Endowments: Legacies of Giving and Sustainability
Are you telling the right story and giving your supporters the right opportunities to give? Many high-wealth donors want to create endowment gifts for nonprofits. Endowments gifts for nonprofits can set up your organization to retain financial sustainability for years to come and showcase to donors that your organization to thinking about its future and growth over time.
The Harvard University endowment is currently valued at over 53 billion dollars in the fiscal year 2021, ending in the largest sum in its history. While an incredible school, if you are a small to midsize nonprofit (most nonprofits are, compared to this) you may be wishing that massive pool of funding was disbursed a bit differently.
In fact, most nonprofit leaders would wish that $53B was deployed more evenly. Many hope that some of these funds could be funneled into our organizations that are solving big problems within our local communities.
Do donors want to give endowments?
One of the biggest hurdles to sustainability for small to mid-size nonprofits is the scarcity mindset and the false idea that donors don’t want to gift endowments. Remember Harvard’s $53B endowments? Do you know of Stanford’s $38B endowments? These higher education institutions (and many, many others) prove that high wealth donors LOVE giving endowments. They are a beautiful thing because endowments create a legacy of giving. It’s one gift that keeps giving for generations to come. It can be named and it can be added to It also grows and can give for generations to come. Donors know that their favorite organizations can count on income potentially everlasting.
The sustainability that endowment gifts could bring to established small to midsize charities in our local communities could be huge. But, what is the problem? Unfortunately, not all nonprofits are telling the right story. Therefore, they aren’t giving donors the right opportunity to give. There are not many small to midsize nonprofits that have the infrastructure in place to accept endowment gifts which means weeks of accounting, legal, setup, and high fees. Because of this, it deters both donors from giving and nonprofits from accepting, and those gifts keep going to higher education while smaller organizations have to keep asking for the same thing year after year. Let’s change that, shall we?
What is an endowment?
Understanding endowment gift for nonprofit doesn’t have to be as complicated as it seems! Some of you readers may be thinking, “That sounds easier said than done.” So, let’s break it down!
An endowment is a dedicated source of long-term funding, made up of donated gifts, which supports the mission and work of a philanthropic organization. Each year, a portion of the endowment is paid out as an annual distribution to fund the organization’s work. Any appreciation in excess of this annual distribution is retained in the endowment so it will continue to grow and support future generations.
Micro-endowments are smaller funds that can still pay for salaries, programs, and scholarships year after year. There is a reason why higher education, donor-advised funds, family offices, foundations, community funds, and even our 401ks are invested – it works. We are simply encouraging more nonprofits to follow similar financial paths that are already in place and considered best practices by those around them.
This may surprise you but many high-wealth donors WANT to give endowment gifts! They want to create sustainability and a legacy of giving from their wealth. More nonprofits just have to tell the right story and invite them into the opportunity. Storytelling is so important to this giving and receiving process. It is essential that you take the time to have a strong mission and vision statement, an impactful story full of emotion and data, and a pitch that will wow your donors.
How to get started
Not sure how to get started? Infinite Giving helps nonprofits easily create their own endowment and helps high wealth donors directly gift unrestricted miro-endowments (and stock shares) to their favorite local charity in about 20 minutes, with no setup cost. They can handle everything else.
Endowment gifts for nonprofits can help secure income that you don’t have to fundraise each year and they help donors create a legacy of giving for their families. Consider asking for the gift of sustainability with a micro-endowment.
This spotlighted blog post is courtesy of Infinite Giving.