Before the coronavirus seriously impacted the whole world, some nonprofits never thought about building an endowment. However, this pandemic forced all expenses to increase. But even without this global concern we’re facing right now, time changes can hit our economy, reducing annual donations.
During this challenging time, nonprofit organizations need other potential incomes, other than fundraising activities, to finance major programs, daily operations and compensate workers. Endowment fundraising is one of the best ways to overcome this problem.
What Is Endowment?
It is when donors give money or properties to a nonprofit organization, which uses the income of this fund when invested for a specific reason. The number one goal of an endowment is to keep the principal money intact while using the investment earnings for charitable activities or programs that align with the donors’ wishes.
The role of consultants in a nonprofit’s endowment is important. They help trustees and major decision-makers establish a review of their portfolio’s investment policy, guidelines, and objectives. When searching for consultants, ensure they have wide experience, fiduciary, and personalized techniques.
How to Build and Grow an Endowment Fund
Create Plans and Guidelines and Include Your Donors
Before you begin to ask for donations for your endowment fund, you must have clear policies and guidelines, contracts with the donor, and acceptance procedures. Your plans must also detail the investing and spending policies of the endowment fund. In short, how will it be spent and invested?
Take note that organizing everything before approaching potential donors will make them think you have a sense of integrity. While they do not usually interfere with the money’s investment, it’s essential to ask for their advice. Otherwise, you must honor their demand if they have specific stipulations.
Set a Clear Goal of Your Endowment
Usually, donors are motivated to give because they are passionately interested in your mission. Set a clear and meaningful objective for your endowment and explain to your prospective donors why it matters. They need to know that your organization can make a difference.
Implement organizational business strategies based on financial planning and management. Another reason why donors give is because of your credibility and goodwill. For instance, match your expenses to your expected realistic earnings.
Additionally, your organizational revenue is more than just money that is directly spent on your operational expenses. You must consider non-monetary contributions that help lower expenses, such as professional solutions, special skills, and supplies or properties. In short, raise an income before establishing expenses because your initiatives will become useless if you raise funds to cover money already spent.
If you lack funds because you find it difficult to follow your usual fundraising yearly, you may need to consider hiring professionals. Alexander Haas offers annual fund assessments to help you make up for lost income or increased expenses.
Have a Cash Reserve
Set aside a portion of your income and account for them appropriately, whether it’s donated or not. This fund must be restricted and is only accessible for emergency situations or particular reasons. And if you have excess money, deposit it directly into your reserve. This shows your possible donors that your organization has an endowment of any kind and even encourages more donations or donors.
Look for Experienced Investment Managers
Search for registered and reputable investment advisors who can bring your company suitable investment guidance. Select specialists that constantly act in your best interests. Be wise in selecting fund supervisors because they make most investment management decisions.
Though market forces affect your investment’s outcomes, an investment manager’s abilities are also a contributing factor. Select an active or alpha manager who can lead your fund to surpass your competitors and benchmark indexes.
Create a Fundraising Campaign
Raise extra income from fundraising programs. This is one way to increase your organizational income along with the revenues of your endowment fundraising. Remember that even if your nonprofit is small, this goal is desirable.
It’s always best to work with professionals. They are knowledgeable and have the best methods in preparing and implementing fundraising policies while resolving issues that may occur during the procedure. No matter where your location is, like this nonprofit fundraising firm in Atlanta, make sure that the company you choose is willing to go the extra mile for your best interest.