An endowment is a powerful way to secure a level of financial stability. Commingled gifts are invested for growth, and only the fund’s generated income (or a stated percentage of income) is used each year. This source of perpetual revenue may be directed to support a specified ongoing expense, program, or scholarship, or it may be left unrestricted, to be used for the organization’s most pressing needs.
Despite all these benefits (and more), many organizations are not incorporating endowment gifts into their conversations with donors in a planned and consistent manner. Becoming more strategic about encouraging endowment gifts may only require slight adjustments to your approach. Consider the following ideas:
1. Increase awareness.
Donors likely know what an endowment is in general terms but may not be aware of how it helps your organization, how it can be a good fit for their charitable goals, and how easy it is to make a gift to an existing endowment fund. Mention this option regularly in donor communications.
2. Highlight the tremendous impact.
Supporters who care about your organization want to maximize their impact on your mission. Help them understand just how powerful an endowment gift can be:
• Perpetual income
• Enhanced financial security (especially critical during difficult economic times)
• Ensured continuation of particular programs or areas
• The opportunity for expansion
Consider sharing specific details about goals that have been or are currently being accomplished with the help of endowment funds.
3. Call attention to donor benefits.
Donors have great flexibility in deciding how they make their endowment gift, and their tax benefits will vary depending on the method they choose—an immediate gift, a future gift, or even a life income gift. But with an endowment gift, tax advantages may be secondary in importance to “soft” benefits:
• preserving and perpetuating the donor’s values well into the future
• providing critical support to a specific and meaningful area of your work
4. Encourage regular givers.
Supporters who make consistent annual gifts may not realize they can maintain that level of annual giving in perpetuity with an endowment gift. For example, let’s say Anne gives $1,200 every year. If she makes a $25,000 gift to an endowment fund, assuming fund earnings of 5%, her gift will generate $1,250 every year while also supporting the specific cause Anne wishes to fund.
5. Discuss both new and existing funds.
So far, we’ve focused on encouraging additions to existing endowment funds since this is an easy and more common gift. But you’ll also want to encourage those less-common donors who may be interested in making a large, legacy-shaping gift in the form of a new endowment fund. These donors have the power to name the fund and direct the annual income to support and sustain a personally meaningful part of your mission. While consistently acknowledging this option in donor communications is important for awareness, these larger contributions generally require more patience, conversations, and time spent building a relationship.
