FAQs REGARDING ENDOWMENTS
What is an endowment?
An endowment is a permanent fund that is placed in an investment pool with many other endowments, where it is managed for long-term growth. The asset value of the endowment is preserved and grown with time. Annually, a percentage of the fund’s total asset value is distributed for the purposes you specified in your Endowment Agreement.
Why create an endowment?
Endowments provide permanent sources of sustainable funding to ensure the long-term support of NLDC’s operations. The investment value of the endowment is preserved and grown over time. Only a percentage of the fund value (typically 4.5%) is distributed annually to the NLDC to be used for the purpose you establish in your endowment agreement. Endowments serve as a perpetual source of funding and provide a reliable source of support for the purpose you specify in your Endowment Agreement.
How is an endowment fund created?
You will work with the NLDC to finalize a fund agreement – a legal document prepared by the NLDC’s volunteer staff. – which specifies key terms of the endowments, such as your endowment’s name and purpose. Upon final signature by you and the NLDC and receipt of the minimum gift required to establish the fund, the endowment becomes active. The endowment will make its first distribution one year after it is established, in either January or July, whichever first occurs after the endowment’s anniversary date.
How long does it take to set up an endowment?
Setting up an endowment includes the opportunity for the endowment’s creator(s) to edit and review a draft endowment agreement, as well as time for the NLDC to coordinate with the Natural Resources Foundation of Wisconsin. We strive to do this as quickly as you wish, with a minimum of trouble to you. An endowment is considered established following the NLDC’s receipt of the minimum gift to create the fund and on the date the final fund agreement has been fully executed. If your endowment needs to be established before a certain date, please let us know as soon as possible. We make every effort to accommodate your timeline.
How does the endowment make distributions?
Annually, a percentage of the endowment’s total asset value is distributed to the NLDC for the purpose named in the endowment. No distribution is made from an endowment if the value of the endowment following distribution would fall below the original dollar value of the endowment, defined as the original gift and any additional contributions, unless such distribution follows the terms outlined in Wisconsin’s Uniform Prudent Management of Institutional Funds Act.
How do you calculate the amount available for distribution?
Currently, the distribution rate is 4.5% per year, and is calculated by looking at the average fund balance over the existence of the endowment (up to 20 calendar quarters). The Foundation establishes the payout rate following the annual review of the endowment’s long-term performance. This formula ensures the ability of the fund to make distributions in perpetuity; to smooth out the available distribution amount during market fluctuations; and allows your fund and the distributions it makes to increase in value over time.
What is the past rate of return on investments?
Rate of return depends upon the global market and investment strategies. The table below shows each rate of return in recent years.
How will you keep us informed of the fund’s activity?
The NRF provides annual endowment reports to the NLDC for every endowment it manages for us. This report details the beginning and ending balance of your endowment, as well as any new contributions, distributions and investment performance. The NLDC will happily provide you a copy of this report annually.
Why has the NLDC chosen to work with the Natural Resources Foundation?
The Natural Resources Foundation of Wisconsin is a nonprofit whose entire focus is conservancy in Wisconsin. It provides sustainable funding for Wisconsin’s most imperiled species and public lands, while connecting generations to the wonders of Wisconsin’s lands, waters, and wildlife through conservation, education, engagement and giving. And it manages endowments for a large number of Wisconsin conservation and nature-based nonprofits.
- Wisconsin-based, conservation focus: The Natural Resources Foundation is not affiliated with a larger, national organization. All endowments it manages stay right here in Wisconsin. And because it is a conservation nonprofit organization, even the endowments’ administrative fees are put to work helping to protect Wisconsin’s natural resources. The NRF’s conservation expertise ensures that your endowment will have a deep, lasting impact on the Discovery Center.
- Low fees: The NRF uses passive investment fund management with TIAA. As a result, the NRF’s investment fees are generally lower than other fund managers that use active fund management. Because the NRF is a conservation nonprofit organization, even its low administrative fee of 1% goes right back to supporting Wisconsin’s natural resources.
- Professional financial services and competitive fund returns: The NRF’s investment manager, TIAA, is one of the largest asset managers in the world. The NRF’s board and investment committee bring a wealth of expertise to the oversight and management to all endowments it manages.
- Recognition and visibility: Your endowment will be held by the Natural Resources Foundation of Wisconsin, regarded as the leading statewide foundation for conservation endowments.