Have a Favorite Charity? Consider an Endowment


It is not easy for nonprofit organizations to secure new funding sources every year. When a regular donor passes away, the organization is often left with a desperate need to replace the funding. If you want to avoid this happening to your favorite charity, you can leave an endowment in your estate plan for a lot less money than you probably think.

Charities are always grateful and pleased to receive large one-time donations, or even small one-time donations. However, what really keeps most charities solvent are the annual donations they receive from regular donors.

It is these donations that allow a charity to plan ahead and budget. 

When those regular donors pass away the charity has to replace them, which is not always easy to do quickly. One way to avoid this problem for charities that you support is to leave an endowment for them in your estate plan.

As the Statesman Journal points out in “Today’s nonprofits need forever friends,” you do not need to leave millions in an endowment to make a difference.

If you annually contribute $100 to a nonprofit organization, then leaving $2,000 in an endowment is enough for that level of annual giving to continue in perpetuity. That ratio holds up no matter how much you give annually. An endowment of 20 times an annual gift should allow for the same contribution annually long after you pass away.

Many nonprofits have endowment funds to which you can contribute. For those that do not, you will want experienced help to create one.

Consult with an estate planning attorney if you would like to consider leaving a charitable endowment.

Reference: Statesman Journal (Nov. 13, 2015) “Today’s nonprofits need forever friends

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