Endowment funds are tools for creating "customized donations" to a charity or institution. The setup of charitable endowment funds allows donors to put stipulations on when (or how) the money will be used. Endowment fund options are used within many fields that deal with any public service agencies or organizations. Businesses will often provide these kinds of donations, and the recipients will do the required work to comply with any restrictions and understand the specific uses of endowment funds.

For either figuring out how to create endowment funds or to give or receive, businesses can find sources of information on endowment funds for beginners on the web. The Internet provides all kinds of basic, accessible info on endowment funds for those new to the process, including:

1. Introductory pages referring readers to related terms and concepts around endowment funds for learning the basics about how this kind of money venture operates.

2. More endowment funds information and guidance from public web pages that detail how these kinds of funds get donated, received, continually funded and monitored.

3. Additional resources including books and online details, including either endowment funds directories or endowment listings, or more on "building" a fund.

Action Steps
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Find definitions for endowment funds lingo

Some of the most basic resources for endowment funds are in the form of 'definition' pages, which can actually go beyond a literal definition and into the conceptual use and practices behind endowment funds. Browse these as a first step to get familiar with the basics, while considering your business's potential role.

I recommend: Find out about endowment funds and related terms at Investopedia. Get more definition on this and other terms from sites like the Hedge Fund Blogger.

Get more guidance from endowment funds resources online

Some websites will go into the 'normal' operation of endowment mutual funds or other options in a business to non-profit or other situation. Universities and other learning centers are often the recipients, but there are a wide range of endowment funds situations that readers can find out about for charting their own plans.

I recommend: Find out how endowment funds are covered in this wide-ranging "how-to" for investment with SlideShare's Beginners Guide to Venture Capital, through reading the attached transcript. Find endowment information on getting knowledge for potential endowment recipients at pages like Government Grant Writing for Beginners.

Look for more resources on figuring out funding for endowment funds

Keeping endowment funds going can be a difficult process: some experts liken it to constructing a house or other building, talking about all of the specific processes that might lead to success. Find these kinds of resources and get into the nuts and bolts of endowment funds to become more than a beginner on the topic.

I recommend: Get volumes like Building an Endowment from online book seller Alibris. Learn about "endowment campaigns" and how they might feed a charitable endowment fund at the Fund-Raising Forum.

Whether you're looking for information on endowment funds because you're interested in donating to one, or interested in starting one, endowment fund directories are the place to look. Endowment fund directories are searchable listings of charitable endowment funds by category, name and location, sometimes along with a rating and giving information.

Other websites include resources for endowment funds, such as articles on starting an endowment fund and information about tax laws governing endowment funds.

By searching online endowment listings, you can:

1. Research and compare endowment funds.

2. Learn about starting or managing an endowment fund.

3. Find resources to help you become a more informed donor.

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Browse the donor resource sections of endowment funds directories

Many endowment listings have extensive resources for potential donors. In addition to information on endowment funds, these sites also feature articles to help donors give more wisely.

I recommend: CharityNavigator is one of the best-known sites for researching nonprofits, but its Tips and Resources section also features articles and tools developed specifically for donors.

Use endowment listings to help you compare endowment funds

With so many charitable endowment funds out there, it can be difficult to narrow your choices. An endowment funds directory can tell you which charities give the most, have the best reputation, or conversely, have a bad reputation.

I recommend: GuideStar is a searchable, online database featuring information on 1.7 million nonprofits. You can register for free, but for access to more information, sign up for GuideStar Select or GuideStar Premium.

Know the tax laws related to charitable endowment funds

A key part of searching for endowment information is locating an authoritative explanation of endowment fund tax law, and how it impacts both donors and charitable organizations.

I recommend: The website for the Internal Revenue Service has a section dedicated to nonprofit organizations. Check out the donor section and private foundation section.

Learn more about endowment funds through networking groups

If you're looking to contribute to an endowment fund, or you're overseeing one, some of the best advice may come from people who've already done what you're hoping to do. Through philanthropy-related associations, you can learn from fellow donors or nonprofit directors, or, connect with nonprofits you may be interested in donating to, or donors who can help your organization.

I recommend: Philanthropy Roundtable connects you with people from all sides--foundation directors and employees, corporate giving officers, and donors. The site also includes free downloadable ebooks for donors and nonprofits.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you're looking for endowment information because you're hoping to donate, online endowment fund directories are a great way to start your research. If you need more information, however, don't hesitate to simply call a nonprofit organization and ask. They may have information packages designed for potential donors, or may be happy to set up a meeting to answer your questions.

