Financial Buzzword: Endowments

Categories: News, Non-Profit, Other

Ever dreamed you could give a gift that keeps on giving?

A financial endowment is a donation of money or property to provide ongoing support for an organization through the donation’s investment income. Once established, an endowment has two purposes: to generate income for today’s programs and to grow in principal providing more income for future program sustainability and growth. Through the power of endowment, your gift can grow over time while making grants to accomplish good things now, and for years to come.

Endowed funds are permanent, creating a pool of charitable dollars that can always address the needs of our singing community. For non-profit organizations like Harmony Foundation and your district and chapter, endowments are important to sustain and grow funding that will meet an increasing demand for our collective social impact. This is equally important to districts and chapters, the Foundation and the Society to enrich lives through singing today and keeping the whole world singing for generations. Working together today, we can secure that financially through endowments. Your investment can still be changing lives 100+ years from now…that’s incredible!

How do endowments work?

Endowments are established by a single contribution or the sum of many contributions to create a fund that supplies both the donors and the recipients a vehicle dedicated to providing a steady stream of income each and every year, in perpetuity. The principle stays intact forever and is invested to generate income. All of our endowment Funds are invested by our Investment and Finance Committee with an eye to steady growth so that the Funds can accomplish the goals that the donors intended. Only the earnings are spent for designated purposes like operations and programs. The earnings also help mitigate donor volatility or governmental and political changes that affect and may endanger non-profit entities.

How about a real-life example?

Recently, the Grand Central Red Caps Endowment Fund established by the Society and Dr. Bart and Audrey Campbell will fund opportunities for people of color to access a variety of singing programs by removing or reducing financial barriers. Harmony Foundation can raise $5,000 every single year to dedicate 5 scholarships to Harmony University for this very purpose but instead, with the $100,000 principle endowment established, the earning will fund the $5000 in scholarships every year … FOREVER!

Harmony Foundation has endowments for three main purposes:

  1. The General Endowment exists to support Harmony Foundation’s mission. This enables an income stream that supports current programs and operating activities today and into the future.
  2. Program, or restricted, Endowment Funds exist to fund donor specified programs such as providing scholarships to singing programs like Harmony University.
  3. Associate Endowment Funds exist to provide income to other singing organizations, such as Society districts, chapters, and other subsidiaries. Harmony Foundation’s partnership can provide resources that further the impact exponentially.

FAQs

  • Q: How much is needed to establish an endowment fund at Harmony Foundation?
    A: Any size gift can be made to a currently established fund like the Harmony Foundation Fund. New Endowments need an initial investment of at least $25,000 to launch.
  • Q: Why should my chapter or district establish our endowment, new or already created, with Harmony Foundation?
    A: There are benefits to joining financial forces with your singing community through Harmony Foundation. We have dedicated staff and a panel of experts to monitor and advise on investment movement for optimal growth, security and success. Plus with more and more funding house at Harmony Foundation, the better buying and selling power we have as well as better rates to do so.
  • Q: What happens to my chapter or district’s fund if the purpose for the annual distribution ceases to exist?
    A: That depends on where your endowment is housed. For example, if your chapter specific endowment is housed at your local community foundation and for some reason the chapter ceases to exist, the funds would roll into that community foundation’s endowment, giving them the option to use any way they see fit. If your endowment is housed at HFI, we can ensure your funds will be used specifically for singing programs as originally intended.
  • Q: Can an endowment also be used as a rainy-day fund?
    A: No. An endowment’s principle is to be left fully in tact and grown. You can not take disbursements from the principle, only the earnings. A separate rainy-day savings account is also smart to have on hand for emergencies. Endowment is for sustained long term planning.

Let the experts at Harmony Foundation International handle your important financial investment opportunities so that the members and volunteers of your singing community can focus on just that: SINGING! Contact us today for more information: hf@harmonyfoundation.org or (866) 706-8021.