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  • Writer's pictureKevin Leahy

Givzey Guidance: How Do I Word This?: Pledge Payments for Newly-Endowed Fund Will be Invested and Accrued Until Fully Funded


Givzey Guidance: How Do I Word This?: Pledge Payments for Newly-Endowed Fund Will be Invested and Accrued Until Fully Funded
Givzey Guidance: How Do I Word This?: Pledge Payments for Newly-Endowed Fund Will be Invested and Accrued Until Fully Funded

Question: How Do I Word This? - Pledge Payments for Newly-Endowed Fund Will be Invested and Accrued Until Fully Funded

How do I say that the money for a new endowed fund will be invested and accrued with each pledge payment until the gift is fully funded?

Answer:

A best practice is to say “the pledge payments accrue monies in accordance with your fiscal policy”, which allows for changes in the interest percentage allotments.


Organizations may adjust the percentage that an endowment spends based on market conditions.  Although the endowment may earn 8% in a year, the average percentage spent each year now averages between 4-5%. 


In the economic downturn of 2008, some endowed funds were “underwater,” meaning the principal in the endowment fell below the original gift amount. By having a conservative spend rate for endowed funds, the organization reduces the chance of an endowed fund being underwater.


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