We’ve been talking to a lot of organizations about endowments lately. This uncertain environment, changing in funding criteria at all levels, and the desire to have sustainability has been the catalyst for most of those conversations.
What has been most interesting when exploring if an organization should start an endowment is the emotional aspects of building such a fund. Unlike most items on a to-do list, this is one you add without expectations of finishing or even, probably, reaping the full benefits of (both in terms of recognition and funding).
As many of you know, it takes time to build up an endowment and then start to receive earnings that make a significant impact. If you aren’t starting with millions (and most don’t), you aren’t going to see meaningful changes in your unrestricted funding streams in the short term. That is where the emotional aspects of endowment building come in.
You, as a leader, must decide that setting up your future organization for success is worth forgoing some of your ease and flexibility today. Endowments build a culture of future focus – you no longer will spend all the money today but put some aside for the future. This is beyond reserves as this safety net you are building is not for your use, but, in all likelihood, is a generation away for full use. And, that is a really important point. CFSC believes it is just as imperative to build intergenerational wealth for the nonprofits that serve the community as it is to build it for its community members.
The other huge difference with endowments, compared to all other types of revenue sources, is that starting, even if small, is a huge gift to the future leaders and one for which you will probably not be recognized or celebrated.
So, why do it?
Let’s look at Harvard University in Massachusetts. More than 380 years ago, John Harvard left a gift of his entire library (400 volumes) and half his estate (around 779 pounds) to the new Cambridge College which was then named after him.
The books started what would eventually become the largest academic library in the world.
The money started what would eventually turn into the largest endowment of any institution in the world.
Most people don’t know who John was or what he did…but, arguably, most know about Harvard.
We hope that all nonprofits can find a “Harvard moment” – a way to leverage, build momentum and build wealth for their future organization.
We are here to help. We can talk to your donors, board, membership about endowments, estate planning and ways to help you put endowment building on a to-do list and celebrate that it won’t be checked off!