, we are currently reinvesting all growth into the fund, instead of using it for our budget. As our organization grows, or should the need arise, up to 4 percent of its net value can be allocated to operating expenses.
How do I give to Legacy’s endowment?
It can be as simple as a check with the memo “Endowment Giving”. However, you’ll want to talk to your attorney or financial advisor about leaving a bequest in an inheritance. For other options, such as stock transfers, etc. you may contact Legacy for brokerage account information.