What is an endowment?
An endowment is a gift that gives forever. It’s designed to provide stable, ongoing gifts to your favorite charities. The principal is preserved and grows through prudent investing, and grants are distributed to your chosen charities each year.
Why would I want an endowment?
To give a gift that leaves a lasting legacy that reflects your faith and values. An endowment bears fruit forever. It ensures your favorite charities receive a steady stream of grants each year, providing them with stable support forever.
What gifts can go into an endowment?
A variety of assets can be used to fund an endowment. These include cash, appreciated securities, required minimum distributions from IRA accounts, real estate, personal property, and more.
What are the costs associated with opening an endowment?
There are no upfront, out-of-pocket expenses. Once the fund is established, there’s an administrative fee of 0.80 – 1.00% and an investment fee of approximately 0.75%.
What tax benefits will I see from opening an endowment?
You may see capital gains tax savings and estate planning benefits depending on your personal situation.
Can I involve my family?
With an endowment, the beneficiaries are set by you and are unchanging. You can involve your family in that decision.
I’m worried I will outlive my savings, so I don’t think an endowment is for me.
This is a common concern. Many people choose to give upon death through an estate gift. That way, they feel financially secure today, and they know they can still leave a lasting legacy.
You can also build your endowment over time. Gifting the annual required minimum distributions (RMDs) from your retirement account is one simple strategy.
How is an endowment invested?
The Catholic Community Foundation (CCF) invests endowments according the USCCB’s socially responsible investment guidelines. We also leverage tactics like impact investing and corporate engagement to ensure our investments not only do well, but also do good.
Endowments are invested in our long-term pool, which is diversified to yield steady, balanced growth over a long period of time.
What happens when the market is down?
Endowments are designed to weather market changes by controlling the spending rate each year to preserve the principal. In years with higher market returns, the extra growth accumulates and acts as a cushion for years when the market is down.
Will my endowment ever run out of money?
No. Endowments are designed specifically to slowly grow with each passing year. There are even state and federal laws that govern the management of these funds to ensure they last forever. CCF always complies with these laws when stewarding your gift to provide your favorite charities with annual support in perpetuity.
What makes CCF different from a typical financial institution?
We do everything with a Catholic heart. That means investing according to Catholic social teaching and the USCCB’s socially responsible investment guidelines. We also screen grantees for alignment with Catholic values.
How much will my chosen charities receive each year?
The amount that is granted to your endowment’s beneficiaries is determined by a “spending rate.” Each year, CCF’s Investment Committee reviews and recommends a spending rate to CCF’s Board of Directors for approval. The rate is based on guidelines dictated by law.
• the preservation of the endowment
• current economic conditions
• the possible effect of inflation or deflation
• the expected return and appreciation of investments
The spending rate is currently set at 4% of the average fund balance over the previous 20 quarters. The ultimate goal when determining the spending rate is ensuring perpetual grants.
What is a beneficiary?
A beneficiary is a charity that benefits from your generosity. For example, if you list Catholic Charities as a beneficiary of your endowment, an annual grant will be given to them. You can list more than one charity as a beneficiary.
What if my beneficiary closes? Or my parish?
If a beneficiary closes during your lifetime, CCF will work with you to make necessary changes. If a beneficiary closes after your death, CCF will change the beneficiary to accomplish, as nearly as possible, the intended purpose of your gift. If your parish is merged, your gift will go to the newly-formed parish.
What if I want to change my beneficiaries?
If you decide you’d like to change your beneficiaries, just give us a call. One of our friendly expert gift planning officers will help update your chosen charities.