Building Endowment Funds for Charities

Building an endowment fund is critically important to the future stability of your nonprofit's work. Creating a fund at the foundation can be the first step in achieving your goal.  We steward more than 275 designated endowment funds for charities throughout Dane County and beyond.

A designated endowment fund at the Madison Community Foundation provides a forever stream of income to support general operations or a specific program of the organization.  Designated funds are an important tool for charities to broaden their financial base and attract donors who wish to support their work long-term.    

Diligence and attention are given to managing the investment of charitable assets, which have grown to over $135 million. An investment committee which consists of knowledgeable volunteers and board members works closely with investment partners to manage both a diversified investment portfolio and a socially responsive portfolio. Commonfund, the only nonprofit investment management firm in the country, administers the diversified portfolio. They oversee more than $40 billion in assets for colleges, universities, foundations and charitable organizations. Walden Asset Management has been a leader in socially responsive investing since 1975. It is a division of Boston Trust and Management Company.  Our financial snapshot provides an overview of our investment strategy and returns. 

Charities with designated endowments benefit from low administrative and investment costs resulting from our economies of scale. Our administrative fee for a designated agency endowment fund is 1 percent each year. When combined with our investment costs of approximately .8 percent, our overall costs for administering a nonprofit fund are less than 2 percent.

For a charitable organization looking to build upon its success, teaming up with the foundation can bring a much-needed boost.  MCF staff are available to assist you to build a strategy for growing your designated endowment.

A designated fund may be created by an individual, family, group, business or charitable organization using an opening balance of at least $15,000.

To learn more about designated funds, download a sample designated fund agreement.  A new fund can be created in a matter of minutes.  Contact Amy Overby, Vice President, Donor Relations, at (608) 232-1763.

A CGA is a simple agreement between a donor and the Madison Community Foundation. We take on all fiduciary obligations with respect to the payment of the annuity to the donor for their lifetime. Upon the death of the donor, the remainder of the annuity is added to an existing endowment fund or used to create a new endowment held at the foundation.   Donors who are at least 60 years of age may establish a Charitable Gift Annuity and they may be created for one or two life beneficiaries.

The Madison Community Foundation is pleased to offer charitable gift annuities (CGA) to benefit charitable organizations.  The foundation is licensed by the State of Wisconsin's Office of the Commissioner of Insurance to administer CGAs on behalf of charities wishing to offer gift annuities as a tool to build their endowment funds.

Administrative Costs are very cost efficient at .5%.

The minimum gift annuity size is $10,000 if your charity has a current endowment fund with the Madison Community Foundation.  If the donor wishes to create a new endowment for your charity, the minimum gift annuity is $20,000.  Additional gifts of at least $5,000 can be made to CGAs.

The Charitable Gift Annuity is an ideal tool for charities that:

• Are not licensed to manage gift annuities and have donors interested in creating such funds;
• Have small constituencies that may produce too few annuities to justify investing in a license;
• Have a governing board or finance department not currently equipped to manage fiduciary responsibilities resulting from gift annuities.

This service helps nonprofits market and offer services to donors interested in life income programs, thereby also increasing donor interest in bequest programs and other planned giving options.