Today For Tomorrow: The power of endowment

Rande Richardson

“The best time to plant a tree was 20 years ago. The second best time is now.” — Chinese Proverb 

More than ever, nonprofit organizations providing valuable services that enrich and enhance our lives are finding the wisdom and necessity of diversifying their revenue. Just as in the private sector, survival is enhanced when there are reliable streams of operating funds. Just as there are short-term, near-term and long-term needs, there should be a resource approach built with each in mind. 

    Currently, over 150 nonprofit organizations, churches and schools serving Jefferson, Lewis and St. Lawrence counties have committed to ensuring their long-term viability by partnering with the Community Foundation. Through these partnerships, they have consciously established and built dedicated resources for the purpose of creating a financial bedrock for the sustainability of their work and mission and best stewardship of gifts entrusted to them. While organizational endowments are not a one-size-fits-all proposition, I can point to many charitable organizations, large and small, whose strength has been enhanced by a permanent fund with the accountable discipline only an endowment brings. 

    This approach continues to be of interest to donors who seek to extend their annual giving beyond their lifetimes. Individuals often prefer to make major gifts, including legacy bequests, to provide support for specific charities that will remain in place in perpetuity or to those charities for specific purposes. Recognizing the importance of annual support, the typical Community Foundation donor creates or adds to a permanent endowment for multiple charities at various percentages. Contributing to an endowment provides an enduring gift that can support programs, projects, buildings and initiatives that the donor may have helped previously provide for. 

    This is a primary reason why the Community Foundation now routinely couples grants with an incentive to help build protection for the initial capital expense. To that end, we are currently doubling gifts to build endowments for over 30 local organizations. Just as in life, it is wise to consider the ability to maintain, improve and properly care for things we have made investments in. Even for smaller charitable organizations, an endowment demonstrates to the community and donors a long-term thinking and a commitment to building capacity for the future. In many ways, earnings from endowments help complement and maximize the annual giving that is so critical to fulfillment of mission. This may draw further support from those who wish to provide for an institution that has stability, longevity, permanence and strength. 

    While some may point out that an endowment is of minimal help until it reaches a certain level, taking the first step to proactively focus on the long-term may help a nonprofit’s most loyal supporters see a clear pathway to do the same. The endowment goal should be aligned with realistic levels of giving for this institution even though organizations often underestimate the ability of one donor to be a game changer for future strength. By demonstrating to donors a responsible, stewarded mechanism to perpetuate their support, the case becomes more compelling. Community Foundation endowments help build even more confidence knowing that there is an additional layer of oversight and accountability through leadership changes over time. Being able to stipulate alternate uses for endowment funds in the event an entity ceases to exist is also incredibly powerful from a donor advocacy perspective. This aligns closely with the sanctity of donor intent knowing that what an organization does is likely the ultimate motivation for the gift over the organization itself. The delivery of that program or service may someday be offered in an alternate form. 

    Whether you are a board member, donor or employee, if you believe that the work your organization does is important enough to support today, finding ways to support that mission long-term should be equally critical. As with a savings or retirement program, there is no substitute for starting early. Endowment gifts help ensure that legacies are best remembered for generations to come, in service of the things about which you care most. Ultimately, this protects the investments you’ve made in those causes during your lifetime and has the potential to provide many times the impact of a gift made in one lump sum. When the generosity of the past is combined with the actions of today’s donors, a powerful effect is created, making both acts of kindness more powerful and far reaching. Together, this helps increase the chance that organizations that are here for good can remain here for good. 

Rande Richardson is executive director of the Northern New York Community Foundation. Contact him at rande@nnycf.org.