The idea of endowment funds originated in the United States of America (US) and the United Kingdom (UK), where these funds became an essential way of ensuring the independence and stability of universities and other organizations. Such foundations ensure the long-term stability of institutions such as Harvard University.
“In recent years, this model has become popular in Lithuania as well. The most striking example is the bequest of the Canadian Lithuanian doctors, dentists and philanthropists Angelė and Sigita Kazlauskas to the intangible capital fund of Vilnius University. The value of this fund currently amounts to 6 million. euros, and the mentioned funds are used for innovation and financing of talented students.
Other successful intangible capital funds in Lithuania are the Vilnius Jesuit Gymnasium Fund (252 thousand euros), the Future Fund of Klaipėda University (500 thousand euros) and M. Čiužel’s Silver Line Fund (748 thousand euros),” the law firms say. Sorainen” expert, lawyer Jurgita Karvelė.
Research conducted in the US shows that intangible capital funds have helped managing organizations through extremely difficult times. For example, in 2009 during the financial crisis, colleges and universities benefited from the financial returns provided by their intangible capital endowments, averaging 13.4 percent. their activities were financed precisely from these funds.
What is an intangible capital fund?
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Unlike traditional charity, where the collected support is used directly (what is collected is what is used), the intangible capital fund ensures long-term financing. This means that the collected funds are not used directly for support, but are invested. And the returns from these investments are used to meet the needs of the supported organization. In other words, the invested funds generate an income stream that is used to finance the supported initiatives while keeping the seed capital intact.
“As the saying goes, ‘Give a man a fish and he eats for a day;’ teach him to fish, and he will eat for a lifetime.” Likewise, an intangible capital fund provides ongoing funding, unlike a one-time charity. The funds transferred to the fund are not directly used to finance the fund’s activities, in other words, this capital is “intangible”. These funds are invested in commercial projects, and the received income (investment return) is used to finance projects supported by the fund”, says J. Karvelė.
She says that traditional charitable foundations, such as the Food Bank, directly distribute the collected support to people in need, but this type of support is often one-time and requires a constant search for sponsors. Meanwhile, intangible capital funds invest the funds received, and the investment returns are used to finance long-term goals. In this way, the funds ensure a constant flow of income without the constant search for sponsors.
The most important requirements
Compared to ordinary support funds, intangible capital funds have extremely significant advantages, the main of which is that the collected funds are not consumed, but invested, which ensures a constant flow of funds for support. However, intangible capital funds must meet rather strict requirements, which is one of the main reasons for choosing traditional fundraising.
Sorainen legal assistant Morta Šablevičiūtė explains that in order to establish an intangible capital fund, it is necessary to have a minimum capital of at least 72,405 euros. The said amount can be collected within 3 years. The investments of such funds must be carried out safely, and the capital of the fund must be managed only by professional investors, it is necessary to strictly follow the guidelines of risk management. At least 50 percent funds earned by the fund must be allocated to the public purposes of the fund, that is, used to provide direct support to the financed activities.
“There is also a limitation on fund administration costs: only up to 5% can be allocated to these costs per year. received income. This limitation is one of the obstacles to setting up these funds, as it is difficult to find professional investment managers willing to work for relatively low remuneration. In order to insure against unsuccessful investments, the fund must strictly adhere to the risk management guidelines – no more than 20% can be invested in one investment object. fund capital” – teaches M. Šablevičiūtė, legal assistant of “Sorainen”.
Despite strict requirements and management challenges, intangible capital funds in Lithuania are becoming an increasingly popular choice among socially responsible individuals and organizations. They ensure that the funds are used for the long-term betterment of society, giving the property a chance to become a lasting legacy for future generations.
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2024-09-18 01:46:03
– What are the benefits of establishing an intangible capital fund for organizations?
The Power of Intangible Capital Funds: Ensuring Long-Term Stability and Independence
The concept of endowment funds originated in the United States and the United Kingdom, where it became an essential way to ensure the independence and stability of universities and other organizations. Today, this model has gained popularity in Lithuania, with numerous successful examples of intangible capital funds benefiting educational institutions and social causes.
What is an Intangible Capital Fund?
Unlike traditional charity, where collected support is used directly, an intangible capital fund ensures long-term financing by investing the collected funds. The returns from these investments are then used to meet the needs of the supported organization, while keeping the seed capital intact. This approach provides ongoing funding, unlike one-time charity, and ensures a constant flow of income without the need for constant sponsor searching.
The Advantages of Intangible Capital Funds
Compared to ordinary support funds, intangible capital funds have significant advantages. The collected funds are not consumed but invested, ensuring a constant flow of funds for support. This approach also allows for long-term planning and stability, as the funds can be used to finance projects and activities over an extended period.
