Power of Endowments
Over a single lifetime, an initial donation of $50,000 invested in a permanent endowment fund at the Richmond Community Foundation can result in funds paid out of over $500,000, an amount that will continually increase because of the effect of compound interest and long-term investment strategies.
This is truly the gift that keeps on giving and growing – forever. The following example may surprise you. It illustrates that, even if no further contributions are made to a fund, the power of endowments can create a permanent source of funds to support important programs and innovative organizations, and enhance the quality of life for all Richmond residents.
Remarkably, in the 80th year, the fund would distribute nearly $26,000, while the fund itself will have grown to over half a million dollars. Most importantly, it will continue to provide meaningful support to the community year after year after year.
Of course, actual future rates of return cannot be predicted. For illustration purposes, we have arbitrarily selected a rate of return of 8 percent per year. Note that the amount disbursed each year from the endowment fund remains constant at 5 percent of the fund value at the end of the previous year (in accordance with Canada Revenue Agency policy).