Should I Consider Raising Funds for an Endowment?
Endowments are often associated with large nonprofit organizations in higher education or hospital foundations. Money raised for an endowment is invested, and the return is designated to support an organization’s general operating budget, a specific program or staff position. The additional funding stream can sustain a mission-driven organization and its future presence in the community.
While fundraising events and donor visits may be difficult to conduct during a pandemic, small and midsize organizations may further realize the importance and need for an endowment to sustain future operations. So, is raising funds for an endowment right for your organization at this time?
First and foremost, organizations should concentrate on raising money for their annual operating needs. Many donors may prefer to support your organization’s annual operations through special events or direct mail.
Endowments take more time to build and require a substantial amount in principal to yield an annual distribution. They tend to appeal to donors who want to leave a lasting legacy gift to sustain the organization for future generations. In such cases, it is imperative that the organization has a planned giving program in place. This allows donors to make a gift toward an endowment as part of their legacy.
An endowment also provides an opportunity for a donor to make a major gift to your organization. Often, organizations establish policies for undesignated gifts — outside of budgeted revenue — to be included in an endowment fund. This opportunity may complement a donor’s intentions to sustain the future legacy of an organization and reserve major gifts to support an endowment.
When establishing an endowment fund, consider the following steps:
- Have a plan. Develop a clear vision for what the endowment returns will support.
- Create case materials to promote to donors.
- Set a reasonable goal. For example, if your nonprofit raises $5 million a year, an endowment goal of $10 million is not likely to be achievable. However, an endowment goal of $1 million may be more achievable and would also result in a great impact to your organization.
- Establish guidelines for withdrawing revenue gains. Set a minimum endowment balance such as $1 million before allocating distributions.
- Mine your database for potential donors and target gift asks to support your endowment.
AMPERAGE Fundraising Advisers can assist in establishing and raising funds toward an endowment campaign. Contact Justin Tolan, director of fundraising, at jtolan@amperagefundraising.com to learn more.
Justin Tolan, CFRE
When Justin and AMPERAGE first met, Justin was one of the agency’s clients. Now, as a fundraising consultant on the other side of the table, Justin helps AMPERAGE’s nonprofit clients get results.
Renowned for not being too pushy because he’s worked in the fundraising trenches himself, Justin relates to, listens to and understands clients’ unique needs. A Certified Fund Raising Executive (CFRE), Justin has long-established relationships with foundations and corporate funders and knows the ins and outs of running a successful fundraising campaign.
A journalism graduate of the University of Iowa, Justin began his career in Germany as an intern with Stars and Stripes newspaper for the armed forces. Upon his return stateside, he worked as sports editor for the Ottumwa Courier.
He charted a new career course with a communications position at Lutheran Mutual/Century Life of America (now CUNA Mutual) insurance company and then a public relations and fundraising position with Lutheran Services in Iowa/Bremwood — before ultimately joining AMPERAGE.
Justin has been a writer throughout his career and is a contributing author to two books: “Successful Capital Campaigns: From Start to Finish” and “Nonprofit Consulting Playbook: Winning Strategies from 25 Leaders in the Field.”
He is a member and past president of the Association of Fundraising Professionals-Eastern Iowa Chapter, which honored Justin as 2015 Outstanding Fundraising Professional. He is also a member of the Eastern Iowa Planned Giving Council.
Justin is also active in the community through organizations such as Big Brothers Big Sisters, Junior Achievement and Waverly-Shell Rock United Way.
As an avid Chicago Cubs fan, Justin’s favorite holiday is opening day of the Major League Baseball season. That may explain his collection of old baseball cards and why he can name the entire 1965 team roster of the Minnesota Twins.