Nonprofits Get Creative in Raising Money for the Long-Term

A growing number of nonprofits are taking innovative approaches to raising money, including one that used to be the exclusive province of universities: endowing staff positions.

Other organizations are establishing public memorials to honor living donors who pledge endowment gifts that will be paid when they die or that support programs that encourage young people to make philanthropy a lifetime tradition.

But some observers say time is short to push the idea of endowment gifts. While such appeals may work to entice the growing cadre of Americans who are in their 60s or older, they probably won’t work so well with people who are younger and tend to want to see an immediate impact from their dollars.

“If you look at younger donors,” says Emmett Carson, chief executive of the Silicon Valley Community Foundation, “they’re not interested in long-term legacy. They’re interested in creating solutions today.”

Appeals to All Ages

Still, some nonprofits are reaching donors of all ages with endowment pitches.

Several Jewish community foundations have established regionwide education efforts to help small charities establish and build endowments. One of the most effective methods has been to establish “Book of Life” programs that honor living donors in public ceremonies celebrating their endowment gifts or pledges for donations after they die.

The Jewish Community Foundation of Greater Phoenix allows donors who pledge a minimum of $10,000 to sign its leather-bound Endowment Book of Life (and its online equivalent), write 120 words about what motivated the gift, and be honored at a signing ceremony, says Sheryl Quen, the foundation’s director of grants.

Since 1998, the book has amassed 216 pages and produced pledges of $41.5-million. Only 10 pledges have been removed because the donors were unable to pay the gift, she says.

The Rose Community Foundation, in Denver, established a similar program in 2012 called the Living Legacy Tapestry, a work of art that incorporates images that donors provide to symbolize their philanthropic philosophies and demonstrate the idea that an endowment gift has value over a long period of time, says Vicki Dansky, the foundation’s gift-planning officer.

The tapestry will eventually have art pieces that represent the first 100 donors to the foundation’s Legacy Circle, regardless of the gift size. So far, 60 people have committed.

The Jewish Community Foundation of San Diego offers a Book of Life as well. But it also pursues several other approaches to seeking endowment gifts.

One is designed to appeal to young donors. Already it has attracted several families to endow a summer philanthropy camp and other programs that encourage young people to get involved in charitable causes and become community leaders, says Marjory Kaplan, the community foundation’s president.

Another, called the Foundation Fund, seeks endowment donations from current and previous board members and the federation’s senior executives.

The fund’s first act was to endow the top leadership position at the foundation.

Ms. Kaplan now holds the Miriam and Jerome Katzin Presidential Chair. Mr. Katzin, a retired investment banker, was the organization’s former board chairman. The Katzins provided $1-million on the condition that the money be matched by others. Several other families within a year contributed a total of $4-million more, Ms. Kaplan says.

The foundation is exploring other positions to endow.

“Colleges and universities have been doing it for years,” Ms. Kaplan said. “It gives tremendous budget relief so we can really focus on the work we’re doing.”

The trend is not widespread, but other organizations have taken similar steps. And many nonprofit leaders and experts are intrigued by the concept.

“The potential probably exists for having a fairly broad-scale campaign to interest people in endowing positions,” says Eugene Tempel, dean of the Lilly Family School of Philanthropy at Indiana University. But, Mr. Tempel adds, “it’s probably a stretch when you get to various types of local human-services organizations.”

Endowed Chairs

American Friends Service Committee, a Quaker charity, is exploring the idea of seeking donations for endowed positions. Since 2011, it has offered donors the opportunity to endow internships for gifts of at least $500,000 and fellowships for a minimum of $1-million.

Thomas Moore, director of development, says the organization is focusing on jobs that will still be needed in at least 20 years so donors have the assurance that their money will be used the way they wanted.

Lori Grecco, assistant director for membership and the annual fund at the Indianapolis Museum of Art, says her organization is also exploring expanding beyond the three endowed positions it now has in place.

The group completed fundraising on one of its three endowed positions in 2011. It received a $1.75-million grant from the Andrew W. Mellon Foundation and a $1.5-million gift from a former museum trustee, Otto Frenzel III, to establish a position for a senior conservation scientist in the donor’s name. The museum is approaching donors interested in endowing curatorial jobs.

“We are targeting curatorial positions,” Ms. Grecco says. “When you think about our donor base, those are the roles that are nearest and dearest to their hearts.”

She says the economic downturn has made it easier to talk about endowment gifts because donors saw how the recession and slow recovery rocked the institution’s finances.

Rather than start a full fundraising campaign two years ago, the museum held off to discuss how to gear a campaign more toward raising money for its endowment.

“Now we’re weighting everything more to the endowment,” she says. “We looked at what would resonate more with our donors; they were concerned about endowment.”

Richest Donors

Building a long-term relationship with donors is key to landing bequests that can be a big boost to an endowment.

“The largest gifts take years,” said John Griswold, executive director of Commonfund Institute, a nonprofit financial adviser to charities and universities.

Ninety-five percent of major gifts come from about 5 percent of the richest donors, says Mr. Griswold. “You have to have a stable group doing it in your organization,” he says. “You’re really concentrating your efforts among a small number of people.”

Such work has paid off for the United Way of Greater Rochester, in New York, which has a $110-million endowment.

The charity routinely receives bequests from estates or wills established in the 1950s that refer to the group by its original name, Community Chest, says Jodi Groden, chief financial officer. It has had an endowment since the 1920s, and appeals to its supporters’ desire to leave a legacy. “We have a lot of loyal donors in the community who over the years have left us in their wills,” she says.

The charity has a separate drive to raise money for its endowment, an appeal that highlights both the charity’s “rich history and what we are doing now to get results,” she says.

But the group met this month to discuss how to appeal to younger donors. “We need to be more focused on younger donors in general,” she says.

Mr. Carson, of the Silicon Valley Community Foundation, thinks such efforts may be a waste of time.

“The argument that says, ‘When you go away, give us all your money so we can make decisions’ flies against what younger donors want,” he says. “That’s not appealing to anyone.”