When you establish a charitable fund, one of the most important choices you'll make is how your gift will work over time. Some donors want their generosity to support Fond du Lac County for generations. Others want to meet a need that is in front of the community today. Both are meaningful ways to give, and our team is happy to help you decide which fits your goals.
This choice is separate from the type of fund you open. A donor advised fund, a designated fund, a field of interest fund, or a scholarship fund can each be set up as endowed or non-endowed. The fund type decides what the money is for, and this choice decides how quickly it goes out. See Types of Funds for more on each fund type.
Some needs are in front of the community this year, such as a building project, a piece of equipment, or a one-time program. A non-endowed fund is designed for exactly that. The full gift can be granted as soon as it is needed, and the fund closes once its purpose has been met.
A non-endowed fund that collects gifts for one specific purpose and grants them out, rather than holding them for the long term, is sometimes called a pass-through fund. It gives a community effort a place to receive contributions and issue tax receipts while the work gets done.
Other needs have no end date. A family may want a scholarship awarded in a parent's name every spring, or a church or school supported every year. For a purpose like that, an endowed fund lets your support continue year after year.
With an endowed fund, the original gift is invested and preserved. Each year, a portion of the fund's value is available for grants, guided by the Foundation's spending policy. That policy is currently 4.5%, calculated on the fund's average value over the previous five years rather than on a single year's balance, which helps keep grants steady when the market rises or falls.
Earnings beyond the annual grant and the administrative fee stay in the fund, so over time the fund can grow and its grants can grow with it. In any single year an endowed fund grants a portion of its balance rather than the whole amount, and it continues to do that every year for as long as the Foundation exists, carrying your name and your purpose.
A non-endowed fund, sometimes called a spend-down fund, holds your gift until it is needed and then grants it, in whole or in part, on the schedule your purpose calls for. The money is invested while it is in the fund, but it does not need to be preserved.
A non-endowed fund suits a capital project, a one-time need, a nonprofit's building campaign, a scholarship meant to run for a set number of years, or a memorial fund where the family wants gifts to reach an organization within the year. It can also be a starting point. Some fund holders open a non-endowed fund, add to it over the years, and endow it once it reaches the size they have in mind.
Once a non-endowed fund's purpose has been met and its money has been granted, the fund closes.
Invested and preserved
Can be granted at any time
A portion of the fund's value, currently 4.5%, based on a five-year average
Whatever the purpose calls for, up to the whole fund
For as long as the Foundation exists
Until the purpose is met or the fund is spent down
Scholarships, named funds, and organizations or causes supported every year
Capital projects, one-time needs, a nonprofit's campaign, or a fund being built up to endow later
No. An endowed fund stays endowed
Yes. It can be endowed at any time
If your purpose has an end date, such as a building, a project, or a campaign, a non-endowed fund is often the right choice. If your purpose has no end date, such as students every spring, an organization every year, or the changing needs of Fond du Lac County, an endowed fund may be the better fit. If you are unsure, you can begin with a non-endowed fund, because it can be endowed later.
Rather than setting a dollar amount for an endowed fund, we look at how much you would like the fund to grant each year and what balance would support that under the spending policy. We'll walk through the numbers with you at your first conversation.
Our goal is to help you choose the approach that best serves your giving. In some situations, such as a single gift to one organization, another giving option may be a better fit, and we're happy to have that conversation and help you explore the options.
A non-endowed fund can become an endowed fund at any time. We amend the fund agreement, and from that point the original gift is preserved and the annual grant follows the spending policy. An endowed fund cannot be converted back, because preserving the original gift is what makes it an endowment.
Your fund agreement can also plan for a change at a set moment. Many fund holders direct that at their death the fund becomes an endowed unrestricted fund, granted through the Foundation's grant cycle, or an endowed designated fund for the organizations they named. These instructions can be reviewed and updated at any point during your lifetime.
At the Fond du Lac Area Foundation, an endowed fund keeps the original gift invested and grants a portion of its value each year, currently 4.5% of a five-year average, so it can support Fond du Lac County for as long as the Foundation exists. A non-endowed fund can be granted out at any time, in whole or in part, to meet the need it was opened for.
If the need is now, a non-endowed fund is the right choice, and the full gift can be granted as soon as it is needed. An endowed fund is for a purpose that will still matter decades from now. You choose whichever fits your goals.
A non-endowed fund can be converted into an endowed fund at any time, and many are. An endowed fund cannot be converted back, because preserving the original gift is what makes it an endowment.
We don't set a specific amount. Instead, we look at how much you would like the fund to grant each year and the balance that would support it. Most funds can be started with as little as $1,000 and built up over time, then endowed once they reach the size you have in mind.
Yes, to either kind. You can add a gift whenever you like, friends and family can give to the fund, and a bequest can be directed to it. Additions to an endowed fund become part of the preserved balance, and additions to a non-endowed fund are available to grant.
Once a gift is made, it belongs to the Foundation, which is what makes it eligible for a charitable deduction. Your say over where grants go depends on the fund type rather than on whether the fund is endowed. A donor advised fund, endowed or not, lets you recommend grants. The Foundation does not provide tax or legal advice. Please consult your advisor.
The fund follows the plan in your fund agreement. You may name a successor advisor, or direct that the fund become an endowed unrestricted fund or an endowed designated fund. These instructions can be reviewed and updated at any point during your lifetime.
Tell us what you'd like your gift to accomplish and roughly when. That conversation is usually enough to settle this choice, and from there we can talk through the fund type, the fund agreement, and the first gift. See How to Start a Charitable Fund for the full process.
