Have you considered establishing an endowment fund? It's a powerful way to perpetually support a gift to us in your name or the name of a loved one while realizing tax benefits for your kindness.
How It Works
An endowment program is simply the time-honored method of allocating certain gifts to an investment fund. This fund is invested to earn income each year, and as the value of the endowment grows, so does the income it generates. The income is used to support us, but the principal always remains invested in order to perpetuate the fund.
When you make a gift to our endowment fund, it can be outright or deferred. Either way, your gift can turn into a legacy of annual gifts long into the future.
Suppose you'd like to make sure we receive $1,000 every year after your lifetime. Let's say, for example, that we spend 5 percent of our endowment each year. This doesn't mean the fund earns a return of only 5 percent, only that we spend that amount; we will reinvest the difference to offset inflation.
To calculate the amount needed to perpetuate your gift, divide the annual gift amount, $1,000, by the amount called for in the spending policy, 5 percent, and you get $20,000. So, contributing just $20,000 can continue the $1,000 annual gift indefinitely to the program of your choosing!
If the value of the endowment grows higher than the spending amount, so does the income. For example, with a return of 10 percent in one year and with a 5 percent spending rate, the other 5 percent is reinvested in the endowment. By the second year, the value of the fund is 5 percent higher, or $21,000, and the "spendable gift" from the fund is $1,050.
The Possibilities
There are many variations on how to structure an endowment to help ensure the future of our mission and enhance the quality of our opportunities for service. They also allow you to leave a legacy with us.
Please contact Erik Showalter at 540-460-1401 or 540-463-1865, or via e-mail at eshowalter@ka-order.org, to determine minimum gift amounts or current spending rates associated with this type of gift.
The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.
