By Deborah Kaplan Polivy, Ph.D.
Endowment fundraising is not difficult. As a matter of fact, in order to provide donors with the most varied opportunities to participate philanthropically with an organization, endowment building needs to be a part of almost all fundraising efforts. Admittedly, it does not belong in every organization especially new not for profits. The first step to adopting endowment development is to eliminate obfuscating language that often scares fundraisers, board members and donors alike.
I was conducting a workshop for a 70 year old not for profit organization. Executive staff of the agency, development directors for individual programs as well as board members were all in attendance and I was thrilled because everyone would hear the same message and it would not need to be communicated in a second-hand fashion to decision makers. The participants were deservedly proud of the history and longevity of the organization and its many projects but there had never been a formal endowment development program notwithstanding that so many of the donors were quite elderly and had been contributing for years.
In my presentation, I used the Donor Lifecycle Map where I illustrated that a donor’s journey with an organization extends from first gift to “ultimate” or endowment. One participant indicated that they were thinking of starting a limited endowment development effort where they would encourage bequests. They thought that “planned giving” was too sophisticated for their group.
No one mentioned outright endowment gifts or even asking for other kinds of future donations that would support the many programs and buildings that had been established by this organization. I realized immediately that this was an organization “ripe” for endowment building but that the board and staff were “frozen” by what they felt was too sophisticated an enterprise for them. I recognized that with some basic training in listening to donors and matching intentions with needs, they could turn around the entire fundraising enterprise and raise a lot more money in the long term. I think they were truly excited by the prospect once they understood it.
Planned giving is the terminology that was adopted for endowment gifts that would be realized sometime in the future, but in my opinion it makes no sense. We all pretty much plan our charitable contributions whether for annual or capital campaigns or present and future endowment gifts. Planned giving really refers to a group of tools or mechanisms, such as bequests or charitable gift annuities, by which an individual can make a future gift without giving up the use of either current assets or income. Why don’t we just say that?
In addition, by constantly referring to planned giving departments and planned gifts, we create silos and often obviate the possibility of current endowment gifts depending upon who is assigned to work with a particular donor. By creating these silos, we often overlook or are not even aware of the possibilities of a variety of gift giving opportunities that we could discuss with donors. Through my own endowment development work, I realized how really easy it is to talk to supporters about alternatives to the annual campaign gift and even different forms of it wherein a current donation could fund a yearly contribution in perpetuity.
My first experience with an outright gift that was placed in an endowment occurred with an eighty-year old widow. We noticed that her annual campaign gift of $5,000 was made through an attorney’s office from where shares of stock were transferred to us on a yearly basis. I wondered whether we could obtain a one-time gift of $100,000 of appreciated stock and would then distribute $5,000 every year into the annual campaign on this woman’s behalf. In this way neither she nor the attorney would have to deal with the contribution in the future and her campaign gift, hopefully, would last forever. Moreover, we expected that due to good investment returns over time, the principal of the gift would increase as would the annual distribution. (We recognized the opposite, too, but the long term was our focus.)
I contacted the attorney’s office and the next time he passed through town to meet with this woman, I joined the conversation. Everyone was assured that we would be good custodians of the gift and the donor was thrilled that she would not be contacted and asked for an annual contribution anymore! On the other hand, I did stay in touch with her and let her know when the annual distribution in her name was made to the campaign and visited her at least twice a year just to keep her informed about our work. All involved – the donor and our organization as well as the attorney – was happy with the new arrangement.
More recently I have increasingly come across the term endowment campaign which I believe is an oxymoron. Endowment is something that has no end – it continues throughout the existence of an organization and even includes or at least should include directions in by-laws or other legal documents as to what will happen to endowment funds if the organization goes out of business entirely or merges with another. An endowment is not a campaign with a beginning and an end – it is ongoing in terms of how monies are raised and spent.
This issue becomes even more problematic when we think about the concept of “major gifts.” Is an outright endowment gift like the one described above a planned gift, a major gift, or something else entirely and in our current department infrastructure, where does it belong?
Endowment relates to building up assets and spending a percentage over time. Planned giving, if we even use that term, is one tool by which endowment contributions can be made. Endowment development is really an essential part of any overall fundraising effort in order to ensure that donors have a panoply of choices in relation to their charitable giving to any particular organization.
Endowment development is not just a bequest program; it is conceptually and very often the final step in a donor’s journey with an organization although such gifts can occur at any time in a contributor’s interactions with an institution. And that is why it is so important to understand the role of endowment donations as just another opportunity for an individual to contribute to an organization. It is not an effort that is put on a “back burner” because of the importance or perceived importance of the annual campaign. It is a complementary fund development initiative that should be a component of an organization’s total financial resource development. Or as Kay Sprinkel Grace, a fundraising “guru” explains, by eliminating the concept of “annual” all together, conversations with donors “can focus on multiple opportunities to contribute on an ongoing basis.” That is the ultimate objective of any fundraising program.
Deborah Kaplan Polivy, Ph.D., is a fund development consultant and the author of The Donor Lifecycle Map: A Model for Fundraising Success (Charity Channel Press, 2017). She also wrote Donor Cultivation and the Donor Lifecycle Map: A New Framework for Fundraising, (Wiley, 2014). For more information, visit: www.deborahpolivy.com.