What is a charitable endowment?
A charitable endowment is a fund created by contributions of gifts or property. The original contributions are not spent, but saved and invested. Only a portion of the investment income is used each year for civic, cultural, educational, and charitable purposes. For example, Endow Urbandale presently limits annual grant spending to no more than 5% of its Community General Endowment fund balance. The fund continues to grow each year by its accumulations and additional contributions, allowing ever-increasing grant amounts as the fund grows.
What is Endow Urbandale?
Endow Urbandale is the umbrella organization for a family of charitable endowment funds. A portion of the income is used each year for various civic, cultural, educational and charitable purposes benefiting the citizens of Urbandale.
Why was Endow Urbandale established?
Endow Urbandale was established in 2001 to facilitate charitable giving in the community of Urbandale. A Board comprised of Urbandale citizens manage the operations of Endow Urbandale. It is the goal of Endow Urbandale to continue the legacy of giving that has been a long-standing tradition for the betterment of Urbandale and its citizens.
Are my gifts to Endow Urbandale tax deductible?
Gifts to Endow Urbandale funds qualify for maximum allowable charitable deductions for income, gift and estate tax purposes. The law generally allows the entire fair market value of appreciated assets to be deducted when given to a community endowment fund because it is considered a public charity. In addition, the Endow Iowa program provides an additional 25% Iowa tax credit that can be used for certain gifts made to qualifying Endow Iowa community endowment funds such as Endow Urbandale's Community General Endowment fund. You should consult your tax advisor for final advice on the deductibility of your intended gift and the availability of Endow Iowa tax credits.
Instead of giving to an existing fund, can I create my own charitable endowment fund under Endow Urbandale?
Yes. Individuals, families or companies can establish a wide range of funds with the assistance of Endow Urbandale to suit the donors’ charitable wishes. Gifts may be made to establish funds benefiting designated charities, benefiting a particular field of interest, to create unrestricted funds or to establish donor advised funds. The minimum amount of contribution for a donor wishing to establish a separate fund is $10,000.
Who decides how the income of a fund is to be spent?
Each fund has a trustee, board or other person designated by the donor with authority to determine spending. In the case of a donor advised fund, the donor is permitted to determine the charitable organization(s) or cause(s) to be benefited each year.
What is Endow Urbandale’s relationship to the Community Foundation of Greater Des Moines?
Endow Urbandale is organized as a component of the Community Foundation of Greater Des Moines to take advantage of Greater Des Moines’ tax exempt status, accounting and staff resources, and professional investment services. While Endow Urbandale funds are invested with Greater Des Moines, control of Endow Urbandale funds is retained by the Endow Urbandale Community Fund Board of Trustees for the benefit of Urbandale’s citizens.
How does Endow Urbandale benefit from its relationship with Greater Des Moines?
Endow Urbandale’s partnership with the Community Foundation of Greater Des Moines provides access to professional investment services, advice and counsel on raising endowments and planned giving techniques, and administrative support, which insures continuity of the organization. For maximum efficiency, Endow Urbandale assets are pooled with the Community Foundation of Greater Des Moines and managed by professional financial investment firms, which are overseen by experienced members of Greater Des Moines’ investment committee. Investments are selected for growth, income and preservation of principal.
Do other communities have community foundations?
Approximately 780 communities nationwide have established similar foundations. They collectively administer some $100 billion in charitable assets. Additional information about community foundations can be found at www.communityfoundationlocator.org.
How does the Community Foundation of Greater Des Moines manage the assets?
The Community Foundation of Greater Des Moines has been in existence since 1969. This foundation is managed by over 30 prominent local community leaders. Currently, the investment committee, along with its professional advisors, manage assets in excess of $767 million. Endow Urbandale has elected to have the assets of Endow Urbandale managed by the Community Foundation of Greater Des Moines, due to its experience and the systems that are in place. That Board uses its collective judgment to select a variety of investments that balance growth with preservation of capital.
What funds have been established so far as a part of Endow Urbandale?
What sort of returns can be expected for money invested with Endow Urbandale?
Naturally, investment returns cannot be predicted. However, the Community Foundation of Greater Des Moines has a well-deserved reputation for delivering positive long-term results. By using a combination of highly regarded no-load funds, the Community Foundation of Greater Des Moines has been able to deliver outstanding investment results during some of the most tumultuous markets in decades.
