Five FAQs to help you establish an endowment Many community-minded individuals have served on the boards of directors of charitable organizations in our region. If you’ve served on a charity’s board (or several!), you are no doubt familiar with the concept of an endowment. Many charities establish endowment funds and reserve funds at the FM Area Foundation to help ensure that their missions stay strong during economic downturns and periods of increased community need. What you might be less familiar with, however, is an endowment fund established at the FM Area Foundation by an individual or family. Every year, the team at the FM Area Foundation works with people like you to establish endowment funds to support the needs of our region in perpetuity. Here are answers to four frequently asked questions about setting up an endowment fund. 1. Why does the FM Area Foundation offer endowment funds to individuals and families? The FM Area Foundation serves as the hub of philanthropy for many families in our community. We connect donors like you to community needs you care about, and this includes offering the opportunity to make a charitable investment that supports a range of community needs now and in the decades ahead–needs that cannot be predicted. That’s the purpose of an endowment: to provide a steady stream of dollars, far into the future, to meet community needs as they arise. 2. How does an “endowment” work? “Endowment” is the word often used to refer to a designated pool of assets that are invested by the FM Area Foundation and tracked separately such that a modest portion (usually based on a percentage) of the assets are distributed each year to charitable causes, and the rest of the assets remain invested to grow in perpetuity. This growth, in turn, helps the endowment provide even more support each year to the causes for which it was established. The FM Area Foundation team is experienced in managing the accounting, investment, and distribution aspects of endowment funds.
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