1. Building assets with a campaign
An important part
of endowment building for any organization is the creation of what
David G. Schmeling, CFRE, calls a donor-sensitive endowment fund.
Schmeling, of Deferred Giving Service/Creative Stewardship Strategies
in Wheaton, Ill., offered his ideas at an international conference
on fundraising.
Schmeling identifies
three exchanges needed for a successful program: the organization
positions itself as wanting and needing these types of gifts; the
organization exchanges information with donors on how they can make
these kinds of gifts; and the organization exchanges immortality
with donors for having made such unique gifts for endowment purposes.
Before a campaign
can start, there are three questions that must be answered:
- Does my charity
offer programs today that make America a better place in which
to live?
- Will these
programs be needed 10 to 25 years from now as they are today?
- Does my charity
have donors who share these values and beliefs?
The best way to
build an endowment fund is with a campaign, similar to a capital
campaign, with stated goals and a defined time frame, an ongoing
planned giving program with budgeted programs and stated goals and
a combination of those two.
The benefits for
the nonprofit are increased contributions, ensuring the viability
of current and future programs and “wholistic” fundraising
in which donors are encourage to support current programs from earned
income and future programs with capital assets.
The benefits for
donors are ensuring the future of a favorite program, perpetuating
their values beyond their lifetime, attaching their names to a meaningful
charitable outreach, memorializing a loved one and gaining significant
financial and estate advantages.
2.
Know which works best for your group
There are
many types of endowments, depending on an organization's needs.
Edward C. Schumacher has identified several types of endowments
in his book Building Your Endowment, published by the Indiana
University on Philanthropy.
Among the types of endowments to choose from are:
- Term endowment:
A fund of money given by a donor to be used for a term agreed upon
by the nonprofit and the donor.
- Quasi-endowment:
A fund from which the organization may take either the annual return
or some portion of the principal for use as needed.
- Unrestricted
endowment: A gift that allows the institution the flexibility to
use the return on investment as best serves the immediate needs
of the institution.
- Restricted endowments,
of which there are many: Among them:
- Program endowment.
For example, the building of a hospice for a health care organization.
- Named memorial
endowment. For an individual being honored.
- Scholarship
endowment. Not only for colleges, may help organizations with an
educational component.
- Uncompensated
care endowment: This allows donors to underwrite those who are
least able to use the services of an organization.
- Staff scholarship
endowment: Helpful for continuous and permanent education.
- Technology upgrade
endowment. Can be very helpful as technology changes rapidly.
- Client services
endowment: A gift to fund a service.
3.
Cultivating That Big Gift
To give the
prospective donor to endowment fundraising an answer to the question “What's
in it for me?” an organization must communicate regularly
and frequently.
Charles C. Schumacher
offers several communication vehicles in his book Building Your
Endowment , published by the Fund Raising School at the Indiana
University Center on Philanthropy.
Among the means
of communication are:
- Mailings and
postscripts. Although direct mailings may get a low response, those
who do respond are seriously interested and are willing to expose
their interest to the organization. Some organizations include
a postscript on all solicitation materials.
- Financial planning
meetings. More often associated with planned giving than endowment
fundraising, this traditional offering to possible donors has the
potential to clarify individuals' interest in an organization's
endowment.
- Focus groups.
Small groups of individuals with some history of support for an
organization are invited to a meeting with key organizational leaders
to talk about an endowment initiative for the organization.
- One-on-one calls.
Individuals, generally from the endowment steering committee who
have made the initial gifts to the endowment, are asked to take
a friend to lunch or breakfast and simply tell them about the endowment
effort and report their response.
- Donor recognition
as incentive. Donor recognition can be used as a stimulus to provoke
others to think about giving to the endowment.
- Challenge gifts.
Corporations, foundations and individuals might be solicited for
challenge gifts.
- Matching gifts.
Like challenge gifts, matching gifts provide incentives for classes
of donors and individual donors.
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