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Featured Article
Charitable Planning That Keeps Your Options Open: Endowing Your Annual Gift
Posted August 2006
Some charitable gifts enable you to change them if needed; they don't lock you into commitments that may prove inconsistent with your evolving goals and objectives. This month we look at a so-called "revocable" gift that can grow and change over time to account for inflation-and continue your support of Wake Forest forever.
We are fortunate to have many generous friends who support Wake Forest with regular annual gifts. You can ensure that your annual gift will continue perpetually by endowing your annual gift. It takes an amount equal to 20 times your annual gift to create an endowed fund and ensure that your annual gift will continue uninterrupted after your death (assuming a 5% annual distribution).
Example: David B faithfully contributes $5,000 to Wake Forest each year. He has decided that he doesn't want his annual support to stop when he dies, so David has named us as the beneficiary of a $100,000 life insurance policy to fund an endowment. Each year the endowed fund will distribute an amount equal to David's typical annual fund support.
An endowed fund can not only ensure the continuation of your current giving level, it can also provide for increases in that amount to account for inflation. If an endowed fund is able to earn 4% more than it distributes, the fund-and its annual distribution-will continue to grow at the rate shown in the chart.
| Years |
Approximate Value |
Distribution |
| 1 |
$100,000 |
$5,000 |
| 18 |
$200,000 |
$10,000 |
| 28 |
$300,000 |
$15,000 |
| 41 |
$500,000 |
$25,000 |
| 59 |
$1,000,000 |
$50,000 |
| 100 |
$5,000,000 |
$250,000 |
| This hypothetical fund earns 4% more than it distributes. |
You can use a will or trust provision, a beneficiary designation, or a pay-on-death designation to fund an endowment. We welcome the opportunity to discuss endowed funds and other revocable gifts to Wake Forest with you. For more information, please click here.
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