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Your Charitable Giving Can Continue Indefinitely

Posted September 2017

Many of our friends tell us how meaningful it is to them to be able to support our work with their financial gifts each year—and say that they wish their support could continue beyond their lifetimes so the targets of their generosity will not be negatively affected when their annual contributions end.

You may find yourself in a similar situation. And, like our other friends, you may be pleasantly surprised to know that there is a way to continue your current level of support in a way that outlives you: you can create an endowment to provide perpetual annual support for purposes near and dear to your heart.

Here is how endowments work: First, you need to decide the level of annual support you would like to see continue in perpetuity. Once that decision is made, you can determine the amount that will be necessary to provide annual funding—generally about 25 times the amount of your current annual gift. That is the approximate amount needed to be set aside and invested in your endowment in order to generate your target annual distributions and to provide enough for the endowment to grow so that distributions keep up with inflation.

Some of our friends decide they want to fund an endowment currently. By doing so, they may be able to secure significant income-tax savings from the deductions that their lifetime giving generates. Others find it more feasible to fund an endowment through a provision in a will or trust or through a beneficiary designation of an insurance policy or retirement plan.

NOTE: Funding an endowment with proceeds of an individual retirement account (IRA) or other qualified retirement plan and leaving other assets to noncharitable beneficiaries can be a smart move. REASON: Because we are tax-exempt, we will not have to pay income tax on those proceeds, whereas individuals typically would have to pay income tax.

We would welcome the opportunity to talk with you about how an endowment may address your charitable-planning objectives. Please feel free to contact our office if we can be of help.

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