When The Cambridge School established a non-endowment fund in 2010 with a gift of $50,000, their new school site was still a dream. The young school was leasing space, growing steadily, and planning to add a grade each year through high school. The purpose of the fund at the Rancho Santa Fe Foundation was to hold gifts made to the capital campaign for a school of their own.
With a non-endowment fund, contributions from donors and investment earnings would accumulate over time, and the school would have access to all the money in the fund when an opportunity to purchase their own building came along.
This preparation for the future paid off for The Cambridge School. Earlier this year, they learned that they could purchase the site where they are currently located. They used the money in the non-endowment fund as a significant part of the down payment toward the purchase. By setting aside the fund at the Rancho Santa Fe Foundation and collecting gifts over 5 years, The Cambridge School non-endowment fund had grown to nearly $190,000 when they needed it.
Non-Endowment or Endowment: What’s the Difference?
- An endowment fund is a permanent fund. The principal is invested and an annual payout provides ongoing income for the nonprofit that established it. As the fund grows through additional contributions and investment earnings, it provides annual support for both the current needs and the long-term sustainability of the nonprofit. Find out more about endowment funds at the Rancho Santa Fe Foundation.
- With a non-endowment fund, the full amount in the fund is available to the nonprofit that established it. As the fund grows through additional contributions and investment earnings, it provides support for special projects or the start of an endowment fund. Find out more about non-endowment funds at the Rancho Santa Fe Foundation.
Non-Endowment or Endowment: Which one is right for your organization?
- An endowment fund is an investment in the future. Your nonprofit should think about establishing an endowment if it has cash reserves of six months or more, and/or you may have planned gifts coming to the organization.
- Non-endowment funds may be set up for special projects or as a first step toward establishing an endowment. If your nonprofit has less than six months of cash reserves and/or has not explored the potential for planned gifts to the organization, then the non-endowment fund option may be right for your organization.
Contact us about opening a fund for your organization.