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How It Works

Definition of Endowment Funds

When donations are designated for an endowment fund, it means the donation is invested, (not spent), and the earnings are used to support charitable organizations or causes.

Reasons Donors Like Endowment Funds At Community Foundations

  • When a donor has more than one charitable interest, they can make one gift to an endowment fund and name several organizations as recipients of a portion of the annual distribution
  • Endowments are expected to grow over time
  • Donors like endowment funds to be an arms-length away from the organization they want to benefit
  • Some organizations do not have the capability of handling complex, charitable gifts (land, commodities, business interests)
  • Some organizations do not understand the endowment (never spending the principal) concept
  • Most organizations do not have estate planning expertise
  • Resources stay in the community