Question 1

What is a Leave a Local Legacy Endowment?

Accepted Answer

An endowment is comprised of money donated by an individual, family, or estate, to a non-profit organization. This sum of money is placed in an endowment fund, which is then invested. The return from those investments are used to fund local improvement projects and grow the endowment principal.

Question 2

What is the minimum gift to create a Leave A Local Legacy Endowment?

Accepted Answer

The minimum level is $20,000. This amount can be donated over a five-year period or via a one-time gift. Gifts less than $20,000 are held in a restricted account until reaching the $20,000 level.  At that time, they are moved to the endowment pool and participate in the pool’s investment returns.

Question 3

When are endowments transferred into the investment pool?

Accepted Answer

Upon reaching the $20,000 level, endowment funds are transferred into the investment pool.

Question 4

After entering the investment pool, when will a new endowment award its first distribution?

Accepted Answer

Endowments begin earning income the first full quarter after they are fully funded and will be allowed to build for a minimum of 12 months to ensure sufficient earnings prior to distributions. This time period provides ample time for the endowment to grow and reduces the potential for volatility of distribution amounts in the early years of a new fund.

Question 5

How is the endowment spending distribution calculated?

Accepted Answer

Each year, the Community Foundation will set aside a certain percentage, not to exceed the greater of 6% or the net fund income from the prior year and use the proceeds for the purposes set out in the agreement.  The balance of the principal and any accumulated income will remain permanently invested and will not be invaded for any reason.

Question 6

Can the distribution for an endowment ever go down from one year to the next?

Accepted Answer

Yes. The market value reported each year can fluctuate significantly.  Since the overall goal is to protect the long term viability of the endowment, yearly distributions are calculated accordingly.

Question 7

What fees are charged to the endowment?

Accepted Answer

The Foundation assesses each permanent fund a nominal fee to cover administrative, investment expense and governmental fees.

Question 8

What happens when endowment earnings exceed the amount needed for spending and administration fees?

Accepted Answer

Each endowment receives its proportionate share of the investment pool’s total return.   Earnings in excess of the spending distribution and the management fee are added to the balance of the endowment and are available to provide funding for spending during future periods, including periods of poor investment performance.

Question 9

What effects do negative or very low returns have on the Foundation’s endowments?

Accepted Answer

When the investment return is less than the spending rate, the balance of the endowment is reduced accordingly.  Due to the distributions and management fee, the value of the endowment could go down even when investment returns are slightly positive. The Foundation’s distribution policy is based upon a strategy where distributions will not exceed net returns.

Question 10

How are the endowment funds invested and managed?

Accepted Answer

The Foundation’s Long Term Endowment Pool is held by the Oregon Community Foundation.  Their broadly diversified investment portfolio is structured to produce investment returns that exceed market averages, particularly in down markets.

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