Endowment, explained

Ask any nonprofit or gift planning professional about the best ways to support your community, and it won’t be long before you hear the word “endowment.” But for many of us, endowment can be a mystery—even though it’s a way to make giving more powerful!

We’re here to walk you through what an endowment is and how it works so you can feel confident in how you invest in your community.

What is endowment?

An endowment is a tool for generous people to support the charities and causes that matter to them—not just today but forever. At its core, an endowment is a special financial fund that is invested to create steady, predictable charitable resources that continue for generations to come.

How is that possible? When you give to an established endowment fund at the Quad Cities Community Foundation or create a new one of your own to support a cause close to your heart, your gift is invested by our local committee of highly skilled professionals. Each year, a percentage of that endowment fund sent out in the form of grants for the cause of your choice, while the rest remains invested. Through investing and the power of compound interest, the fund continues to grow—and so does the amount that can be granted to community causes annually.

Here's how it might look:

  • Today: You start your endowment with $10,000 (or more!), or build up to that amount over a few years of gifting.

  • 15 years later: You have granted out nearly $20,000, while investment returns have more than doubled your initial investment. You have more to grant out each year (and can keep up with inflation rates, too!).

  • 30 years later... and beyond: You have now granted out nearly $50,000, while investment returns have more than tripled your initial investment. And it keeps on growing and granting.

What are the benefits of giving to an endowment?

Giving in a way that creates lasting, growing charitable resources for our community—what’s not to like? The benefits of giving to an endowment may seem self-evident, but it’s worth taking a closer look.

For many people, endowment giving is a profound way to leave a legacy that honors their values and their passion for what is important to them. For those who have been steadfast supporters of a cause or charity, knowing their support is sustained well beyond their lifetimes can bring an unmatched personal fulfillment.

Giving to an endowment can also come with special tax advantages. Programs like the Endow Iowa Tax Credit were created to recognize the power of endowment—and to make it easier to give more for less.

With the predictable income that charities receive from endowment, they can plan more strategically for the future and take the bold steps they know will advance their missions.

How do you give to an endowment?  

At the Community Foundation, donors—whether individuals, families, or corporations—have many options for giving to an endowment. You can create an endowment fund of your own to support particular nonprofit or area of passion or give to a nonprofit endowment fund that’s already been established. You can start an endowed donor-advised fund to give now and make grants on your own timetable. Or you can give to a Community Impact Fund or one of many other community-focused funds, where your gifts join forces with those of other generous donors to support the region’s most pressing needs and promising opportunities. The list goes on!

All types and sizes of gifts can be a good fit for endowment. Because endowment goes hand in hand with legacy, planned gifts through a will or estate are one popular route. But it can be just as effective—or even more so—to give to endowment today, to start your gifts growing. Working with the Community Foundation, it’s easy to give gifts of cash, stocks, property, and more.

Since gifts to an endowment are invested in perpetuity, you might be wondering what happens decades into the future as our community evolves. What if a nonprofit decides to close down or new organizations emerge to address related needs and opportunities? That’s why the Community Foundation is committed to keeping our finger on the pulse of your community. No matter what other uncertainties lie ahead, we make sure your gifts always carry out your wishes.

Learn more about giving to endowment at the Community Foundation here.

Read stories of endowment!

When generous people with a passion for our community give to endowment, they don’t just make gifts—they create stories that are worth sharing. Here are just a few of our favorites that you can read for inspiration. Read about:

Eric McDowell