GIFT - Global Investment Foundation for Tomorrow
Any individual can establish a long-term endowment fund for any charity of their choice. Start small. Set aside $12 per month for 12 years. Get 12 friends to join you.
Or reach higher. Set aside $120 per month for 12 years. Get 12 friends to join you.
You select the charity. You select the intervals that determine when the charity can begin using the money and when you want to roll over the principal for additional investment growth. The examples reflect the magic of compound interest on the value of the endowed investment.
EXAMPLE # 1 $12 GRASSROOTS OPTION
12 people invest $12 per month for 12 years.
| Rollover Intervals In Years |
Compound @ 6% | Compound @ 8% | |
| 12 Years | $30,261 | $34,633 | |
| 24 Years | $62,059 | $90,164 | |
| 48 Years | $260,994 | $611,096 | |
| 96 Years | $4,616,177 | $28,071,554 | |
EXAMPLE # 2 $120 GRASSROOTS OPTION
12 people invest $120 per month for 12 years.
| Rollover Intervals In Years |
Compound @ 6% | Compound @ 8% | |
| 12 Years | $302,610 | $346,330 | |
| 24 Years | $620,590 | $901,640 | |
| 48 Years | $2,609,940 | $6,110,960 | |
| 96 Years | $46,161,770 | $280,715,540 | |
Purpose
One way to increase charity is to insure the life of a young individual – say age 20 to 25, and designate your selected charity as the beneficiary.
Definition
Charitable laws as well as life expectancies and insurance premiums vary in each country.
Three Options As Examples
Underwrite a $100,000, $500,000 or $1 million life policy with a one-time premium or spread the payments over a ten-year period. Upon the ultimate death of the insured, the charity is the designated beneficiary.
The donor can get a charitable deduction by giving the cost of the premium to the charity, with the charity purchasing the policy.
To allow the principal to grow untouched, to allow compound interest to work, the donors can deed restrict the use of the funds as they see fit. As an example, upon the death of the insured, one fourth of the money can go into the regular endowment of the charity for immediate use, the second fourth can be invested untouched for the next 25 years, the next can be invested untouched for 50 years, and the last payment can be invested for the full 100 years – or any reasonable intervals as selected by the donor.
How It Works
| (*) Life Policy |
One-Time Premium |
10-Pay Annual Premium |
(#1) Payment at Death |
(#2) 25 Years |
(#3) 50 Years |
(#4) 100 Years |
| Female $100,000 |
$8,625 |
$1,088 |
$25,000 |
$513,636 |
$2,345,081 |
$54,994,031 |
| Male $500,000 |
$26,003 |
$3,660 |
$125,000 |
$2,568,180 |
$11,725,405 |
$274,970,155 |
| Female $1,000,000 |
$58,006 |
$7,319 |
$250,000 |
$5,136,360 |
$23,450,810 |
$549,940,310 |
(*) Based on 2006 United States sample premiums. Assumes 8% Compound Interest Rate.
The continued long-term viability of schools, colleges and universities, religious institutions and all non-for-profit institutions can be enhanced through long-term investment endowment programs. The GIFT model assumes that a group of interested individuals or alumni commit to donate $1,000 to $10,000 per year for 5 years, and that the endowed funds will be held for long-term growth. After 25 years, one third of the accumulated capital is transferred from the long-term endowment to the regular endowment where annual income can be used to meet the operating needs of the non-profit. After an additional 25 years, take one half of the accumulated capital and transfer it to the regular endowment for immediate use. Invest the remainder for an additional 50 years, taking advantage of the impact of compound interest. Then distribute all remaining capital to the regular endowment for annual operating expenses.
$1,000 For 5 Years
Assume that 12 participants donate $1,000 per year for 5 years. Assume three restricted payout intervals: after 25 years; after 25 more years; after 50 more years.
| 12 Participants Total: $60,000 |
After 25 Years | After 50 Years | After 100 Years |
| At 6% Compound To Regular Endowment |
$216,947 $72,316 (1/3) |
$620,739 $310,370 (1/2) |
$5,717,054 $5,717,054 |
| At 8% Compound To Regular Endowment |
$328,128 $109,376 (1/3) |
$1,498,117 $749,058 (1/2) |
$35,132,028 $35,132,028 |
$10,000 For 5 Years
Assume that 12 participants donate $10,000 per year for 5 years. Assume three restricted payout intervals: after 25 years; after 25 more years; after 50 more years.
| 12 Participants Total: $600,000 |
After 25 Years | After 50 Years | After 100 Years |
| At 6% Compound To Regular Endowment |
$2,169,470 $723,160 (1/3) |
$6,207,390 $3,101,900 (1/2) |
$57,170,540 $57,170,540 |
| At 8% Compound To Regular Endowment |
$3,281,280 $1,093,760 (1/3) |
$14,981,170 $7,490,580 (1/2) |
$351,320,280 $351,320,280 |
95 - 5 RATIO
90 - 10 RATIO
Most non-profits, schools and universities need funding for current operating expenses. In annual fund raising drives and in regular endowment campaigns, there are always more demands for money than there are resources. At the same time, an important goal is to assure the long-term survival of the organization.
We propose that a small portion of all annual fund raising drives – say 5 percent, as well as a small portion of all endowment campaigns – say 10%, be set aside into long-term endowment funds. Examine the financial impact of long-term financial set asides.
Annual Fund Raising Drives – Set Aside 5%
Raise $100,000. Set aside $5,000 per year. Raise $200,000. Set aside $10,000 per year. Once this system is in place, after just 25 years, see how much money is generated every year.
| $5,000 Set Aside | After 25 Years | After 50 Years | After 100 Years |
| At 6% Compound | $274,323 | $1,451,680 | $28,191,840 |
| At 8% Compound | $365,530 | $2,868,851 | $137,442,579 |
| $10,000 Set Aside | |||
| At 6% Compound | $548,646 | $2,903,360 | $56,383,680 |
| At 8% Compound | $731,060 | $5,737,702 | $274,885,158 |
Regular Endowment Campaigns – Set Aside 10%
Raise $500,000. Set aside $50,000.
Raise $1 million. Set aside $100,000.
| $50,000 Set Aside | After 25 Years | After 50 Years | After 100 Years |
| At 6% Compound | $2,743,230 | $14,516,800 | $281,918,400 |
| At 8% Compound | $3,655,300 | $28,688,510 | $1,374,425,790 |
| $100,000 Set Aside | |||
| At 6% Compound | $5,486,460 | $29,033,600 | $563,836,800 |
| At 8% Compound | $7,310,600 | $57,377,020 | $2,748,851,580 |