In 387 B.C., in an olive grove just outside the gates of Athens, the philosopher Plato established the Academy, the world’s first institution of higher learning. Plato then bequeathed his farmlands to the Academy, to ensure it would continue after his death. His gift is regarded as history’s first endowment. It was certainly one of the most enduring: The endowment lasted nine centuries, until Emperor Justinian closed the school in 529 A.D. and seized its assets.

For clients who look to you for advice about the disposition of their wealth, and their legacy, following Plato’s example of establishing an endowment may be a fulfilling—and tax-advantaged—solution.

Although the word “endowment” is often associated with the billion-dollar portfolios of Ivy League colleges and other major institutions, an endowment can be an advantageous option for a donor with $100,000 or more. It can be funded immediately, or years after it is established (for example, in connection with the sale of a business or real estate), or through a bequest.

At its core, an endowment is a charitable fund set up to provide support for one or several of the donor’s chosen charities or causes after death or during the donor’s lifetime and beyond. The assets are managed prudently and professionally, enabling a certain percentage to be distributed each year to those charities or causes while preserving the principal. The donor can direct that the proceeds go to a specific organization, such as a hospital, school or other nonprofit organization, or to a field of interest, such as medical research or support for the arts.

Endowments can of course be funded with cash, bonds and shares of public companies, but many other types of assets can be used as well. These include real estate, life insurance policies, private securities, charitable gift annuities, artwork, jewelry and intellectual property. Even IRAs and other retirement assets can be used, if transferred as a bequest or IRA charitable rollover for those 70 and a half years or older. Charitable trusts can provide such benefits as lifetime income to the donor or preservation of family wealth, with the charitable interest funding an endowment.

The types of donors for whom an endowment may be appropriate include those whose heirs are financially secure, or who are without heirs; those whose heirs are mentally unstable or worse; donors who plan to leave some of their wealth to their heirs, but also want to provide lasting support for their favorite charities; those who want to start an endowment for a charity and see the immediate impact of their philanthropy; donors who have had, or are anticipating, a liquidity event such as the sale of a business or an inheritance; and many more.

Donors may plan on making ongoing gifts to build up their endowment, including a bequest from their estate. They may establish multiple endowments in the names of their children or other family members, to transmit their philanthropic values and celebrate life cycle events. A memorial endowment may honor a friend or loved one via a scholarship or medical research in an area important to that individual. Groups of donors, such as members of a board, may set up a fund to honor a leader.

The estate-planning advantages and tax benefits of an endowment fund can be significant. A tax deduction of up to 50 percent of the donor’s adjusted gross income (AGI) can be taken for cash contributions to the fund, and up to 30 percent of AGI for donations of stock and other appreciated assets.