Maybe you have only heard the word “endowment” in relation to higher education – maybe “endowed professor” or “endowed chair.” But have you ever thought about what “endowment” means? And did you know that the Jewish Alliance of Greater Rhode Island has an endowment?
Here’s a primer on endowments, how they work, and why contributing to ours might be right for you.
What is it?
An endowment is an investment fund, or set of funds, that provides ongoing income to one or more charities. The amount of income distributed is calculated by a formula that ensures the fund will never be depleted. This means the distributions will continue in perpetuity.
Endowments can also serve as financial safety nets for their organizations because they aren’t included in operating budgets.
The Jewish Alliance’s endowment, valued at more than $74 million, is operated by a nonprofit called the Jewish Federation Foundation of Greater Rhode Island (JFF) and has its own board, currently chaired by Mitzi Berkelhammer. JFF established a partnership with the Rhode Island Foundation a few years ago and now greatly benefits from its expertise and investment options.
JFF offers two types of permanent fund options to donors:
Unrestricted fund: Income distributed to the Jewish Alliance to use at its discretion.
Restricted fund: Income distributed to the charity/charities named in the fund agreement. Many restricted funds are created solely to continue the donor’s annual Alliance campaign gift after they have died. This is called a Perpetual Annual Campaign Endowment, or PACE fund.
Why have a fund?
First, the technical reason. There may be other financial vehicles that automatically make annual gifts to charities, but a JFF fund, even one that doesn’t specifically give to the Jewish Alliance, still benefits the Jewish community. The 1% administration fee applied to all funds supports JFF staffing, a necessity to manage the endowment.
Additionally, since funds are invested as a big pool, the larger the endowment, the higher the returns, meaning larger distributions go to the Alliance and other community organizations. So even if you decide that your fund will benefit a homeless shelter, just by being invested with JFF, you’re helping the Alliance’s endowment grow.
Now, the philanthropic reason. An endowment fund provides you with the comfort and certainty that comes with knowing your chosen charities will receive your support forever. Establishing a JFF fund communicates to your loved ones and community that the local Jewish community is one of your philanthropic priorities.
When your actions can no longer convey your commitment, your endowment fund will continue to speak for you and support the causes dear to you. Additionally, if you choose to use your name in the fund’s name, your name will be remembered along with your legacy.
When should I establish a fund?
Funds can be established now with a tax-deductible gift or through your estate plan. The Alliance’s Dor L’Dor Society recognizes donors who have included JFF or the Alliance in their wills or as beneficiaries of life insurance, retirement plans or annuities. JFF appreciates notification of such gifts so that everyone, even donors of deferred gifts, can be properly thanked and appreciated.
How do I establish a fund?
For information on setting up an endowment fund, please email email@example.com or call Sara Masri, the Alliance’s chief development officer, at 401-421-4111, ext. 223.
CLAIRE UZIEL (firstname.lastname@example.org) is the Endowment/Campaign Operations Manager at the Jewish Alliance of Greater Rhode Island.