How to Establish an Endowment for a Nonprofit

An agency that establishes and endowment fund can raise money one time instead of doing yearly fundraisers. For example, raising one million dollars for an endowment fund can yield $50K a year in interest. Annual fundraisers would have to raise $50K a year for twenty years.

A nonprofit organization should have an endowment fund because it gives the organization financial and credible stability. This is important when writing grants and recruiting board members.

Difficulty: Moderately Challenging

Instructions

Establish an Endowment for a Nonprofit

1. Allocate a portion of all funds raised to be contributed to the endowment fund. The board of directors would need to make a motion to do this.

2. Ask individual donors to contribute to the endowment fund rather than a general fundraiser. Wealthy individual donors understand their money will go further in an endowment fund. Offer to name the endowment fund after the person. They will feel immortalized.

3. Check out local endowment organizations in your area. Take the steps to have your nonprofit become a recipient of these funds. For example, Endow San Diego says, "Participating nonprofit organizations must meet the program’s partnership requirements, which include having a strong commitment to endow and a signed board resolution confirming this commitment."

4. Raise funds through your local United Way. During campaign time, make pitches directly to employees at their place of business. It is a good way to spread the word about your nonprofit and how donations to the endowment fund will ensure its work for years to come.

Tips & Warnings

• A lot of grants do not fund endowments, so any money raised from them will need to go as specified in the grant guidelines.

[2nephews]

on 2/26/2008 This was a great article! I didn't know that establishing an endowment was this easy. This shows me a sensible way to do these things. Thanks!