Wisdom Wednesdays: Endowment Building: The Future of Organizations

by Jon Dize

In fundraising circles, we’re taught that annual giving helps keep the lights on, but endowments ensure your long-term viability.  How do endowments help?  Use the 5 percent rule: if an organization has an endowment of $100,000, then they could earn $5,000 ($100,000 x .05) every year, forever.  Move that example to a $1,000,000 endowment, and leadership could enjoy an extra $50,000 in operating funds without doing anything else.  Period.  Think about that.  What could you do with an extra $50,000 a year?

Should investments in the fund grow more than 5 percent, the annual benefit can grow, too.

Dize-JonNow that you know why you need to support an endowment, I suppose you would like to know how to move forward …

First and foremost, you need a plan.  I love plans.  You can’t get where you want to go without a plan to get there.  Below are some basic suggestions for your plan:

Begin with a GOAL:

  • Start with a program’s funding as your goal.  Want to provide for $50,000 in scholarships every year?  $1,000,000 is your goal (rule of 5 percent).  Want to pay for that new position?  Maybe $250,000 is right.  Want to make sure $5,000 goes to Costa Rica missions every year?  $100,000 will do it.
  • Start with a minimum in mind.  Maximum?  The sky’s the limit with this fundraising system!  Do not limit yourself.

Next, you must PROMOTE the endowment:

  • Promote the endowment in general.
  • Promote the impact that endowments can provide.
  • Promote how the funds will be used.  Talk about your goals.
  • Promote past gifts to your endowment, who made the gift, the impact it made, etc.
  • Promote how to give to the endowment.  Add it to the offering envelope, have brochures in the narthex, list it on your website, etc.
  • Need more promotional ideas?  The ALDE website has resources, or shoot me an email at jond@tlspartnership.org.

Last, (arguably, first!), you need MANAGEMENT of the process:

  • Management should come from an Endowment Committee.
  • Manage the process with an Endowment Policy.  I love helping creating policies for endowments, gift acceptance, distribution, investing and segregated funds because good policy makes work easier and more effective.
  • Manage the investment.  Lutheran and other church bodies have several options to look at, and perhaps your hometown has a good bank trust department.
  • Manage the promotion as listed above.  Fundraising staff, fundraising committees, board members, called staff, etc.  Keep it in front of everyone.

Jon Dize, CFRM, serves as the Director of Development for The Lutheran Schools Partnership in Fort Wayne, Ind.  He is also President of the Indiana-Michigan Chapter ALDE.  Contact him at jond@tlspartnership.org(260) 203-4510, on LinkedIn or via Twitter: @JonDize17.


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