Successful Examples in Lithuania
The most striking example of an intangible capital fund in Lithuania is the bequest of Canadian Lithuanian doctors, dentists, and philanthropists Angelė and Sigita Kazlauskas to the intangible capital fund of Vilnius University. The value of this fund currently amounts to 6 million euros and is used to finance innovation and talented students. Other successful intangible capital funds in Lithuania include the Vilnius Jesuit Gymnasium Fund, the Future Fund of Klaipėda University, and M. Čiužel’s Silver Line Fund.
Research on Intangible Capital Funds
Research conducted in the US shows that intangible capital funds have helped managing organizations through extremely difficult times. For example, in 2009, during the financial crisis, colleges and universities benefited from the financial returns provided by their intangible capital endowments, averaging 13.4 percent.
The Most Important Requirements
To establish an intangible capital fund, it is necessary to have a minimum capital of at least 72,405 euros, which can be collected within 3 years. The investments of such funds must be carried out safely, and the capital of the fund must be managed only by professional investors. At least 50 percent of the funds earned by the fund must be allocated to public purposes, and fund administration costs are limited to 5% per year.
Challenges and Limitations
Despite the advantages of intangible capital funds, there are challenges and limitations to setting them up. The minimum capital requirement, strict investment guidelines, and limitations on fund administration costs can be obstacles. However, for those who are willing to invest time and resources, intangible capital funds can provide a lasting legacy for future generations.
Conclusion
Intangible capital funds are becoming an increasingly popular choice among socially responsible individuals and organizations in Lithuania. By understanding the benefits and requirements of these funds, we can ensure that our philanthropic efforts have a lasting impact on society. With the power of intangible capital funds, we can create a better future for generations to come.
Keywords: Intangible capital funds, endowment funds, philanthropy, long-term financing, independence, stability, socially responsible, investment, returns, capital.
Meta Description: Learn about the power of intangible capital funds, a long-term financing solution for organizations, and how they ensure independence and stability.
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H1: The Power of Intangible Capital Funds: Ensuring Long-Term Stability and Independence
H2: What is an Intangible Capital Fund?
H2: The Advantages of Intangible Capital Funds
H2: Successful Examples in Lithuania
H2: Research on Intangible Capital Funds
H2: The Most Important Requirements
H2: Challenges and Limitations
H2: Conclusion
What are the key advantages of establishing an endowment fund for organizations?
Here is a comprehensive and SEO-optimized article on the topic of endowment funds:
The Power of Endowment Funds: Ensuring Long-term Stability and Financing for Organizations
The concept of endowment funds originated in the United States of America (US) and the United Kingdom (UK), where these funds became an essential way of ensuring the independence and stability of universities and other organizations. Such foundations ensure the long-term stability of institutions such as Harvard University.
In recent years, this model has become popular in Lithuania as well. One of the most striking examples is the bequest of Canadian Lithuanian doctors, dentists, and philanthropists Angelė and Sigita Kazlauskas to the intangible capital fund of Vilnius University. The value of this fund currently amounts to 6 million euros, and the mentioned funds are used for innovation and financing of talented students.
Other successful intangible capital funds in Lithuania include the Vilnius Jesuit Gymnasium Fund (252 thousand euros), the Future Fund of Klaipėda University (500 thousand euros), and M. Čiužel’s Silver Line Fund (748 thousand euros).
Research conducted in the US shows that intangible capital funds have helped managing organizations through extremely difficult times. For example, in 2009 during the financial crisis, colleges and universities benefited from the financial returns provided by their intangible capital endowments, averaging 13.4 percent. Their activities were financed precisely from these funds.
What is an Intangible Capital Fund?
Unlike traditional charity, where the collected support is used directly, the intangible capital fund ensures long-term financing. This means that the collected funds are not used directly for support, but are invested. And the returns from these investments are used to meet the needs of the supported organization. In other words, the invested funds generate an income stream that is used to finance the supported initiatives while keeping the seed capital intact.
The Benefits of Establishing an Intangible Capital Fund for Organizations
The benefits of establishing an intangible capital fund for organizations are numerous. Unlike one-time charity, an intangible capital fund provides ongoing funding, ensuring a constant flow of income without the constant search for sponsors. This type of fund also allows organizations to plan for the long-term, knowing that they have a steady source of financing.
The Most Important Requirements
Compared to ordinary support funds, intangible capital funds have extremely significant advantages, the main of which is that the collected funds are not consumed, but invested, which ensures a constant flow of funds for support. However, intangible capital funds must meet rather strict requirements, which is one of the main reasons for choosing traditional fundraising.
To establish an intangible capital fund, it is necessary to have a minimum capital of at least 72,405 euros. The said
