Endowed vs Non-Endowed Funds

Funds at the Community Foundation of Southern Maryland can be either endowed funds or non-endowed funds. An endowed fund is a perpetual fund from which grants are given annually. A non-endowed fund is one in which grants are given throughout the year.

An endowment is a permanent fund on which the earnings are available for grants for nonprofit organizations while the principal (the amount deposited into the fund) remains intact. The amount available for the grants are based on the Community Foundation’s spending rate. Our current spending rate is 4%.

Every donor who establishes an endowed fund at the Community Foundation of Southern Maryland receives quarterly statements detailing all transactions in and out of the fund and investment performance. Wherever the funds are invested, the donor may recommend to the Foundation on where to spend/grant the income/earnings only, based on the Foundation’s spending rate. The non-endowed funds may be spent/granted in whole or however the donor chooses and the spending is not based on a spending policy. Both endowed and non-endowed funds are able to accept donations at anytime.

The advantages we offer to a donor lie in our ability to simplify the giving process, by offering flexibility, local expertise, and administrative convenience. We can accommodate nearly any kind of giving a donor wants to do, either a present gift or deferred. We have staff members who can help you define your giving interests, arrange site visits, or research worthy charities in all areas of the country. We have a financial staff that handles all the investments (if desired), check writing, and other backroom functions.

Because we are a public charity and not a private foundation, federal law does not require us to distribute any set amount in grants each year, so donors can contribute more to the fund in one year, then recommend grants over time as their giving interests dictate. Most gifts from donor advised funds go to IRS-recognized public charities.