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Article reprinted with permission from the Cleveland Jewish News.
Carol F. Wolf | SPECIAL TO THE CJN
It is difficult to explain why endowment funds are important and much easier to ask for a gift that supports a specific project, program or building.
Although it is challenging to find anything positive to say about the current health crisis, it provides an example of the importance of endowment funds in times of immediate need. Once the crisis occurs, it’s too late to create a fund. Endowment funds must include forethought and planning, and may seem counterintuitive to the extreme need for current assets that support the bottom line.
Endowment funds are often created from bequests or other carefully planned gifts, using assets other than cash. Without spending current income, donors may designate “leftover” assets to the causes for which they are most passionate. These resources may include retirement assets, appreciated securities or insurance policies. Most people designate charities where they have been the most involved and have established long-term, trusting relationships.
An endowment fund provides a safety net for the organization or community that the charity serves. In the most challenging and unpredictable crises, it is the endowment, and not operating resources that provides immediate and essential emergency assistance. We are in such a situation and are so grateful for the robust endowment funds that exist in the Jewish community. Annual funds may cover the cost of services for the current year with little or nothing left over. There is little flexibility to provide assistance in emergencies, which often escalate rapidly. Endowment fund assets may increase through wise investing and spending policies that restrict what may be distributed from the fund annually. The goal of a spending policy is to distribute meaningful amounts as well as allowing the fund to grow.
As an example, the Jewish Federation of Cleveland’s endowment fund was the original funding source that created the Chesed Center and Jewish Family Service Association’s Forward Focus programs, both in response to the increased levels of financial need in the Jewish community (as identified by the 2011 Federation Population Study). As the current health crisis accelerated quickly, with many in the community losing jobs and worrying about how to feed their families, the Federation’s Board of Trustees re-sponded immediately by approving a grant from its unrestricted endowment fund for assistance in four key areas – hunger, employment, financial assistance and mental health. Grants have been distributed to support local Jewish organizations that are at work identifying those in need and providing relief for them.
Often, leaders cannot predict when a crisis will occur, and we are so grateful for the insightful planning that Jewish Cleveland’s leadership undertook almost 70 years ago, establishing endowment funds at the Federation as well as many of its beneficiary agencies. The donors who contributed to these endowment funds made an investment in the future of Jewish Cleveland, not knowing when or how their legacy gifts would be used. It is our sacred responsibility to use precious gifts wisely and build these resources for generations to come. May our community go from strength to strength.
Carol F. Wolf is the assistant vice president, planned giving and endowments, at the Jewish Federation of Cleveland. She can be reached at email@example.com or 216-593-2805.