How to Grow Your Endowment
(and why you should put in the effort)
By Abby Webster, Vice President
In the midst of what has been a constantly changing economic, philanthropic, and social climate, a nonprofit’s commitment to financial stability and diversified revenue streams has become increasingly important to fulfilling its mission. One way that many nonprofits are seeking to ensure their sustained impact and weather uncertainties is by growing their endowments. While nationally, only one in nine nonprofits has endowment funds, a study of the asset allocation of nonprofit endowment funds found that those nonprofits with endowments grew more quickly in terms of their assets, revenues and contributions.
This study points to the importance of endowments and confirms what we are seeing in the nonprofit sector with our clients. Over the last five years, we have helped nonprofits raise hundreds of millions of dollars for their endowments. Almost 60% of the campaigns we supported during that time included an endowment goal. These organizations range in budget size and span different sectors.
What does it take to raise funds for an endowment? And are the benefits worth the effort? Before you say, “We would love to grow our endowment, but there is no way we could possibly raise above and beyond our operating needs,” there are practices you can implement in the coming year that will set you up for endowment growth.
The common thread is a commitment to strategy, planning, communication and solicitation. The fundraising cycle applies even to endowment fundraising.
First, what is a nonprofit endowment? It is a fund set aside by an organization, the principal of which is invested to generate income. The income generated from the endowment is then used as a stable, long-term source of support for the nonprofit’s operations, programs, or initiatives. In many cases, nonprofits establish spending policies and separate management to ensure that the endowment exists in perpetuity.
Three Benefits of a Strong, Well-Managed Endowment
Steps to Grow Your Endowment
Remember that growing an endowment is a long-term endeavor, requiring consistent effort and a commitment to building lasting relationships with your supporters.