An Endowment is a pool of money invested for long-term growth and income, with a portion of the value of the endowment used by the organization as the donor stipulates. Most endowments are designed to keep the principal amount intact while using the investment income for charitable efforts.
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.
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.
Endowments from the Adams County Community Foundation will be pooled with those of or our partner the Scioto Foundation and invested in common yet accounted for separately. The investment approach is a total return concept. This means investing for a comprehensive return, including interest and dividends, earnings on stocks and bonds, plus realized and unrealized gains and losses. Scioto currently manages over $40,000,000 in assets.
Three professional money management institutions currently manage the funds within the parameters provided by the Scioto Foundation’s Investment Policy Statement (IPS). Scioto’s Board of Governors sets and approves the IPS, and the Investment Committee is charged with approving investment strategy and monitoring the performance of the investment portfolio on a quarterly basis. A trustee of the Adams County Community Foundation has been invited to participate as needed on the Scioto Foundation Investment Committee.
The goal of the IPS is to accumulate a pool of assets sufficient to build capital for future use while meeting the corresponding obligation to support current and future needs. To do this the asset management objective is to provide annualized returns that exceed the rate of inflation plus 4% grant payout net of fees.
Since 1999 the Scioto Foundation has been able to distribute a 4% payout from each endowment fund for scholarships and grants. Through Scioto’s 45 years of experience and investment expertise, we expect but cannot guarantee that Adams County Foundation’s endowment funds will distribute a 4% payout into the future.
