Giving Compass’ Take:
• Various types of endowment funds can help spur charitable giving practices and get donors closer to achieving their philanthropic goals.
• Although this article is directed at philanthropy advisors, the general information about endowment funds can be useful for donors interested in different giving vehicles.
• Read about this foundation’s changemaker model of philanthropy.
When you think about the charitable planning tools available for philanthropic clients, donor advised funds, private foundations and split-interest trusts may be the first that come to mind. But there are a host of additional options available through The Chicago Community Trust, including endowment funds, which can be part of the charitable planning conversation with clients.
Understanding the world of endowment funds can help you expand your philanthropy toolkit, and better align charitable solutions with the goals and objectives of your clients.
An endowment fund at The Chicago Community Trust is a permanent fund where the principal is invested and grants are made through interest, dividends and gains. Endowment funds are established with an eye toward perpetuity, with the goal of supporting specific causes, named organization and/or issue areas that are most important to the donor.
As you work with your clients on creating a thoughtful charitable plan through lifetime and estate gifts, there are many reason to consider an endowment fund, and many different fund types to help you and your clients achieve their philanthropic goals.
Types of endowment funds:
- Designated Fund: A designated endowment fund allows for continuous support to one or more named organizations in perpetuity.
- Field of Interest Fund: If you have philanthropic clients who feel passionately about issue areas instead of specific organizations, a field of interest endowment fund may be a perfect planning tool.
- Unrestricted Endowment Fund: An unrestricted endowment fund gives the Trust the discretion to make grants annually from the fund and in the name of the fund to meet the most pressing and urgent needs of the community in perpetuity.
- Donor-Advised Endowment Fund: When a donor establishes a donor advised endowment fund, a certain percentage of the principal is available each year for grant making out of the fund.
Read the full article about endowment funds by Tim Bresnahan at The Chicago Community Trust.
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