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Endowment campaign strategies that work

By November 9, 2021February 23rd, 2022Steier Tips

For many nonprofits, raising money for an endowment is the ultimate dream. To have the resources and support necessary to increase an endowment beyond an organization’s operating needs seems like a challenging, yet desirable goal.

When you think of an endowment campaign, you might generally think of large nonprofits with endowment funds in the hundreds of millions. While those large institutions are often the most prolific endowment fundraisers, more modest sized nonprofits can and should raise endowment dollars when they are able.

Small nonprofits, those raising $5 million per year or less, should generally focus on expanding their general and annual fundraising programs before thinking about an endowment program. Likewise, organizations that do not yet have a planned giving program should plan one before launching an endowment campaign.

Endowed funds differ from others in that the total amount of the gift is invested. Each year, only a portion of the income earned is spent while the remainder is added to the principal for growth. In this respect, an endowment is a perpetual gift.

Endowments are HREs: Highly Regulated Entities. Before starting one, check with an experienced nonprofit attorney and your accountant. You will want to be sure you raise, invest and disburse your endowment funds in a way that complies with all applicable rules and regulations. You will also want to create a policy that all non-donor-designated planned gifts (i.e., the donor has not specified what the money is for) go toward an investment fund.

If you are ready to build a new endowment or strengthen an existing one, here are some endowment campaign strategies that work:

Form a strong leadership team
If you are launching an endowment fundraising effort, recruit a leadership committee to head up your fundraising efforts. Find people who are committed to your organization, able to make a sizeable gift themselves, and willing to make asks of their colleagues and friends.

Craft a strategic plan
Endowment donors are giving because they want your organization to be sustainable. Make sure you have a plan in place for the future and share that plan with donors and prospects. The case for support should be detailed and presented professionally.

Donors generally like funding endowments with large gifts because they feel that it is a way to fund a cause they believe in on a regular and sustainable basis both now and long after they are gone. Start with the donors you already have, meet them in person, explain your needs and strategic plan, and make a specific gift request.

Most nonprofits, especially churches, have a life span. Nobody wants to admit that, but it is a fact. If your church is currently in a strong financial position, that is when you should consider an endowment campaign. If you build your endowment when your church is thriving financially, you will extend the longevity of the organization and help it for generations to come.

Set a reasonable, but visionary goal
You will want a realistic and attainable goal. At the same time, dream big! Remember: if donors support your work and strategic plan, they likely want to make sure that you can carry out your mission forever.

Focus on multi-year gifts
Many people who could not write you a check for $100,000 today could commit $20,000 each year for the next five years. Focus your endowment fundraising on securing multi-year gifts and make it easy for donors to give by offering yearly or monthly options.

One of the best ways to grow your endowment is with planned gifts, such as bequests, or gifts of life insurance or real estate. These are generally once-in-a-lifetime gifts, which are appropriate for building your endowment, because by their very nature, they are one-time gifts.

If you receive a planned gift, work with the donors to see if they will allow you to promote it. These types of gifts can be intimidating to people, but when they see that others are doing it (oftentimes people they know), it causes them to consider making a gift through their estate as well.

Make endowment part of a larger approach
Instead of thinking about an endowment as a stand-alone campaign, consider how it can be integrated into your annual or capital campaign efforts. Make supporting your endowment one of many choices you provide to donors.

In other words, if you are conducting a capital campaign, endowment can be one of several things for which you are raising funds. In a comprehensive capital campaign, you will want to give donors choices of areas to support, which might include a variety of capital projects and endowment for programs and services.

If you have questions about endowment fundraising or need help with other strategies to achieve your organization’s goals, please contact me.