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Understanding an Endowment

An endowment is a large sum of money held in interest bearing accounts for an extended period of time by non-profit organizations such as hospitals, private universities, foundations, and other non-profit organizations. Dividends and other gains are primarily spent on operating costs and other overhead costs, and the rest is usually reinvested to adjust for inflation and to ensure growth and financial stability of the endowment.

What are the Advantages of an Endowment?

Endowments provide many advantages to an organization; the biggest being financial stability. With an endowment, organizations can diversify their revenue streams. Other advantages include increased income diversity and ease of setup and maintenance. Donors will feel a sense of accomplishment as their contributions make a meaningful, positive, and long-term difference in the local community by donating to an endowment. Community Foundation funds in a clients name are subject to extensive tax deductions, with 50% of tax treatment of cash gifts are deductible, tax treatment of gifts of appreciated publicly traded securities are full market value deductible or up to 30% of adjusted gross income.

Setting Up Your Endowment

It may be easier than you think to establish an endowment, and you don't have to have a large sum of money to begin an endowment. The Community Foundation of NC East can help you establish an endowment for as little as $5,000. Community foundations are especially easy to establish compared to private foundations, as no corporations or trusts are required for community foundations because they are automatically covered by the Community Foundation's tax exempt status. Other things to consider include determining how much money is necessary, restrictions, and guidelines as to how much interest will be available to the organization yearly. Opening the account with a financial institution such as the Community Foundation of NC East who will properly manage the funds is very simple.

Endowments are a sign of strong financial health and comfort for non-profit organizations, and thanks to the Community Foundation of Eastern North Carolina, they're easy and inexpensive to set up, too. Contact us today to further discuss the possibilities and benefits of an endowment for your private or community non-profit organization.

Get Started Today

To learn more about the Community Foundation of NC East and its impact to our region and local communities, or to get started on your planned giving, simply contact us today, or call us a 252-756-8549 to speak with our Chief Executive Officer, Melissa Spain.