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PAGE 18<br />
AMERICAN FRIENDS OF THE HEBREW UNIVERSITY<br />
<strong>AFHU</strong> NEWS VOL. 22 PAGE 19<br />
Planned Giving<br />
Leave a Permanent Legacy -<br />
How to Establish an Endowment Fund with <strong>AFHU</strong><br />
by Neal Myerberg<br />
Establishing an endowment fund is often misunderstood<br />
by individuals, particularly when someone hopes to<br />
make a charitable gift during his/her lifetime or by will<br />
for a designated purpose or program (e.g., scholarships,<br />
in the case of an educational institution such as the<br />
Hebrew University). With an endowment, the principal<br />
of the fund remains intact and grants are made for the<br />
purposes set out in the fund agreement based upon the<br />
organization’s spending policy for its endowment funds<br />
from year to year. In effect, an endowment fund may<br />
exist in perpetuity, providing annual funds to fulfill its<br />
purposes well beyond the lifetime(s) of the donor(s).<br />
The questions to be resolved when contemplating the<br />
establishment of an endowment fund are subject to a<br />
wide range of issues:<br />
What is the minimum amount the organization<br />
requires for a permanent endowment?<br />
A contribution of at least $100,000 would establish an<br />
<strong>AFHU</strong> endowment fund.<br />
May there be provisions in the endowment<br />
agreement for the use of portions of principal<br />
from time to time for the purposes of the<br />
endowment?<br />
Endowment agreements can allow for flexibility in the<br />
use of fund principal. Provisions can be made that,<br />
under certain circumstances or guidelines, principal in<br />
either a specific amount or a percentage of the then<br />
value of the fund can be applied in addition to income<br />
to carry out the purposes of the fund.<br />
May the endowment be funded during the donor’s<br />
lifetime and supplemented by distributions from<br />
the donor’s will, trust or qualified plan - so that<br />
the donor can see how the endowment fund<br />
works during his/her lifetime?<br />
For individuals who would like to have the fund carry<br />
out its purposes during their lifetimes yet be funded in<br />
a major amount in their estates, they may make annual<br />
gifts to establish and operate the fund. For example,<br />
a fund might be established by gift agreement to be<br />
endowed by will in the amount of $1,000,000. Based<br />
upon a 5% spending policy, there would be allocations<br />
of $50,000 each year. The donors may decide to make<br />
annual gifts of $50,000,00 during their lifetimes to<br />
enable their fund to provide those sums to carry out its<br />
purposes. At the end of their lifetimes, or sooner if they<br />
wish, the fund would have principal in the amount of<br />
$1,000,000 through their estates and would thereafter<br />
provide a continuous amount of $50,000 each year<br />
thereafter as an endowed fund.<br />
May the endowment agreement provide for the<br />
naming of the endowment fund?<br />
One of the meaningful benefits of an endowment fund<br />
is the ability of the donor(s) to select its name. Most<br />
often an endowment fund is named for the donor(s) or<br />
for others they may wish to honor or memorialize. The<br />
name will be in perpetuity.<br />
And the question for most individuals contemplating<br />
providing significant support for the future of the<br />
organization—how can this all be accomplished? To learn<br />
how to establish endowment funds now for the future<br />
of <strong>AFHU</strong> and the Hebrew University, please contact<br />
Monica Loebl, National Director of Development, for<br />
information and planning ideas. She may be reached at<br />
mloebl@afhu.org or by phone at 212.607.8502.
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