Helping Your Favorite Charity Remain Solvent

A nonprofit organization can find itself in financial need as donors pass away. One way to help a favorite charity is to consider leaving an endowment in your estate plan and it doesn’t have to be a lot of money.

One-time donations, either large or small, are always welcome at nonprofit charities but the key to remaining solvent is often annual donations that allow a charity to budget for the upcoming year. However, the annual donation may end when the donor passes and replacing the funding can be a challenge. 

One way to avoid this problem for charities that you support is to leave an endowment for them in your estate plan.

As the Statesman Journal points out in “Today’s nonprofits need forever friends,” you do not need to leave millions in an endowment to make a difference.

If you annually contribute $100 to a nonprofit organization, then leaving $2,000 in an endowment is enough for that level of annual giving to continue in perpetuity. That ratio holds up no matter how much you give annually. An endowment of 20 times an annual gift should allow for the same contribution annually long after you pass away.

Many nonprofits have endowment funds to which you can contribute. For those that do not, you will want experienced help to create one.

An estate planning attorney could be helpful if you consider a charitable endowment.

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