Wondering how a gift might make an impact? Here is one example.
A retirement account is donated to the Winona Community Foundation with a value of $100,000. The Board of Directors establishes an endowment fund with this gift which is invested and grown while earnings are distributed annually based on the Foundation’s endowment spending policy.
Original Gift: $100,000 (tax-free), invested for one year
- Total earnings: $7,500 (based on 7.5% return)
- Distribution available: $5,000
- Value of Fund after distribution: $102,500
- Total earnings: $39,000+
- Total distributions: $26,000+
- Value of Fund after distributions: $113,000
Who do the distributions benefit?
- If there is a specific cause you care about, earnings could be donated to that charity year after year.
- If you want to contribute to a more flexible program, the earnings could go into the competitive Community Grant program of the Foundation.
Examples at the Winona Community Foundation:
- A quasi-endowment fund where the first $5,000 of earnings is given to a local charity and any remaining earnings go to the Community Grant Program.
- A quasi-endowment with a specific purpose (childhood literacy).
- An endowment fund where heirs direct the earnings from year to year to a charity of their choice.
- A spend-down fund where $10,000 is directed toward the Community Grant program until the funds are depleted (this fund is estimated to last 20 years).
IMPORTANT: The information provided is intended for illustrative purposes only and are not guaranteed. The illustration should not be relied upon nor deemed as endowment fund advice. The investment projections, outcomes and other information are hypothetical in nature, are based on community foundation investment goals and policies, and do not reflect actual investment results. Results may vary with each use and over time, and they are not guarantees of future results.