Endowment funds assist in funding the operations of nonprofit groups and ensure their continuing existence to provide services, whether they are educational, health or arts related. Companies often restrict the use of monies donated to endowments. For example, only the interest earned is available to the operations of the organization or foundation with the allocation of monies clearly specified. Financial advisors often oversee the endowment funds to ensure the fund operates as designed and the organization or foundation adheres to laws and regulations.

Online research can provide individuals unfamiliar with endowment funds information on:

1. Established funds such as the Endowment Challenge Grant Program

2. Charitable endowment funds

3. Establishing an endowment fund

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Review endowment funds laws and regulations as they pertain to the Endowment Challenge Grant Program

The mission of the Endowment Challenge Grant Program is to offer institutions endowment challenge grants in order for them to establish or increase their endowment fund and, in turn, make the institution more self sufficient in meeting expenses. The Endowment Challenge Grant Program, which is a match grant program, is available to institutions that qualify for the Strengthening Institutions Program, the Strengthening Historically Black Colleges and Universities Program or that provide minorities and economically challenged individuals resources to obtain a medical education.

I recommend: The Code of Federal Regulations Title 34 Part 628 outlines the Endowment Challenge Grant Program regulations and provides additional endowment fund information. The Harvard Crimson reports on Congressional concerns that may affect how institutions utilize endowment funds.

Review the laws and regulations pertaining to an endowment mutual fund

Investment companies such as Fidelity and Vanguard operate charitable endowment funds that allow individuals to donate money to mutual funds earmarked by an organization. A charitable endowment fund of this nature may choose to utilize the interest earned on donations to fund operating expenses, scholarships and publications. These types of charitable endowment funds are also subject to laws and regulations, such as an excise tax on investment income and stringent reporting obligations.

I recommend: The Tax Policy Center provides information on mutual fund endowment resources, information on endowment funds and endowment listings such as the Students for the Exploration and Development of Space (SEDS).

Review endowment funds laws and regulations that pertain to establishing an endowment

When starting an endowment, enlist the services of a financial group specializing in endowment services to ensure that it adheres to the appropriate laws and regulations. Financial groups are not only a resource to educate and provide individuals endowment information, but may serve as a trustee for the organization or foundation, ensuring that the endowment functions as planned and there is no misuse of monies.

I recommend: Utilize services provided by BNY Mellon and Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF) to assist in the development and management of endowment funds.

Knowing the ins and outs of endowment funds can help you avoid common pitfalls organizations make when allocating fund assets and authorizing distributions from these funds. Consider, for example, whether it would benefit your nonprofit group to launch an endowment campaign that raises money to cover fixed operating expenses. You might also give thought to developing an endowment agreement for your fund that clearly spells out a donor’s options and your organization’s policy for managing the fund. Here’s a basic outline of key facts and terms that shed light on endowment funds.

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Endowment campaign

Non-profit groups launch an endowment campaign to raise endowment funds. Proceeds from the endowment campaign are invested rather than spent. The funds can be used by the organization for a variety of expenditures, such as day to day expenses or the cost of special projects.

I recommend: Raise Funds identifies some of the reasons that non-profit organizations decide to launch an endowment campaign.

Donor advised endowment fund

A donor advised endowment fund allows a donor to make decisions about which organizations ultimately benefit from the fund's assets. When a business makes use of a donor advised endowment fund it is foregoing the need to have a private foundation allocate grants. One of the main benefits of this type of fund is that donors can designate heirs who also support the fund.

I recommend: NWMF compares the benefits of a donor advised endowment fund to other types of endowment funds.

Nonprofit endowment funds

If you're supporting a nonprofit endowment fund, you're providing financial support to nonprofit groups. One of the main benefits of having nonprofit endowment funds is that you'll take advantage of many state tax credits.

I recommend: GR Foundation identifies the organizations in Michigan that benefit from nonprofit endowment funds.

Endowment agreement

Most businesses encourage you to develop an endowment agreement before supporting any endowment fund. The agreement is usually made between the donor and the organization receiving the funds. The agreement outlines the reason for the fund and the procedures the organization agrees to follow in maintaining the assets.

I recommend: Go to Duke University to find out more specifics about the terms and conditions of a typical endowment agreement.

Asset allocation

One of the standard procedures involved in managing endowment funds relates to asset allocation. This refers to the process of distributing the assets in the fund so that the maximum return on investments can be realized.

I recommend: See a breakdown of asset allocation in a typical endowment fund at Appalachian State University.

Historic dollar value

Those in charge of managing endowment funds consider the historic dollar value of the fund when they are considering certain distributions. Normally, an endowment agreement will define how the historic dollar value affects the payout requirements, which are different for public and private foundations.

I recommend: Go to MCF to learn how some organizations respond when distributions from the fund are lower than the historic dollar value.