The Croatian Scholarship Fund launched its Endowment Fund in 1998, and it has proved to be highly successful. As more information and understanding of the program reaches others, it is expected to attract the participation of many more Croatian Americans. Endowment programs have been widely adopted by a majority of US colleges and universities as a means to provide a stable method of assuring that scholarships will be funded. This emphasis on endowment funds in no way eliminates or substitutes the need and importance of typical periodic financial contributions. In fact, both types of scholarship funding are essential for the Croatian Scholarship Fund (CSF) to fulfill its scholarship goals. An Endowment is a method by which sums of money or equivalent monetary value are contributed to CSF and invested with the purpose of deriving interests or gains which, in turn, provide funding for scholarships. It is important to note that the original endowment or money equivalent is never penetrated or consumed; endowments remain separate and protected. In other words the principle of the endowment earns income that is assigned to scholarships; this relationship continues into perpetuity. Endowments may be in the form of money, real estate, jewelry, works of art, stocks, bonds, insurance, or other items of value. Endowed scholarships are administered by virtually every college and university in the USA. In many of the nation’s most prestigious institutions of higher learning, from 25 to 45 percent of all students in attendance receive a scholarship by way of endowments. It is safe to claim that a large percentage of our recognized leaders in nearly every field of endeavor obtained their university education with vital assistance from an endowed scholarship. Recognizing that the scope and impact of scholarships on America, the greatest and wealthiest nation in the world, must depend on endowments to prepare future leaders, it is sensible and practical to implement the same solution for Croatia. For at least three generations, Croatia has suffered through what is often referred to as “brain drain”. Many of its most talented, ambitious and independent thinkers emigrated to Western European countries and the Americas during this time period, while the former communist government failed to keep pace with progress made by comparable nations. Consequently, Croatia could not elevate the standard of living for its people. Further, as the leading nations of the world expand and rely upon advanced technological methods for the conduct of nearly all public and major enterprises, the need for Croatia to develop its own leaders has never been greater. Most political and economic observers emphasize that for any nation to move forward in the world arena, the following two ingredients are required: 1) Financing to initiate or enhance business, trade manufacturing, agriculture, and other essential economic and social areas; and 2) An adequate and steady supply of highly educated and well trained young men and women who can successfully serve in administrative and supervisorial roles. Either of these ingredients without the other is a formula for disappointment. However, when both ingredients are present, external governments and financial sources are more likely to make appreciable financial investments. Although both of theses two vital ingredients for national advancement and raising the standard of living are essential, the preparation of future leaders is of higher priority. CSF was founded ten years ago to dedicate its efforts to this purpose. However, in order to prepare even a limited number of young people for leadership roles, the Endowment Program remains the key to success. Currently, CSF sponsors 52 students at universities located in Croatia. Sadly, and tragically, nearly 500 applicants who possess outstanding academic grades in solid courses must be denied scholarships due to lack of funding. Realization of this fact alone is the justification and necessity for the CSF Endowment program. After several months of careful scrutiny, CSF chose the East Bay Community Foundation (EBCF) to manage its endowment program. This charitable, non-profit organization was founded 70 years ago. It maintains offices in Oakland and Walnut Creek. Currently it oversees an endowment pool that exceeds $50 million. Some 20 highly respected community leaders from various businesses and professions constitute its Board of Directors. An executive director and staff are responsible for its operations. Both an internal and external audit are completed annually. CSF will receive a quarterly financial report. CSF may withdraw from EBCF at any time for any reason. The CSF Endowment Program offers you an opportunity to make an immediate and perpetual contribution to assist Croatia now and henceforth. Endowments may be made in memory of donors, families or other entities. These endowments will carry their original identification into perpetuity. HOW YOU CAN BENEFIT YOURSELF AND CROATIA AT THE SAME TIME You can simultaneously benefit yourself, your heirs, and Croatia through CSF’s Endowment Program. Gifts of financial worth to the CSF Endowment Fund can greatly reduce or avoid capital gains tax and the financial outcome benefits CSF, the donor and the donor’s heirs. There are several types of gift plans. From these the donor selects one or more that best meet the personal needs and wishes. These different gift plans will be fully explained to donors by a CSF board member. Some of the more popular types of gifts are: APPRECIATED PROPERTY: Despite the huge value appreciation of assets via stock markets in recent years, many people do not think of making a charitable gift of these assets because they are not aware of the capital gains tax that will confront them if and when they sell. Others wish to support the CSF Endowment Program but sell an appreciated asset and thereafter donate all or part of the after-tax proceeds! Regrettably, this occurs frequently, even though recent federal legislation reduces but does not eliminate capital gains tax liability. For many persons, their biggest investment is their residence. However, they may also own several types of assets: publicly traded stocks and bonds, commercial buildings, undeveloped property, farmland, vacation homes and tangible personal property (such as artwork, jewelry or antiques). Any or all of these assets can be used to fund gifts to charitable organizations, such as the CSF Endowment program, and consequently, the donor enjoys a reduction in taxes. An example of how one of these assets has increased in value in the last few years is publicly traded stocks. If a stock was purchased for $10 in 1970, and it has increased an average of 10% a year (growth plus reinvested after-tax dividends), it would be worth approximately $200 in 2000. Applying this same formula of growth, an initial investment of $100,000 would be worth over $2 million. Many other closely held assets have increased in value even more in this time. TURNING AN ASSET INTO A COST-EFFECTIVE GIFT Frequently, when the time arrives that a person is ready to reinvest appreciated stock, sell or transfer a business to heirs, he or she is confronted with a dilemma. Selling or transferring ownership creates a tax on appreciation, called the capital gains tax. This tax, in conjunction with estate and state taxes, can easily consume 75% of the asset value, leaving the owner or heir about 25cents of each dollar. Prior to selling or gifting assets, many individuals who are financially able, make significant gifts to their favorite charitable organizations. The CSF Endowment Program can accept your gift and assist in reducing or escaping the severe capital gains tax. DEFERRED GIFTS For some donors, a deferred gift plan may be desirable. This plan may be economically advantageous for the donor because it may increase the net income from the asset, and, at the same time, decrease or avoid taxes. LEARN MORE ABOUT OPTIONS BEFORE TAKING ACTION In this brief overview it is impossible to present the various ways that gifts can be made so that both the donor and the CSF Endowment Program can benefit. Each of the several plans will be fully explained by a CSF Board member in a face-to-face meeting. It is suggested that your attorney or tax consultant be present, if you so desire. To arrange a meeting with a CSF Board member or to request more information, contact: Secretary Croatian Scholarship Fund c/o: Endowments P.O. Box 290 San Ramon, CA 94583 e-mail: vbrekalo@email.msn.com