By Jan Lane
Most of us want to build generational wealth for our loved ones. This might include naming them in a will or setting up a trust that will create lifetime support.
What if I told you we also have an opportunity to build generational wealth for our community and the causes we care about?
The Community Foundation’s 5forCNY campaign is all about encouraging every Central New Yorker to invest in the future of the community by providing lasting support for local nonprofits.
What does that look like? Endowment.
Charities rely on gifts from donors to operate, and those donations can fluctuate over time. Endowments are like a financial safety net for universities, hospitals and nonprofits. Think of an endowment as a giant savings account filled with donations, which gets invested to grow over time. The money earned from these investments helps sustainably fund scholarships, cutting-edge research and crucial community programs.
Following are some frequently asked questions about endowments:
Q.: Who can establish an endowment fund?
Many charities establish endowments to help ensure that their missions stay strong during economic downturns and periods of increased community need. Many individuals, families and corporations also create endowments to provide a sustainable stream of funding for their communities and favorite causes.
Q.: How does an endowment work?
An endowment is a designated pool of dollars that are invested for long-term growth. Each year, a portion of the assets (usually 4-5%) are distributed to charitable causes, and the rest of the assets remain invested to grow in perpetuity. This growth, in turn, helps the endowment provide even more support each year to the causes for which it was established.
Q.: Who decides where the endowment distributions go each year?
An endowment’s purpose is defined by donor intentions. Endowments can be restricted to support specific programs or charities or they can provide broader support for community causes like literacy, the arts or greatest needs. Each year, institutions go through a budgeting process to determine how much of an endowment’s returns will be spent. The allocation of endowment distributions is typically overseen by the governing board or trustees of an institution in accordance with the terms set forth by the donor(s) when the endowment was created.
Q.: How can I give to an endowment?
Various options are available — either through the Community Foundation or other nonprofits in the community. Anyone can give any amount to an existing endowment.
The Community Foundation, for example, is a collection of endowments that provide sustainable support for local causes. We connect donors to community issues they care about, giving them the opportunity to make a charitable investment that supports those issues now and for generations to come.
That’s the purpose of an endowment: to provide a steady stream of dollars, far into the future, to meet community needs as they evolve.
For a minimum of $25,000, you can establish your own endowment at the Community Foundation, which will provide around $1,000 to the community each year — forever.
Whether you give today or leave a legacy, whether you establish your own or help grow an existing one, endowments are gifts that keep giving— forever.
To learn more about 5forCNY and how you can help endow a brighter future for Central New York, contact me at legacy@cnycf.org or visit 5forCNY.org
Jan Lane is a chartered adviser in philanthropy (CAP), and a senior philanthropic adviser at the Central New York Community Foundation. In her role, she supports charitable planning for individuals, families and companies and facilitates the Community Foundation’s legacy planning program. To learn more about options for preserving your charitable legacy, contact Jan Lane at jlane@cnycf.org or visit 5forCNY.org
