March 20, 2003 | Read Time: 2 minutes
Building Your Endowment
by Edward C. Schumacher
Today many nonprofit organizations are establishing endowment funds rather than relying solely on fund raising for operating and capital expenses, writes Edward C. Schumacher, president of Third Sector Consulting, in Seattle. He notes that several community foundations, local United Ways, and national foundations—including the Ford and Kresge Foundations—have begun offering management advice and grants to help charities create and grow endowments.
Mr. Schumacher describes some of the benefits that a charity can derive from having an endowment. In addition to providing greater financial stability and reserves for use during economic downturns, he says, endowments can allow nonprofit organizations to pay for innovative programs and services that don’t attract support from grant makers or others. Also, donors are often drawn to organizations that have endowments because they feel that it is a sign the organizations will operate into the future, and that their donations will continue to benefit causes after they die, writes Mr. Schumacher.
Despite the advantages endowments offer, Mr. Schumacher warns that they are not appropriate for every organization. He says that charities need to confirm that their volunteers and staff members are committed to a time-consuming effort to create such a fund, and that board members are willing to make monetary donations as well as solicit large contributions from others. He suggests that an organization thoroughly assess the size and financial capabilities of its pool of donors before embarking on an endowment campaign. According to Mr. Schumacher, people age 50 or older who have previously donated to or have a direct connection with the charity are the most likely to contribute to an endowment fund.
Throughout the book, worksheets offer tips on such tasks as developing endowment committees, creating fund-raising budgets, and drafting endowment agreements.
Publisher: Jossey-Bass, 989 Market Street, San Francisco, Calif. 94103-1741; (415) 433-1740 or (800) 956-7739; fax (415) 433-0499 or (800) 605-2665; http://www.josseybass.com; 88 pages; $28; I.S.B.N. 0-7879-6010-1.
