Many nonprofit organizations, private schools and foundations have endowments in place to secure a steady income stream for the long term.
Typically, only the interest from an endowment fund can be spent. The core endowment principal usually remains intact for the purpose of sustaining the organization’s long term goals well into the future. The greater the principal, the more impact the endowment can have.
Assuming that you have done your homework in deciding whether your organization should have an endowment, set it up properly, established a fund committee, and created an investment policy statement, it’s time to turn to raising funds for the endowment.
In many cases endowment fundraising is not that different from raising funds for a regular capital campaign. But it’s important to understand that an endowment, unlike funds generated from an annual widespread fundraising campaign, secures an organization’s place in the future. So it’s critical that you put the right building blocks in place before you solicit endowment funds.
Let’s talk about best practices for generating funds to put into the endowment.
1. Data is Golden
While not the most thrilling aspect of raising funds, getting your data in order is a necessary evil. Good data is the foundation of prospecting. The ability to slice and dice good data is often what separates a powerful endowment campaign from just an average campaign.
Know as much as you can about your past and prospective donors. In your organization’s database, record information about your donors’ personal interests, past giving history, volunteer history, use of the organization’s resources, role within the organization (e.g., board member or past board member), and anything else that will be helpful in approaching them about a gift.
2. Communication and Transparency Mean a LOT to Donors
It’s all about the donors. Without donors, you have no endowment. Without an endowment, your organization’s sustainable future may be uncertain.
With a strong database of prospective donors in place, you can target donors. Raise money from the audience that your nonprofit or private foundation plans to serve.
Donors like to see how their money is used. Be sure to send donors an annual report, which should highlight accomplishments and give donors a sense of how the organization’s funds are being used and managed. After all, your donors are “investors” in your organization and its future. They want to know that their contributions are helping to build a financially stable future for their favorite cause.
It goes without saying, but be sure to thank donors for the gifts. In many cases, multiple thank yous are in order and will only give you the opportunity to keep the organization’s name in front of donors, and to remind them about the endowment’s purpose.
3. Train Your Team Before They Make The Ask
Organizations are often so gung-ho about “making the ask” that they don’t adequately train those who will be involved in securing funds for the endowment.
It often takes a village to build an endowment. First, decide who will have contact with your donors. Who will ask for funds? Board members, executive directors, chief financial officers and volunteers all have roles. Each person needs to understand their role.
Anyone who is responsible for communicating with prospective donors should be able to comfortably answer the following questions:
- What is the purpose of the organization?
- What is the role of the endowment in the organization’s future?
- What are the endowment options (wills, bequests, securities, etc.)?
- How are endowment funds restricted?
- What happens to the money?
- Why should donors make a long-term investment in the organization?
Need Help?
For help with endowment fund management, contact us online or call 800.899.4623.
