THE IMPORTANCE OF ENDOWMENT

At the Community Foundation of Shelby County, we believe in endowments. 

Endowments are charitable funds that are to be permanently held at the Community Foundation of Shelby County.  They will provide a steady stream of charitable dollars supporting not-for-profit organizations, programs and events in our community.  

Approximately, 65 percent of charitable fund assets held within the Community Foundation are endowed and will serve the purposes identified by donors forever.  With the exception of certain short-term funds, any type of fund can be endowed.

There are well-known people today who are giving away their wealth with no intention of leaving money to support future generations.  We would, instead, ask you to look at the example of John D. Rockefeller, Jr., the richest man of his generation, and one whose wealth is still supporting causes 90 years after the start of the Rockefeller Foundation.  While most of us cannot compare our assets to Mr. Rockefeller's, his example is worth noting.  As Robert Frank of the Wall Street Journal wrote after the economic downturn of 2008, “Now, with the living running out of cash, it is the nonliving who are back in the lead as donors.”

Endowments abide by the Foundation’s Spending Policy which is caluculated using a charitable fund’s average value from the 16 quarters preceding October 1. This disciplined spending enables both the assets and the grantable amounts to grow to keep pace with inflation.  The Spending Policy enables endowed funds in each of our investment pools to spend a different percentage.  Those funds in the Conservative Pool have a three percent (3%) spendable amount. Funds in the Balanced Pool spend three and a half percent (3.5%).  Funds in the Aggressive Pool have available four percent (4%).

Imagine if you gave $100,000 to establish an endowed charitable fund 34 years ago.  If the fund had no excess investment growth, by today it would have awarded grants of more than $100,000 and the original $100,000 gift would still be intact and continue to award grants.  With good market growth, the amount granted would have surpassed the amount of the original gift years ago and the amounts being distributed would likely have increased.

The adage that ‘you can’t take it with you’ is true.  None of us can take our earnings or inheritance with us, but there is a way for the community to keep it forever.