What are Endowments?

Usually, the term endowment applies to sizable donations, although technically any kind of donation can be considered an endowment. Therefore, endowments are any kind of donation accepted by the Foundation. A donor does not have to be rich or to pass away in order to establish an endowment.

There are two fundamental types of endowments:

• Restricted Endowments: Restricted endowment funds are permanent funds where the principal is invested and grants are made through interest, dividends and gains. These restricted endowments are sometimes referred to as “permanent endowments”.
• Non-restricted Endowments: Non-restricted endowment funds are contributions available immediately for granting. Such contributions can be earmarked for a specific purpose. MSF includes non-restricted endowment funds in the General Fund, unless they are earmarked for inclusion in an MSF restricted fund, such as the Bapak Legacy Fund.

Why endow?

Whether restricted or non-restricted, an endowment is an investment that provides continuing support to charitable Subud entities. It’s an investment in the future of Subud. It’s a gift – a promise without end – made by you to future generations in support of your Subud community. Endowments are made possible by those who have lived and embraced all that Subud means, will mean, and can mean.
 
Restricted endowments benefit Subud in perpetuity as the assets generated by these permanent gifts continue to grow and provide grants for the needs of both current and future generations. Contributions to an endowment are irrevocable and become assets of the Foundation.

Non-restricted endowments benefit Subud in both the short and long term, as the current distribution policy, set by the World Congress in Spokane, requires the following: A spending policy allowing 15% of available capital from the capital use fund (the General Fund) is to be used together with the current income for the annual Foundation budget. Therefore, a portion of the General Fund is invested to earn more money for the future whilst the needs of annual budgets are met. Earmarked donations are always honored and disbursed accordingly and in full, as long as no laws are contravened. According to USA charitable foundation laws, contributions to the General Fund may not be permanently restricted by the Foundation trustees.

Who can endow?

Donors, or groups of donors, can create a restricted endowment fund by having their investment set aside in a special account that will be invested for future use. The income earned from these endowments is used to fund programs. The principal contributed remains intact, helping to ensure that funding for programs is available on an annual basis.

National committees, Susila Dharma and SICA organizations, and even Subud groups, can create restricted endowments with the Foundation to provide for their financial needs into the future.

How does a restricted endowment work?

Restricted endowment funds are pooled for maximum benefit and invested to preserve existing principal, whilst seeking investment income and capital appreciation in a prudent manner. Restricted endowments have two balances:

• Principal
  The principal balance cannot be invaded, other than as provided in the endowment agreement. In addition, depending on the terms of the endowment agreement, investment appreciation may be added to the principal to protect its value.
• Distributable
  The distributable balance is determined by the donor in the endowment agreement. For example, it may be (1) a percentage (say, 5 percent) of the principal balance at the end of the preceding year or (2) the investment income and appreciation in the preceding year. The distributable balance is the portion of the fund from which grants can be made.

Your contribution will continue to benefit Subud activities long into the future. If the terms of the endowment provide that the principal balance cannot be invaded, it carries on providing a continuous gift. However, the amount of money available for distribution will be affected by the performance of financial markets and the fund’s investment allocation.

Are there different types of restricted endowments?

There are four types of restricted endowments to choose from: an Advised Endowment (also called a donor-advised endowment), a Field of Interest Endowment (for particular activities or causes), a Designated Endowment (for supporting specific organizations), and an Agency Endowment (established by and for a specific Subud organization).

• An Advised Endowment allows you and your designees to be actively involved in the granting process. This is commonly referred to as a “donor-advised fund”. Currently, the Foundation has one donor-advised fund: the Lucienne & Francois Farkas Endowment Fund, created by Daniel Magnus Cheifetz.
• A Field of Interest Endowment is a gift that allows for the constantly changing needs of our Subud Association. Some donors define a particular field-of-interest they would like the Muhammad Subuh Foundation to address, such as archives, translations, international helper travel, scholarships, or Subud youth activities, to name a few. Currently, the Foundation manages one such endowment fund: the Bapak Legacy Fund, established by Subud USA.
• A Designated Endowment is a gift that provides a permanent source of support to one or more of our Subud organizations selected by the donor. If there is already a nonprofit Subud organization whose vision and mission aligns with your particular focus, you can endow that organization through a designated endowment. Currently, the Foundation has one designated endowment, the Aisah & Leonard Parker Endowment Fund (also referred to as the “Subud Australia Fund”), which was created by the Parkers via a testamentary gift. Testamentary gifts are made through a donor’s Last Will and Testament to be awarded on his or her passing.
• An Agency Endowment is an endowment established by a legal entity, such as a registered national committee or a Susila Dharma organization. The organization collects the fund principal and signs an agreement with the Foundation to hold and manage these funds on behalf of the organization. This Foundation service ensures that the purpose, terms, principal, distribution, and management of the endowment will be respected into the future, regardless of who is serving on the organizational committee at the time.

