What is an endowment anyway?

What is an endowment anyway?
September 24, 2019 / 5 mins read


Do you know what an endowment is?

The word endowment gets thrown around a lot. But unless you’ve worked at a foundation, you might not know what it means.

In simple terms, an endowment is a fund with money in it, set up to provide long-term support for a particular nonprofit organization or cause.

Since the goal is long-term support, the organization or cause doesn’t get all the money at once: It is made available to them a little at a time. And since not all the money is given away at once, the remainder is invested and grown so that it can continue – forever.

When someone decides to establish an endowment fund at a community foundation, money is given to the foundation and in exchange, the foundation manages it and then awards it according to the donor’s wishes. A legal agreement is signed between the donor and the foundation to make sure everyone knows what to expect.

Who uses endowments?

Endowments are a tool lots of people and nonprofit organizations use, not just the rich. Some people establish an endowment because they are passionate about the kind of work a nonprofit organization does. Others may see the importance of education so they set up a scholarship, or they may be aware of an unmet need in the community they want to see addressed.

The Harrison County Community Foundation (HCCF) has more than 260 different endowment funds providing scholarships and benefiting all kinds of nonprofits that serve Harrison County. Most of those funds were established by people who had a particular end use in mind.

What does that mean for the future? There are still uncertainties.

What will Harrison County look like 50 years from now? What will be our greatest need? What new jobs or careers will exist then?

Will we still be a rural community? What will our land use and recreational needs be? If 50 years from now is hard to imagine, what will Harrison County look like 100 years from now?

Predicting the needs of the future is tricky and most of us will not predict accurately. Many of us care about our future community because we expect our children and grandchildren will be here. What can we do to help them and set up our community for success?

By using endowments, we can set aside the assets our future community will use to meet the needs of the time. A different kind of endowment, a Builder’s Fund, is not restricted to a particular use but instead is flexible to allow it to be used for the greatest needs now and in the future.

The foundation has the HCCF General Builder’s Fund. Individual donors and businesses can establish a Builder’s Fund too. Thanks to a special challenge grant from Lilly Endowment Inc., gifts to existing Builder’s Funds or gifts to create new ones are being matched $2 for every $1.

How does that work?

For a limited time, you can make payments to create a new Builder’s Fund, which will honor someone special, leave a family legacy or demonstrate your investment in our community. The minimum amount to establish a new Builder’s Fund is $2,500. Lilly Endowment will match your gift 2:1 so a minimum fund of $2,500 becomes $7,500.

If you have an existing Builder’s Fund or would like to help HCCF leverage new money into our community, a gift of any size will help.

The special 2:1 match from Lilly Endowment is only available for gifts that are not restricted to a particular use. HCCF continues to offer a 1:1 match for eligible gifts that are restricted to a particular use, such as a specific nonprofit or a scholarship.

To learn more about endowments and matching opportunities, contact HCCF at 812-738-6668 or Kim Harmon, Director of Development at kimh@hccfindiana.org.