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The Case for Endowment Fundraising
By Andrea McNaughton
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 Executives, board members, and frontline fundraisers alike are too heavily focused on the present -- at the expense of their endowment's growth. Impatient for results, nonprofit leaders tend to focus on immediate objectives and current operations. This approach is short-sighted.
Endowments build sustainability, and many donors (especially those giving after 2008) see the virtue of funding the long-term health of a nonprofit. Without that opportunity, fundraisers are missing a critical method for engaging their donors.
How the Case for Endowment Differs
The case for endowment giving is distinct from the case for annual or capital gifts. Endowments appeal to:
- Donors concerned with a nonprofit's sustainability;
- Donors interested in estate planning;
- Donors who understand the power of investing for their long-term financial stability;
- Donors with long-term ties to a nonprofit; and
- Donors who believe a nonprofit deserves to last forever.
The case for endowment giving is unlikely to persuade those donors keen on current impact metrics and will not be useful with foundations or corporate prospects. On the other hand, you cannot appeal to donors thinking about the long-term without an endowment.
Getting Prepared for Endowment Giving
The prerequisites for cultivating and soliciting endowment gifts include:
- Organizational Considerations: You need to be an established nonprofit and show the capacity for managing an endowment. Some benchmarks to consider are:
- Time to build this initiative and the capacity to wait for results;
- A 10-year history of increased giving and a stable staff;
- A board committed to building an endowment and providing investment oversight;
- The ability to report progress towards your endowment fundraising goal alongside annual fund goals;
- Time for and knowledge of endowment fundraising, including end-of-year stewardship reporting;
- The infrastructure for crediting fundraisers for their solicitations and for stewarding donors properly. Remember: If your gift officers are only judged on their success of achieving an annual fund target, they are unlikely to spend much effort on anything else. Similarly, if your donors are not rewarded for supporting a special initiative, they are less likely to give; and
- A record of successful investing. Remember: Donors will want to know who manages the funds, the investment mix and returns history.
- Planned Giving: Since endowment fundraising is all about the long view, planned giving is an important component. Wills, bequests, and trusts are typically the main source of endowment funding, so nonprofits need a planned giving infrastructure to support such gifts, including:
- Gift acceptance policies;
- State registrations;
- Established administration procedures;
- Uniform gift agreements; and
- Gift accounting and valuation policies.
- Case for Support: Your case can be simple, but must include:
- A rationale for having an endowment;
- A detailed explanation of how the money will be used over time; and
- A description of how the fund investments will be managed.
Adding Endowment Fundraising to Your Toolkit
Once you have decided to create an endowment, you must integrate it into your ongoing development plan. To get started you should:
- Establish an Endowment Committee to provide oversight, promote endowment giving, and cultivate potential donors;
- Add an endowment "ask" to an annual fund proposal to enhance the case for the longer-term impact of a larger gift;
- Create unique naming opportunities and benefits for endowment gifts; and
- Start tracking cumulative lifetime giving.
Moving Forward
Endowment fundraising requires dedicated efforts, planning, and an investment of time and resources. Success will not happen overnight and often requires outside expertise. But, over time, endowments can become visible and fruitful legacies for donors and the staff who made them possible.
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If you need coaching or support to build or enhance your endowment program, please contact me today at [email protected] or (202) 719-8066.
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Tuesday, July 8, 2014
10:00 am - 12:00 pm
Foundation Center
79 Fifth Avenue, between 15th and 16th Streets, Second Floor
New York, NY 10003
National research shows that women are more generous than men and are more likely to make charitable contributions, even after accounting for income, race, and education.
- Single women give almost twice as much as single men, and married women give significantly more than both single and married men.
- In the United States, on average, high net-worth women give 3.5% of their total net worth to charity each year, almost double the 1.8% given by men.[1]
- In nearly 90% of high net-worth households, women either are the sole decision maker or an equal partner in decisions about charitable giving.
Simultaneously, societal changes have empowered women as wage earners, business owners, investors, and inheritors.[2]
- 60% of all personal wealth in the United States is controlled by women.
- Nearly half of the top wealth holders in the U.S. are women, including more than 3 million women with annual incomes greater than $550,000.
- 83% of all household purchasing decisions are made by women.
- Women will inherit 70% of the intergenerational wealth in the next 50 years.
Despite these changes, many institutions have yet to recognize the untapped philanthropic potential of their female constituents. In a recent poll commissioned by the Chronicle of Philanthropy, 40% of women at large nonprofits (defined as organizations with $25 million or more in assets) said their organization did not put as much effort into identifying and soliciting affluent women as it did men and as a result their organizations were losing money that could have been donated to their causes. Only 36% said wealthy female donors were given the same respect as affluent men.[3]
Join us for a special workshop intended to help nonprofits maximize the potential of women's philanthropy. Creating a strategy for deepening the engagement and increasing the philanthropy of women stakeholders requires an investment of time and financial resources, but it is not as difficult as many may think, and the results are long-lasting. During this interactive session, organizations will start the process of assessing women's relationships with their organizations and the steps to design and implement a strategy for deepening relationships with and support to their organizations. You will come away from this session with a toolkit of best practices for developing a strategy that will successfully engage women and set them on a path to be a major donor in the future.
Presenter:
Registration:
This session is free. Click here to register.
[1] "The 2011 Study of High Net Worth Women's Philanthropy," Bank of America Merrill Lynch, 2012.
[2] Women, Money, and Philanthropy; Foundation Center WIP Presentation; sourced from Fem-anthropy: Women's Philanthropic Giving Patterns and Objectives, 2010; and Jewish Federation of North America, National Women's Philanthropy: Philanthropic Profile, July 2011.
[3] "Lack of Women in Top Roles Hinders Nonprofits, Female Nonprofit Workers Say," Chronicle of Philanthropy, April 2014.
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About Orr Associates, Inc. (OAI)
OAI is a national leader in fundraising and development consulting. We provide a full array of outsourced development services including campaign planning and execution, major gifts management, event management, foundation fundraising, corporate sponsorships, and any leadership and/or staff support needed. Drawing on more than 23 years of experience working exclusively with nonprofit organizations, OAI has helped more than 450 clients raise hundreds of millions of dollars for their causes. With a staff of more than 50 professionals in Washington, DC and New York City, OAI is well positioned to assist its clients in achieving their goals.
See how we can help you today at www.oai-usa.com.
 
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