An endowment fund is money that is permanently invested. The annual interest earned on the capital of the fund is then used to provide grants for charitable projects.
At the Community Foundation of Newfoundland and Labrador, many different funds are pooled together into one large endowment. The total earnings on the pooled endowment are split between the different funds on a proportional basis. Investing all the funds together in one large pool allows us to secured lower investment management rates and higher rates of return than can typically be obtained for smaller funds.
Why start an endowment fund?
Affordability: Starting an endowment fund is free of charge. Each fund is charged an annual administration fee, but we keep this very low – it’s currently 1.5% per year -- to ensure that as much income is allocated to community grants as possible.
Long-term impact: An endowment fund enables your gift to live on in perpetuity as a permanent resource to the community. We are committed to managing your fund permanently according to your wishes.
Flexibility: Funds can be set up to benefit different grant recipients each year, to support scholarships that can be taken to any university, or to fund grassroots community projects that aren’t associated with large organizations. This flexibility can allow your fund to respond to the community’s changing needs so that it can make the most difference over time.
Ease of use: Endowing a fund at a community foundation takes the burden of fund management off the donor. We handle administration, grant application assessment, and grant follow-up. As the donor, this gives you the option to be as involved or as hands-off as you would like to be.
Financial responsibility: Funds endowed with us are conservatively invested to ensure long-term stability. Fund holders are provided with annual audited financial statements on the value of their funds and the income and expenditures of the foundation.
Please note: A minimum balance of $10,000 is required to maintain a donor-directed fund. This is to ensure that the interest on the fund is sufficient to sustain a worthwhile annual grant. The full amount does not need to be invested at the outset but can be contributed gradually over a period of up to five years.