For more details, download: endowment fund classifications

Why endow with the Muhammad Subuh Foundation?

Bapak confirmed that the role of the Muhammad Subuh Foundation is to serve as the receptacle to receive the bequests of Subud members for the long-range stability and development of Subud.

The Muhammad Subuh Foundation was designed and established for this purpose by Varindra Vittachi in 1991, and the Foundation has now had years of experience in bequests and fund administration. MSF trustees have overlapping terms to encourage smooth continuity and transfer of knowledge and expertise to incoming trustees, as well as the support of a skilled executive team and an experienced and qualified investment advisory team. Confidentiality for donors is assured through non-disclosure agreements which must be signed by all MSF trustees and executive staff. The work of the Muhammad Subuh Foundation offers donors, national committees and other groups, like our “wing” organizations, a fully functioning Subud vehicle to establish endowments to further their work into the future.

The MSF Endowment Advisory Committee

To prepare for a potential increase in the number of permanent endowments, the Foundation will be establishing a volunteer MSF Endowment Advisory Committee. Creators of permanent endowments are very welcome to serve on this committee, to advise trustees on the management of their, and other, endowments. What better way to be involved than to directly participate in the management of your own permanent fund! This is particularly helpful when a permanent endowment fund is established by a national committee or a “wing” organization, such as Susila Dharma, when assistance with administration, investment management, monitoring, and advising is desired.

For more details on the Endowment Advisory Committee, download:

MSF Endowment Advisory Committee Terms of Reference
MSF EAC Duties & Responsibilities

How to Establish a Fund

A fund for charitable giving provides a flexible solution for making a difference in our Subud community, with possible tax-advantages depending on your country of residence.

You are on the right page if you want to:

• consolidate your charitable giving to Subud
• find grantmaking assistance
• establish a permanent endowment fund
• make sure your wishes will be followed after your lifetime
• take advantage of potential tax benefits
• support a Subud charitable area of interest

Setting up a fund for charitable giving represents the answers to each of these desires. We're here to help you every step of the way to establish a fund that matches your charitable intentions.

This section makes it easy. Start below - then contact us for personal assistance. Initial minimum balance required to establish a permanent endowment fund is US$50,000 for individuals, and US$75,000 for agency endowments.

As an individual, or with the participation of your family or group of friends, you can choose a fund type (restricted or non-restricted), a fund classification (which determines how your funds will be distributed), and whether to support an ongoing cause or participate in a special project.

Five Easy Steps to Opening a Fund at the Muhammad Subuh Foundation

1. Decide When to Give

Give now or in the future. You can open a fund with a current gift, or provide a lasting legacy through your will or estate plan.

For more details on making a testamentary gift to the Foundation, download:

Bequest guidelines
Benefactor Commitment Card or send us your commitment through our online form
Guidelines for donors to the funds of MSF

2. Decide What to Give

Almost any kind of asset can be used to start your fund, including cash, securities, life insurance, real estate or private foundation assets. 

Check our Gift Acceptance Policy for further details.

3. Name Your Fund

Most funds are named for the donor or the donor’s family, or as a memorial to someone you care for deeply. Grants from your fund will carry the fund name unless you wish to remain anonymous.

4. Decide How to Give

A restricted endowment is a permanent fund. The principal can be invested and never spent, earning income that provides endless support for the causes or organizations for which you genuinely care. A non-restricted endowment fund distributes grants from both the principal and the interest earned. It is not a permanent fund, but may be used as need dictates.

5. Choose Your Fund Classification

You can choose from a variety of fund types, depending on the degree of involvement you desire and the number and types of charitable grants you wish to make. Examples include donor-advised funds, field of interest funds, designated funds, and agency endowments.

For testamentary gifts (provisions for MSF in your will), fill out the Benefactor Gift Commitment.

To establish your fund or to receive more information, contact the Foundation administrator, Lillian Shulman, at: lillianshulman@netscape.net

You can request a personal conversation with a trustee or a member of the MSF Endowment Advisory Committee. Foundation trustees, committee members, national liaisons, and our Executive Team will treat your inquiries with discretion and confidentiality.