| by Cynthia M. Adams, CEO, GrantStation
A few months ago I was asked to
sit on an Advisory Board for a local nonprofit I had helped
start 35 years earlier. I was honored to be asked, and curious
about the Board's role. After I attended the first meeting,
I understood that one of the major priorities of this newly
convened Advisory Board was to help establish and build an
endowment fund.
Since I have committed to take part in this process, I thought
it might be helpful to share the steps we go through with
you. Rather than a step-by-step textbook how-to approach
to endowment building, this series will develop organically,
providing you with access to both the Board's insights and
the hurdles we face. It's my hope that this hands-on approach
will help guide your organization through the process of
developing its own endowment.
Are You Ready to Build an Endowment?
Part One
First, what is an endowment? An endowment fund is historically
understood as a perpetual fund from which only the earnings
are distributed. Your endowment can be $10,000 or $10,000,000.
Whatever the amount (and it will continue to grow over time),
this is a restricted fund established by donor gifts and
bequests.
The Advisory Board I have been elected to is committed to
helping this nonprofit organization establish an endowment
fund. I came into the conversation late but I can guess
what factors contributed to the Board's initial decision.
This organization:
- is over 30 years old;
- has more than 800 Members, and has for over 5 years;
- has more than 50 Major Donors, and has for over 5 years;
- has successfully run two capital campaigns over the past
20 years;
- is well-known and easily recognized in the community;
and,
- is at a place in its growth cycle where it needs to begin
building an endowment or bequests will become missed opportunities.
I don't think there is much room here to argue. This organization
is poised for endowment building.
But what if you don't know if your organization is ready
to establish an endowment fund and run an endowment campaign?
Some organizations are too young or too small to begin endowment
fundraising.
The first order of business is to appoint an Endowment Working
Committee. This committee can be made up of as few as three
individuals whose task is to determine if proceeding with
an endowment campaign is right for your organization at this
time.
The endowment working committee should answer the questions
on the readiness
worksheet we've provided.
Once the committee has completed the worksheet, your organization
will know where its strengths and weaknesses lie. You will
also know if you need to make some phone calls, do a survey,
or talk further with your Board of Directors before making
a decision to move forward with endowment building.
There's no magic here. You will instinctively know once
you've answered these questions whether or not your organization
is poised for establishing an endowment fund and running
an endowment campaign.
In the case of the nonprofit with which I'm working, our
next question isn't whether we are ready to do a campaign,
but what vehicle we will use to establish this new endowment
fund. Who will manage it? Will the Advisory Board run an
internal (quiet) or external (public) endowment campaign?
We'll talk about all of these questions in future articles.
Next week, we'll discuss the initial decisions we had to
make in order to move forward with our endowment campaign. |
