What is an endowment? | What are the tax benefits of funding an endowment? |
How can I fund an endowment? | Do I need to fund my endowment all at once? |
Can I choose what I want my endowment to support? | Can I name my endowment? |
How much does it cost to establish a named endowment? | How does an endowment grow? |
How will I know how my endowment is making impact at UND? | If have more questions, who can I contact?
What is an endowment?
Simply put, an endowment is an investment in the future of the University of North Dakota. Your gift is invested to provide support for a specific purpose you choose and to ensure the principal amount of your gift grows. Your original principal is never spent, only the return on investment (interest) up to a defined percentage. Any remaining interest income is put back into the fund so it continues to grow.
What are the tax benefits of funding an endowment?
There is a federal tax deduction for contributions. Some states, including North Dakota starting in 2011, give tax credit for gifts to endowment, which further amplify tax benefits. North Dakota provides a 40 percent credit against state taxes. Consult your tax advisor to optimize tax benefits.
How can I fund an endowment?
There are a number of options. Gifts of cash or stock are often used to fund an endowment. An endowment also can be funded through a bequest in your will.
Do I need to fund my endowment all at once?
No. You may establish your endowment by making scheduled gifts for a duration of up to five years.
Can I choose what I want my endowment to support?
You may designate any purpose, including priority needs of the University. Endowments generally fund scholarships, faculty positions and academic programs.
Can I name my endowment?
We encourage you to do so. Naming your endowment after your family, a respected faculty person or coach or a business provides a personal connection for the recipient of your endowment gift.
How much does it cost to establish a named endowment?
A minimum gift amount is required to establish a named endowment. At UND, $25,000 is the minimum requirement.
How does an endowment grow?
Your endowment is invested and a portion of the return is used to provide the annual allocation. To guard against the consequences of inflation, the remainder of investment return, net of fees, is then added to the principal. The goal is to ensure that the principal maintains its purchasing power over time. Each year, the UND Foundation Board of Directors reviews and determines the annual spending rate. Currently, the annual spending rate is 4 percent. For example, an endowment valued at $25,000 will provide $1,000 to be used for your stated purpose ($25,000 x 4% = $1,000). As the principal of the endowment grows, so does the corresponding annual allocation amount. No allocations will be made from your endowment until it has been completely funded and invested for one year at the time the allocation is made December 31.
How will I know how my endowment is making impact at UND?
The UND Foundation manages more than 1,000 donor-established funds. These funds result in an average annual impact to the University of about $4 million and growing. We steward endowments by providing you with an annual report that illustrates your endowment’s growth and activity. For scholarship endowments, you will also receive information about the recipient of your endowment. While reports are sent annually, you may request a quarterly report at any time by calling our office.
If I have more questions, who can I contact?
The UND Foundation has a staff of experienced gift planners to assist you further. You may e-mail email@example.com or call 1.800.543.8764.