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Endowments: The gifts that keep giving

By  Nerissa Flores, Catholic Register Special
  • October 31, 2018

A lot of people think that creating an endowment fund is something only rich people can afford. 

After all, we often read in the newspapers about such funds supporting big projects in institutions like universities, foundations and hospitals. Other endowments were started up by a one-time major gift or a family putting together the entire endowment. 

So it’s understandable that not many know that endowments are something the average person can start up, ensuring long-term giving that will sustain charities or other causes they love.

Consider the story of Bill and Sheila Morano. They set up an endowment fund in 1995 after attending a seminar in their parish. 

“We like to tithe, but we’re not always at 10 per cent,” explained Bill. “The endowment helped us reach our goal of 10 per cent.”

The Moranos believed that tithing is one way of recognizing the Lord’s blessings and sharing it with others so they decided to put up a modest endowment fund to benefit the diocesan causes close to their heart. The archdiocese included the fund together with other donor-initiated endowments under its investment portfolio. 

Today, though the Moranos moved to New Brunswick several years ago, their initial endowment fund continues to steadily grow and once it reaches its funding goal, will eventually pay out interest to recipients.

If long-term giving is on a donor’s agenda, then an endowment fund is one giving vehicle he or she might want to consider. An endowment is an investment fund set aside for the long-term support of an organization. Depending on how it was set up, only the income, or a portion of it, is expended. The principal remains intact. 

While it’s true that bigger institutional charities tend to establish or receive endowments of significant amounts, smaller charities are able to use this vehicle to encourage donors for sustained funding. By pooling together funds from various small endowments, they are able to consolidate these into one big investment portfolio.

The benefits of endowments are many. Primarily, they provide continuity and dependability in an organization’s long-term cash flow. They also smooth out the peaks and valleys associated with traditional or seasonal fundraising by providing a “safety net.” 

By utilizing funds coming from endowment payouts, there is also a potential to decrease fundraising costs. Moreover, donors are given an impression that the organization is in it for the long haul and that it can remain strong and stable over time. Endowments can give donors meaningful goals by specifically directing the money to where they want it to go and effectively creating legacies. However, not all organizations could be fit for building endowments, particularly when their needs are current and short-term in nature. Charities, for example, would rather put the money to good use immediately. Some donors would also rather have their gift going to the entire cause rather than to a portion of it. Endowments may also create the impression that an organization has more than sufficient funding. 

Organizations however, recognize the need to widen their giving options and tend to strike a balance by creatively focusing on raising short-term funding through campaigns and encouraging long-term sustainability through planned-giving vehicles.

If a donor wishes to start an endowment with an organization or charity, they should first check if the organization can receive and manage endowments and, more importantly, if it fits the organization’s mission. It is best to discuss the details and the parameters of the gift with someone in the organization who can understand the wishes of the donor and if an endowment is the proper option.

Endowments can be technical and the types of endowments vary. How these are set up can range from simple to complex depending on a donor’s requirements and how the organization can strategically provide the right endowment solution to meet them. 

As an example, the Archdiocese of Toronto currently administers a few endowments wherein the donors wanted to direct funds to help the needy. It was no surprise then that when these endowments were initially discussed and set up, ShareLife — the diocesan fundraising arm helping the marginalized in our communities — was named as a recipient of payout. 

ShareLife, by itself, actually has its own separate 

“Each year, whenever we receive bequests, they’re put into the Legacy Endowment Fund and then each year a small portion of that amount, which is basically on earnings, is given to ShareLife to be distributed to agencies,” said Arthur Peters, executive director of ShareLife.   

For donors, an endowment is more than a donation. It is a legacy that perpetuates a donor’s values and the things they are passionate about — a gift that grows and lasts long into the future. 

(Flores is the manager of Planned Giving and Personal Gifts at the Archdiocese of Toronto.)

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