An Endowment: what is it and why does it matter?

By April 24, 2017Commentary

 

Schubert Club has an Endowment Fund. We are very fortunate to have this Fund  — a vital piece of the organizational and financial puzzle challenging today’s non-profit organizations. I thought I would write my blog today about our Endowment and provide, I hope, some clarity around what it is and what it does for Schubert Club’s programming.

First, what do we mean by “Endowment”? An Endowment is a long-term or perpetual investment owned by an organization that generates income to fund its ongoing mission. The gifts that are given to the Endowment are not spent; they remain invested in stocks, bonds and other investment vehicles, managed either directly or indirectly by the Board of Directors.

The first Schubert Club Scholarship Fund was established back in 1922 on the occasion of Schubert Club’s 40th anniversary!  Over the years, a significant number of donors have added to the endowment with generous gifts and bequests. Some donors may wish to support a particular program, to honor a person, or simply to express their belief in the organization’s mission; but in all cases, the reason Endowment gifts are made is to help ensure the long-term stability of Schubert Club. The current value of our Endowment is approximately $15 million.

Each year, the Board authorizes a certain percentage to be withdrawn from the Endowment to fund programming. Of course we all know that the value of investment portfolios can go down as well as up. So, the Endowment draw authorized by the Board of Directors needs to be small enough to reasonably allow the fund to sustain itself for future years, and large enough to actually fulfill the Endowment’s mission-related purpose each year. This year, Schubert Club’s Endowment draw is 4.5%.

Of Schubert Club’s annual draw, about 70% is restricted by donors for specific programs, and the other 30% is available for general operating purposes. In the current year, the Endowment draw amounts to 28% of our total revenue. The rest comes primarily from ticket sales, donations, grants and sponsorships.

What does our Endowment Fund pay for? Donors over time have made endowment gifts to support Schubert Club’s overall mission in the Operating Fund, as well as to support specific programs. There are five specific areas of programming that the Endowment funds:

  1. The Concert Fund supports primarily our International Artist Series. It pays for some of the artist fees and concert production costs, allowing us to keep ticket prices affordable. You’re unlikely to be able to buy top price tickets to a 5-performance recital series featuring artists like Renée Fleming and Sir András Schiff anywhere else in the country for $200! 
  2. The Music in the Park Series Fund was added in 2014 to help support that wonderful concert series.
  3. The Scholarship Fund supports student musicians through the Bruce P. Carlson Scholarship Competition, the Special Music Grants program, and the Jazz Piano Workshop day.
  4. The Education Fund supports the Schubert Club’s education and outreach programs, which are offered at free or reduced cost to participants.
  5. The Museum Fund has enabled us to keep Museum admission free.   

Endowment giving is not possible for everyone, but it’s certainly not just for wealthy music lovers. Consider this: an endowment gift or provision in your will of $5,000 will generate $225 every year (4.5% of $5,000). Similarly, $10,000 will generate $450 annually.  Every endowment gift, be it $50,000 or $5,000, is meaningful  because it contributes to Schubert Club’s ability to offer our programs to people who share our love of music without the barrier of high prices. 

If music is important to you and if you believe Schubert Club is playing a role in your musical life and in the musical life of the Twin Cities community, please give it some thought.  You can really make a difference.