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Is This Your Situation: Creating a Program to Increase Endowment

The foremost components of endowment growth are investment returns. Although important, strong endowment giving cannot be overlooked. When considering years in which strong markets are scarce, it remains essential to secure a strong inflow of gifts. Consider the following approaches:

  • Develop a professional-looking prospectus.
  • Seek leadership gifts first.
  • Focus on multiyear gifts.

If you think you can't possibly raise an endowment, you're wrong. If you're willing to put in the hard work and wait for the reward over a number of years, you can raise a major endowment — but don't cannibalize your annual fundraising efforts to do it.

Increasing fundraising efforts results in more rapid growth. To achieve good endowment growth, nonprofit organizations want to keep their spending rates below 5 percent.

That extra $100,000 per year can mean a new, ongoing program, two new staff members or other items to take your nonprofit to the next level. Donor stewardship is needed to encourage repeat gifts:

  • Named endowment gifts are a key component of successful endowment giving programs.
  • Publicity, including celebratory events that include the donor, family and friends, benefit endowment income.
  • Specific terms of the gifts can be fitted to the needs of the donors and to programs being supported.
  • Consider fitting policies to the size of the gift. You may have some flexibility in how much of the endowment income generated by the gift is available to the program being supported.
  • Encourage donors to buy into endowment pools.
  • Simplify the description of available endowment giving provided to prospective donors.
  • Legal and financial managers can provide positive support of endowment fundraising efforts rather than create unnecessary hurdles. Close cooperation between these staffs and the major gift fundraisers is crucial.

Simplification may include some assurance that a minimum level of income from endowment and supplemental funding is available in the early years following the gift. Look closely at the motivations for endowment giving:

  • Be aware of the factors that are encouraging endowment giving at your nonprofit.
  • Look for possible improvement you can make and observe how other organizations are meeting this challenge.
  • Look for ways to create a more positive environment for endowment fundraising.

Matching funds, donor recognition and stewardship are factors for success. Look for positive incentives and select those that will be most effective for your fundraising program. Comprehensive fundraising campaigns and a commitment to active fundraising are key to enhance opportunities for raising endowment funds and to maximize the effectiveness of active incentives for giving. Remember that donors like funding endowments with large gifts because they feel it's a good way to fund a cause they believe in on a regular and sustainable basis, both now and long after they are gone.