Invest 5% for the Future

Iowans Encouraged to Include Endowed Charitable
Giving in Estate Plans

Over the next few decades, Baby Boomers and older generations will pass trillions of dollars in assets on to younger generations in what has become known as The Great Wealth Transfer. In a recent report, the Iowa Council of Foundations (ICOF) found that $1.8 billion will be passed down in Linn County during the current decade.

Inspired by their findings, ICOF recently launched ‘5 for the Future,’ a campaign that encourages Iowans to leave 5% or more of their assets to charitable causes in their hometowns. Working with a financial planner to invest those assets in charitable endowments could create significant resources for Iowa communities. 

“A significant amount of wealth will be transferring from one generation to the next in the coming years,” said Kimberly Hillyard, CFP™, Managing Director at Choreo. “We help clients define and fulfill their goals of leaving a legacy to their children and leaving a lasting legacy for their community.”

Leaving a percentage of your assets to charitable organizations through your estate plan is an easy way to provide long-term support for your community. The Community Foundation can work with you and your advisor to create a plan that provides for you, your family and your community.  

What is an Endowment?

Simply put, endowments—or endowed funds—are permanent resources. The funds are invested to grow over time, and a percentage is distributed each year through grants to nonprofit organizations. As a fund grows, so does its ability to support programs and projects throughout the community. Grants from endowments might support education, the arts, affordable housing, healthcare, access to food, or other causes.

Linn County has a long history of building and using endowments. When radio and television pioneer William Quarton passed away in 2007, he left $35 million to local endowments. This included $21 million for the Community Foundation’s unrestricted endowment, now known as the Greater Good Fund. His unrestricted gift would become a key piece of flood recovery efforts just a year later.

Thanks to Mr. Quarton and the many who have followed in his footsteps, the Greater Good Funds now provide over $1.5 million each year to local nonprofits. The Greater Good Funds also continue to support response to and recovery from disasters such as the derecho and pandemic.

“Many donors understand that the needs within our community will evolve over time,” Kimberly said. “I believe the Greater Good Fund resonates well with those that want to create a legacy for the community because there will always be a committee getting those dollars where they’re needed.”

Kimberly also pointed out that for some families, endowed donor-advised funds are a way of staying connected with their hometowns. These funds allow individuals or families to act as a sort of grant committee, making recommendations each year.

“The next generation can step in and carry on the legacy of giving back to Eastern Iowa, even as they spread throughout the country. Establishing those funds at the Community Foundation keeps those dollars local.”

As individuals and families create wills and estate plans, there are a lot of factors to consider. The Community Foundation is a partner to help donors provide security for their family while investing in the place they love. They offer extensive knowledge of the community and a wide range of giving options to help you establish, implement, and accomplish your philanthropic goals. You can give to a specific organization, cause, or community. Funds can also bear your family’s name, cementing your legacy in our community forever.

The Power of Endowment

Because endowments are permanent, nonprofits and communities can rely on them as long-term sources of funding. Last year, the Community Foundation worked with donors to establish the Mount Vernon Community Betterment Fund (see page six for more). This endowed fund can provide grants to Mount Vernon nonprofits each year, forever. Residents and businesses can continue to give to the fund, increasing the value of future grants.

This collective, community-centered approach to building endowments can create substantial resources. If just 5% of the wealth being passed between generations over the next 20 years is placed in charitable endowments, Linn County nonprofits could benefit from $75 million in grants. During that time, those endowed funds could grow to more than $200 million, providing a large, flexible resource for future generations.

The Community Foundation manages nearly 800 endowed funds that provide annual grants to over 500 nonprofits each year. These grants support nonprofit organizations in addressing community needs while also creating opportunities for arts and culture that enriches the vibrancy and the future of our community.