Our recession will be long regardless of governmental response and it will fall heavily on the prudent and foolish alike. The foolish think it will never end, and the prudent endure the present while planning for the future.
The prudent will avoid financial moves that put them at risk without reward. The prudent will spend cautiously, and for that reason I want to explain a giving plan that is made for the prudent. It is Installment Philanthropy. Usually community foundations dress it up with a metaphorical name such as Acorn Society. If you don’t find it under that name, just keep looking. The web page will have it somewhere. The plan is for those who would like to be the creator of an endowment fund but do not feel comfortable with a large single payment or making a binding pledge for a large amount in the future. What they are looking for is a plan that stretches over a comfortable period of time, sticks to very reasonable amounts, and can be self-adjusted if personal circumstances dictate.
For example, a donor decides that he will set a goal of $10,000 for his endowment fund and plans yearly payments over a period of ten years. If he makes a $725 payment every year in ten years he will have given $7,250 but the fund will be worth more than $10,000. This works out because the fund is not activated until it reaches $5,000, and the payout does not exceed 3% plus a very low administrative fee. While it is building, payouts from the fund may be held over from one year to the next so the amount is large enough to make a difference. At the end of ten years the donor is free to decide if he wants to set a second goal.
Another example may be a donor who can afford a larger initial payment of $5,000 but then plans to make a $1,000 payment each of the next ten years. He has contributed $15,000 to a trust fund that in ten years is approaching $20,000. If the donor encounters a slow year and skips a payment, he knows he can make future adjustments to cover what he skipped.
Another donor may time his payments to end when he reaches retirement. So whether it is 9 years or 13 years he knows the payments will be completed during his peak earning years. He may set a minimum payment knowing that he will exceed the minimum during good years.
In any of the examples the donor may find that he can not complete the payments. The fund remains intact and grows but at a slower pace. If the donor has been able to build the fund up to or near $10,000, a fund that size can survive on its own. Naturally the larger it is when the payments stop, the stronger and more productive it will be.
The fund contract setting the name, purpose, rules, and sunset provision does not need to indicate any specific donation total. Your payments are based on prudence and honor and should never become a burden or drudgery for you. We can put together a payment coupon booklet with a tan cover just like the bank uses so you have a funky record of how you have built your own endowment fund.
We have all taken on payments for things we knew were too important to do without or to delay until we had the money saved. Credit can be a smart move. With this giving plan you are not taking on credit, you are building a trust fund. Trust is also a smart move. Installment philanthropy makes possible a wonderful life achievement. Reach out and take advantage of it. Charles Marlin
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