Here is a boy with five small barley loaves and two small fish, but how far will they go among so many?-John 6:9
One of Jesus’s most well-known miracles is the feeding of the 5,000. This event is inspiring on many levels: His concern for meeting the needs of the people, the experience of abundance from limited resources, and the crowd’s testimony to the authority of Jesus. The feeding of the 5,000 has one always been one of my favorite portions of the Bible.
When I was a child, I was fascinated that Jesus could take just five loaves of bread and two fish and spread them among thousands of people. The pieces must have been so small! And how was everyone full after eating such a small amount?
I later understood that Jesus didn’t split the food from the boy into small pieces; He multiplied it. Said in another way, Jesus allowed the gift to have a much broader impact than expected.
I view endowments in a similar fashion. A gift to an endowment can have a broad impact by being utilized over generations. The boy’s gift of bread and fish was multiplied across many people, while a gift to an endowment is multiplied across time.
How does the time span of endowments work? Endowments operate with a mandate to spend a portion of their assets each year. The amount spent is intended to be sustainable with the investment returns, allowing the endowment to last for an unlimited time period. Furthermore, a responsible level of spending can even facilitate growth over time. In other words, the spending rate is set so that the targeted long-term investment returns meet or exceed spending plus inflation.
While endowments are most frequently associated with colleges and universities, they can be used by any type of charitable organization. Endowments can be used to fund ongoing ministry, scholarships, operating expenses, and more. Given their long-term nature, they are typically invested with a growth focus.
Cornerstone Management advises on a number of endowments across our client base. In doing so, we help organizations develop their investment philosophy, draft investment policy, and construct the portfolio. These elements are custom designed to meet the objectives of the organization and the goals for the endowment. We have also participated in studies on endowment spending rates and can offer guidance on spending best practices and trends.
Please let us know if we at Cornerstone Management can assist you with your endowment.