How is an endowment funded?
Endowments are funded through outright gifts, pledges, donations of securities or other noncash assets, as well as through a variety of planned gifts such as bequests, charitable gift annuities, charitable trusts, and beneficiary designations in retirement plans, financial accounts and insurance policies.
How long does an endowment last?
Most endowment donors want their gifts to provide support in perpetuity. Typically endowments are established to last forever. This means they are never totally exhausted. But donors can also set up endowments for a specific term, at the end of which they may be exhausted, expended or transferred to a traditional-type endowment.
Who is responsible for endowments?
Advocate Charitable Foundation is the philanthropic fiduciary responsible for all donations to all Advocate hospitals and programs, including gifts designated for an endowed fund. The Foundation is responsible for investing endowed funds and distributing income in accordance with donor restrictions as well as with the policies of Advocate Health Care and Advocate Charitable Foundation.
How are endowments invested?
Endowed funds are invested to ensure support over a long period of time. The investment policy adopted by the Board of Directors of Advocate Charitable Foundation provides for diversified investments, currently about 56-percent equities, 25-percent fixed-income securities and 19-percent alternative investments. Sub-allocations are made into a well-diversified portfolio of large/small, growth/value and U.S./international stocks and long/short bonds.
How much is available to spend on program each year?
Currently, 4-percent of the average market value of the prior three years is transferred to a related spending fund. Covered program expenses are paid from this fund. Earnings--interest, dividends and capital gains--in excess of 4-percent are retained in the endowment and reinvested. In this way, the endowment can grow. The 4-percent transferred is sometimes called “proxy investment income.” The percentage transferred is determined by the Foundation’s Board of Directors.
How many endowments does Advocate Charitable Foundation manage and where are the assets held?
The Foundation currently manages more than 60 endowments with a total market value of more than $34 million. The Northern Trust Company is the custodian of our endowments, which are pooled into a single endowment account. All endowments receive their allocated portion of investment income each month. Notably for the year ending December 31, 2010, the Foundation’s Endowment Account ranked eighth for its return on investments (14.4-percent) according to the Chronicle of Philanthropy’s national survey.
For more information about endowments at Advocate, contact Susan Mongillo at 630.929.6940 or Susan.Mongillo@advocatehealth.com.