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Preface:
The establishment of a permanent endowment is the unique privilege of a donor to provide perpetual funding for a valued purpose. These guidelines are intended to assist persons who are considering making a gift to establish an endowment at the LAVC Foundation.
Endowment Defined:
An endowment is a gift whose funds are invested to provide continuing income, in perpetuity, for a general or specific purpose stated in the written endowment agreement between the donor and the LAVC Foundation. Donor established endowments shall be used only for the purpose(s) specified in the endowment agreement which must be accepted by the LAVC Foundation as well as the donor.
Endowment Income:
Income utilization of all endowment funds are determined by the LAVC Foundation Board of Directors. Endowment earnings in excess of the approved utilization are generally credited to the principal of the endowment. This enables the endowment to keep pace with inflation and thereby continue to fulfill the original intent of the donor. Pending donor agreement, a portion of the excess earnings may also be used to support the total program of the LAVC Foundation. This enables institutional stability and flexibility.
Endowment Focus:
Endowment gifts may be unrestricted or they may be restricted for a particular purpose subject to the approval of the LAVC Foundation. Unrestricted gifts enable the donor to support the total program of the LAVC Foundation in perpetuity. Such gifts provide institutional stability and flexibility. Restricted gifts enable the donor to provide funds for the stated purpose of the endowment in perpetuity. A donor may request that an unrestricted or restricted endowment be named or that it remain anonymous.
Procedure for "Named" Endowments:
Normally, a "named" endowment (e.g., for a scholarship or a faculty chair, or other purpose) shall be established through a written and binding agreement assuring 100% funding of that endowment by the donor(s) within a specified period of time (usually within 3-4 fiscal years or less) and stating parameters of the fund witch are agreeable to both the donor and the institution. Donors may also specify that available earned income be returned to the principal rather than expended for a fixed number of years during which time the fund will grow.
A minimum of $10,000 is required to establish a named endowment fund for a scholarship, faculty chair, or other purpose. The donor(s) may take up to three years to reach the minimum level provided the donor has provided the LAVC Foundation with a written record of such a pledge.
The endowment is established when the Foundation Association has received at least $10,000 and the donor and the Executive Director of the LAVC Foundation has signed parameters outlining the purpose of the fund.
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