How to Perpetuate Your Values

Have you considered establishing an endowment fund? It's a powerful way to perpetually support a gift to your favorite charitable organizations in your name or the name of a loved one, while also realizing tax benefits for your kindness.

How It Works
An endowment program is simply the time-honored method of allocating certain gifts to an investment fund. This fund is invested to earn income each year, and as the principal grows, so does the income. The fund income is used to support charitable nonprofits, but the principal always remains invested in order to perpetuate the fund.

When you make a gift to our endowment fund, it can be outright or deferred. Either way, your gift can turn into a legacy of annual gifts long into the future.

Suppose you'd like to make sure your favorite charitable organizations receives $1,000 every year after your lifetime. Let's say we spend 5 percent of our endowment each year. This doesn't mean the fund earns a total return of only 5 percent, only that we spend that amount; we will reinvest the difference to offset inflation.

To calculate the amount needed to perpetuate your gift, divide the annual gift amount, $1,000, by the amount called for in the spending policy, 5 percent, and you get $20,000. So, contributing just $20,000 can continue the $1,000 annual gift indefinitely!

If the value of the endowment fund grows beyond the spending amount, so does the income. For example, with a total return of 10 percent in one year and with only a 5 percent spending rate, the other 5 percent is reinvested. By the second year, the value of the fund is 5 percent higher, or $21,000, and the "gift" from the fund is $1,050.

The Possibilities
Endowment funds ensure the future of our mission and enhance the quality of our opportunities for service. They also allow you to leave a legacy with your favorite charitable organizations.

Please contact Mary Ludwig, Development Director at 712-732-5127, for more information.

The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.

Copyright © The Stelter Company, All Right Reserved.

Essentials

Ways to Give

What to Give

Reading Room

Glossary of Terms

Q&A

Goals & Gifts

Bequest Language