Can an existing charitable organization create an endowment fund under the auspices of Endow Urbandale?
Yes. In addition to encouraging individual and corporate giving to existing funds, Endow Urbandale provides the opportunity for other charitable organizations in our community to create their own endowment funds under the Endow Urbandale umbrella. If an organization has money that need not be used for immediate purposes or wishes to create and grow a permanent fund, Endow Urbandale provides a convenient vehicle. Through its affiliation with the Community Foundation of Greater Des Moines, Endow Urbandale offers the opportunity for local charities to invest money into a balanced portfolio of stocks and bonds at a higher average rate of return than provided by money markets or CDs. For example, the Library Foundation invested its reserves with Endow Urbandale to create a permanent endowment, the Urbandale Booster Club placed with Endow Urbandale its permanent funds for the Frerichs Scholarship for enhanced long-term results and the Urbandale Education Foundation recently initiated an endowment fund for similar reasons. The minimum initial amount to establish a separate fund is $10,000. These funds should not be money that may be needed for day-to-day operations, or for immediate grants or other special purposes anticipated within the near term, but rather to create an ever-growing investment account generating a sustainable income stream to provide funding into the future.
What is the cost for the services offered by Endow Urbandale?
Greater Des Moines charges one percent per year based on the principle amount of the fund.
If money is invested with Endow Urbandale are the assets commingled with other funds?
Although the assets are invested collectively through mutual funds, a separate accounting is provided for each individual endowment fund created under the Endow Urbandale umbrella. Each donor creating a fund is given a complete accounting and statement of the value of the account on a quarterly basis and the donor is provided with an annual report so the donor can judge the performance of the account.
In what ways can I make a gift to Endow Urbandale?
We are interested in serving the wishes of the donor with the traditional gift giving avenues. Although we may not be able to serve the needs of all potential donors, we welcome the opportunity to discuss all gift giving possibilities. For some donors, testamentary gifts by Will are the most feasible. Other donors may choose to make gifts during their lifetime. Charitable gifts – either at the time of passing or immediate gifts – can take many forms:
1. Cash or other liquid assets
2. Appreciated securities
3. Existing life insurance policies
4. Appreciated real estate
5. Gift annuities
6. Charitable remainder trusts
7. Donor advised funds
Would you please explain more about the donor advised funds?
Donor advised funds are fast becoming a very popular mechanism for charitable giving. Many brokerage houses, such as Schwab and Fidelity, are encouraging people to consider donor advised funds. These funds accomplish much of what a private foundation accomplishes without the administrative hassles and expenses.
The donor can place assets into a donor-advised account with Endow Urbandale, have the assets invested through Endow Urbandale and instruct Endow Urbandale as to the recipients of the donations each year. The donor-advised fund works particularly well with appreciated property or securities. The donor advised fund provides some unique income tax advantages for the donor, fulfills the charitable intent of the donor and provides a maximum level of flexibility.
What is the minimum amount necessary to establish a donor advised fund with Endow Urbandale?
The minimum amount is $10,000. Furthermore, the donor can fulfill this commitment by spreading this contribution over a period of years.
With donor advised funds, who selects the recipient of the charitable gift?
Naturally, you – the donor – have the flexibility to name the charitable organization(s) that will receive funds from your donor advised fund. The donor also has control over the timing of the gift. For example, it may be advantageous for tax purposes for the donor to make a large contribution in a particular calendar year. However, the donor may not have any particular charitable causes in mind at the time the contribution is made to Endow Urbandale. The donor advised fund allows the donor to make the contribution when it is advantageous for the donor – for example, during a high income year – and to delay the making of grants until appropriate charitable needs are identified by the donor.
Do all donors to Endow Urbandale need to have identified charitable causes?
No. Endow Urbandale encourages contributions to its Community General Endowment Fund from donors who do not necessarily have a specific charitable cause in mind, but who wish to benefit the Urbandale community generally. One of the responsibilities of the Board of Endow Urbandale is to manage these unrestricted gifts in its General Fund. The Board will annually solicit applications for grants from community organizations. A portion of the income (5% maximum) from the assets of the general fund will then be distributed annually to those civic, cultural, educational and charitable causes and organizations within the community of Urbandale having the most pressing needs of the day.