A permanent endowment fund is a pool of dollars (sometime referred to as the corpus) from one or more donors that is invested. A certain percentage of the fund can be withdrawn each year to fund a nonprofit organization’s overall mission. A spending (or withdrawal) policy determines the amount that can be withdrawn each year. The Spending Policy is meant to keep the fund’s corpus intact and ensure the long-term financial health of the nonprofit organization and its beneficiaries.
Endowment funds are designed to provide a source of lasting support, representing the promise of a reliable income stream to cover many needs such as operating expenses, fill occasional shortfalls, or even seed new work. Establishing an endowment fund helps to address that unpredictability and provides great benefits to the organization:
- Attract large gifts. Individuals often prefer to make major gifts (including bequests) to support features or efforts that will remain in place long after they are gone. Contributing to an endowment ensures that the gift lives on beyond the donor.
- Signal strength. The existence of an endowment can serve as a signal to donors that an organization will be around for the long-term. This may draw further support from those who wish to invest in an institution that has longevity.
- Support operations and innovation. Because it comes in as unrestricted dollars, the income from an endowment can be used as needed in any given year—for example, to smooth out financial shortfalls in lean times, and can also be used to cover ongoing overhead costs, or even fund projects that are more experimental in nature and may put an organization on the cutting edge of its field.
During the Endowment Challenge, the Foundation will award a total of $40,000 through 1:2 matching grants of $5,000 to 8 nonprofit organizations to establish or to build an existing agency endowment fund at The Community Foundation of Gaston County. Every two dollars raised by the organization will leverage one grant dollar from the Foundation up to $5,000. Grant recipients will have 18 months from the date of the award to raise the full match. Grant dollars will be transferred into the endowment fund at the Community Foundation of Gaston County once the match has been met and follow the Foundation’s Investment and Spending Policies.
The Foundation will consider only those organizations and institutions that are recognized as 501(c)(3) non-profit entities providing services to the residents of Gaston County.
The Foundation uses an online grant submission process. Applications and all required supporting documents must be uploaded using the online system. Applicants will be required to submit a detailed plan, including a timeline, for building the endowment fund over a period of 18 months. The deadline to submit an online application is Thursday, November 1, 2018.
Learn More at: cfgaston.org