Deb’s July Tip: The Endowment Path: 5 Reasons to Take It
A Giving Strategies post by Deb Steinbuch
Our friends and donors to Cincinnati’s Jewish community are beginning to feel the buzz about endowments, ie money or other financial assets donated to nonprofits. Through the Create Your Jewish Legacy program and ongoing conversations our many agencies, organizations, and synagogues are having, we as a community are beginning to understand that establishing endowments has lasting, powerful effects on our community’s future. So it is not surprising that our community’s endowment funds are growing.
There are so many ways to make an endowment happen. Many people have their estate make a distribution to initiate a fund, while others get started during their lives and build up the fund over time. Some even start their funds now and add to them later through their wills, or designations from their IRA or life insurance. Our development team at the Jewish Federation can easily help you with the how. Let’s look at the frequently less-examined question: why.
Why do people choose to make legacy gifts to a charity? It depends on your objectives. Here are five reasons we hear from our friends and donors as to why:
1. Personal satisfaction: Making a real difference by doing something important and lasting is highly satisfying. Many legacy donors tell us that having their family name on a fund fulfills one of their highest personal ambitions while honoring loved ones. Just remember each agency and organization has their own guidelines regarding naming funds.
2. Strengthening the community: We will always need to raise an amount for operations, such as facility usage, programs and personnel, to sustain our agencies and organizations. However, an annual endowment payout eases some financial pressure. Having a strong endowment either at the Jewish Federation or with an organization that you feel close to allows the charity to have a financially stable future. As a neighbor and friend of mine said recently, “Philanthropy is not reserved for the wealthy. We are all responsible for the future of our community.
3. The name lives on: A donor’s name can be attached to a fund and because the funds are permanent, this legacy will carry that name in perpetuity and perhaps influence future generations in the family. Again each agency, organization, and synagogue has its own minimum for naming a fund.
4. Continue an annual gift: Some friends or donors recognize that their regular gift each year will be missed once it can no longer be made. To continue the annual gift, they create a fund that is 20 to 25 times the amount they currently give each year to the agency, organization or synagogue. For example, a couple who gives $1,000 annually can endow this contribution by making a one-time gift of $20,000 to $25,000. Once the organization invests the gift, it can then—every year—take out a small percentage equal to the couple’s original annual gift.
5. Permanence: Many donors see a connection between their retirement fund and legacy or endowment funds. Both are protected and managed separately, so the principal is retained for a specific purpose. Our endowment at the Jewish Federation and at some of our local organizations is managed like a retirement account, providing needed income in a predictable way. Some of our donors even designate unused retirement money to our endowment.
To learn more about our endowments or our Create your Jewish Legacy program feel free to call or email us. We are happy to answer any questions about how or why to leave a legacy gift.
You can reach Deb Steinbuch, Planned Giving and Endowment Manager at the Jewish Federation, at 513-985-1593 or email@example.com. You can reach the Jewish Federation’s Create Your Jewish Legacy team here and the community-wide Create Your Jewish Legacy initiative here.
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