The Community Foundation is an ideal vehicle for building an endowment to help your nonprofit organization better meet current challenges and provide long-term stability for the future of your organization. The Community Foundation provides investment oversight of the funds and many other services.
What is an agency endowment?
An agency endowment, which grows through gifts from generous donors, and investment income, is a permanent pool of charitable dollars whose earnings benefit a specific organization. Only a portion of the earnings are spent for purposes determined by the nonprofit's board, or in some cases, the wishes of the donor.
What is the difference between an endowment and a cash reserve?
A cash reserve is a board-designated fund. Both the contributions and earnings are available to meet emergency needs. It is wise for a nonprofit organization to establish a cash reserve as part of prudent financial planning, prior to creating an endowment. An endowment is a permanent fund in which contributions may not be spent but rather are invested to generate a stream of income for the organization.
Who should create an endowment?
Organizations with an outstanding track record of service to the community, strong leadership and management, financial stability and accountability, a committed and diverse pool of donors, board and staff commitment to the effort, and the capacity to engage in this long-term fundraising strategy are the best candidates for endowment development.
Why does your organization need an endowment?
An endowment demonstrates that your organization has made a long-term commitment to your mission. It provides an additional source of annual income. Endowment earnings can be used each year to help fund operations, programs, and unanticipated needs.
Who can establish an agency endowment with the Foundation?
An agency endowment can be established by a nonprofit, tax-exempt 501(c)(3) organization or by a donor of that organization.
How do you set up an endowment?
How can you build your endowment?
- Select a committee to plan the effort, fundraise, and meet with potential donors.
- Create an endowment building plan which includes responsibilities of staff and board, strategy for building the endowment, an investment policy, a spending policy, a gift acceptance policy, a marketing plan and a donor recognition plan.
- Seek donations of cash, appreciated securities or planned and deferred gifts.
- Encourage donors to include your organization in their wills.
- Become educated about endowment building and planned giving. Staff and Board must be able to explain the difference between annual fund, capital fund and an endowment.
- Contact us. We can help simplify the endowment building process.