Endowments Mark Fiscal Maturity for Environmental Groups

Ducks Unlimited, in Memphis, has worked for 61 years to protect waterfowl habitats throughout North America. But until recently, the environmental group has relied almost exclusively on fund-raising events and donations to support its activities.

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Saving for the Future

Now, the group is in the fourth year of a six-year effort to create a $100-million endowment to insure its financial stability, and it has raised $85-million in pledges so far.

Ducks Unlimited is not alone among environmental and conservation groups in pursuing such a financial strategy. And while numerous types of charities are for the first time embarking on endowment drives, the emphasis that conservation groups are placing on endowments signals a transformation in the philosophy of many in the environmental movement.

Known mostly for their grassroots activism and ability to mobilize donors and volunteers on short notice, many organizations now are taking the long view on land- and water-use problems. As a result, many are focusing on endowments, the very emblem of planning, permanence, and fiscal maturity.

“Environmental and conservation organizations are coming of age now,” says J. William Straughan, Jr., group manager for membership and development at Ducks Unlimited. While many environmental organizations were created in response to urgent needs and causes, he says, groups like Ducks Unlimited now need to be involved in environmental issues “for the long haul, meaning pretty much forever.”

Echoing that sentiment is Jack Murray, director of development at the Natural Resources Defense Council, a 400,000-member advocacy group in New York that completed its first endowment campaign two years ago. “If you are going to have an impact on government policy or private activity, you need to have financial stability,” he says.

Mr. Murray says the council raised $20-million, $17-million of which went for its endowment — a reversal of the more common practice of including a tiny endowment component in a campaign to raise money for other purposes. Of the money raised, $7-million to $8-million was in the form of planned gifts, such as bequests. Many of those gifts came from middle-aged donors who were in their 30s when the group was formed in 1970. Mr. Murray say he expects the planned-giving trend to grow stronger in the future. “Some of our early members are dying, so certainly bequests are going to become a greater part of our income,” he says.

A portion of the council’s endowment is in a permanently restricted fund — meaning the organization cannot spend the principal — and some is in a temporarily restricted fund whose principal can be tapped only in an extraordinary situation.

The council relies on annual gifts for 90 per cent of its operating budget, Mr. Murray says. Before it sought an endowment, he says, the group was concerned that it might not have enough in reserves to deal with fluctuations in contributions or to cope with environmental issues that are “not easily solved” or “out of funding fashion” with the public.

Mr. Murray also says the council was not sure how long it could continue to rely on direct-mail appeals to raise money. “One of the perennial concerns for any organization that relies on direct mail is, ‘What are we going to do in 20 or 30 years?’” Mr. Murray says. “Are baby boomers going to respond to direct mail, or do we need other ways to reach them?” Having an endowment will help cushion the organization as it seeks to adjust to changes in donors’ giving practices, he says.

Like the council, Ducks Unlimited started its endowment campaign partly to respond to a changing fund-raising environment. It also wanted to help pay for an expanding environmental agenda in the United States, Canada, and Mexico.

Mr. Straughan says Ducks Unlimited once relied on fund-raising dinners run by its local chapters to generate 90 per cent of its revenue. But in the mid-1980s the organization realized that the growth potential of such events was not sufficient to cover new environmental projects. Now, only 50 per cent of revenue comes from dinners. The rest comes from a mix of large gifts from corporations and individuals, government grants, royalties from companies that pay to use the charity’s name on products such as clothing and furniture and, increasingly, endowment income.

Ducks Unlimited so far has only $8-million of its endowment in hand, but Mr. Straughan believes the amount can grow to $250-million in 25 years.

Of the $85-million promised by donors so far, the average pledge is $75,000, with 1,033 pledges of less than $100,000 and 20 worth $1-million or more.

Another sharp increase in endowments has occurred among the nation’s 1,200 land trusts, which hold land or conservation easements and protect properties from development.

Of 541 trusts responding this year to a survey by the Land Trust Alliance, a Washington advocacy organization, 275 had special endowment funds for monitoring and maintaining land, up from 160 in 1994. In addition, 66 land trusts had endowments to pay legal costs in land-use disputes, up from 18 in 1994; 250 had such funds earmarked for land acquisition, up from 154 in 1994; and 215 had funds to help pay annual operating costs such as rent and telephone bills, up from 174 in 1994.

Martha Nudel, a spokeswoman for the alliance, says land trusts are increasingly asking donors who give property or conservation easements, which protect privately owned land from development, to contribute toward the future maintenance and preservation of the land. Many land trusts, she says, are setting that money aside in endowed “stewardship” funds.

One land trust where that philosophy has taken root is the Triangle Land Conservancy, in Research Triangle Park, N.C.

Triangle began an endowment in 1984, a year after the organization was created. But by 1992 it had only $30,000 in endowed funds. Now it has approximately $430,000.

And in August the conservancy began a new capital campaign in which it hopes to raise an additional $85,000 in endowment money to take care of a 260-acre tract it is acquiring that includes a network of public trails.

The conservancy, which works in six counties of the Piedmont region, has always asked its members for money to maintain the land under its care, says Kate Dixon, the organization’s executive director. But the requests were made through an optional checkoff system on direct-mail pieces and raised only a few thousand dollars annually.

In the early 1990s, after the organization began budgeting how much it cost to conserve individual property sites, the conservancy started asking donors directly for gifts that could be put into an endowment or other reserve account to pay for land maintenance and improvements. In addition, the conservancy adopted a policy that it would no longer acquire land unless it had the money to cover such costs, Ms. Dixon says.

“We have this perpetual responsibility and don’t want a situation where we’re constantly raising money to take care of land,” she says. “We’re setting aside more money than we used to because we’ve done a better job of knowing what it costs to take care of land.”