Endowments and Planned Gifts: What and Why?
* Make significant investment in the future. Many donors make larger endowment gifts through planned-giving vehicles than the combined value of all the current-use gifts they have made previously. Endowment gifts are sometimes the donor’s last (and largest) gift to the organizations they value most. Donors can receive great satisfaction from making significant investments in the future from assets accumulated over their lifetimes. In the case of deferred planned gifts, the gifts may be the donors’ final acts of contributing to the organization or the work that they find most valuable.
* Endow annual gifts. An endowment gift gives donors the option to perpetuate their annual gifts. For example, the $100-a-year donor might make a $2,500 endowment gift in order to continue annual support of at least $100 to the organization for generations to come. This concept often is appealing to the consistent older donor.
*Allow incremental funding. Some donors do not want to give away their assets during their lifetimes, yet they want to see the benefits of the gift immediately. They establish endowment gifts through bequests or other gift vehicles that take place after their lifetimes. They make gifts annually that represent the amount that would have been distributed from the endowment if their gift had already been received. In this way, their annual gifts can provide the support currently that their planned gift will provide eventually.
*Provide lifetime income. Some kinds of endowment gifts — split interest gifts — pay income to the donor for life, with the remainder going to the charity’s endowment after the donor’s death. These kinds of gifts can provide stable income to the donor during retirement or can help the donor meet family obligations.
* Alleviate management burdens. Some donors, particularly as they become older, are uneasy with managing their assets and making investment decisions. A split-interest gift enables the donor to receive regular income for life without the burden or cost of managing investments.