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An endowment is a fund designed to provide monies for a certain program while at the same time building itself through self-perpetuation.
The principal of an endowment is invested and left untouched, while the interest is used each year for two purposes:
- A percentage of the interest is re-invested into the fund in order to allow the principal to avoid the costs of inflation and to grow each year.
- A percentage of the interest is utilized to fund the particular budget item for which the endowment was created.
For instance, if a scholarship endowment has $1,000,000 in principal and it is invested with a 5% rate of return, $50,000 in interest will be used in various ways. A percentage of the interest (let’s say 50% to use round numbers) will be used that year to fund scholarships. So $25,000 will go directly to offset tuition costs for students. Another percentage (again, let’s use 50%) will be re-invested to build the fund and to stave off inflation costs. So $25,000 will be added to the principal so that in future years the fund will grow larger and more each year can be used to fund scholarships directly.
Endowments are established through major gifts when the donor desires that the gift “keep on giving” over the years. Smaller gifts may then be given to add to the endowment at any time. Often, the endowment is named in honor or memory of the initial donor or someone the donor wants to recognize for his or her contribution to the organization or to the donor’s life.
The King’s Academy currently has two named scholarship endowments: The M. Nelson and Jane Loveland Scholarship Endowment and The James and Annie Erneston Scholarship Endowment. We also have the unnamed Faculty Development Endowment. Endowment gifts are a wonderful way to support the long-term financial stability of The King’s Academy! If you are interested in contributing to one of our established endowments or even providing the capital for a named endowment, please contact Mrs. Rosario Larson at 561-686-4244.
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