How to Build an Endowment Fund?

Let’s talk about how to build an endowment fund.

So, your organization has recently decided that they would love to have an endowment fund.

Either you don’t want to spend quite so much time each year fundraising, or you have realized that it would be nice to have an “income” that you can count on each year.

Okay, well now you are trying to build up your endowment fund.

Some organizations are really lucky and have a large endowment fund gifted to them by a generous donor in their will or during their life, but that isn’t always the case. Other organization’s have to slowly build their own endowment fund by combining a few techniques.

How can your organization build an endowment fund?

Let’s be clear… it probably isn’t going to be easy, but it’s going to be worth it.

Here are some ways that you can work on building an endowment fund:

Top Donors

Contact some of your top donors and see if they would be willing to stretch their annual gift a little further to donate to an endowment fund. Many top donors understand the importance of building up a savings account and so the idea could be compelling to a lot of top donors.

Overhead Expense

Create a fund in your annual budget where you donate to the endowment fund each year as part of your “expenses” back to your overhead. This will take a long time to grow because you won’t be able to donate too much since you are also concerned about your other overhead and programs, etc., but it will slowly increase over time.

Board of Directors

Ask your Board of Directors to donate to and create an endowment fund for the nonprofit organization.

Fundraising Event

Host a fundraising event where the proceeds go to creating an endowment fund for the organization (make sure that you are clear where the money is going because you don’t want people to think that the money is going to your programs if it is not).

I would recommend doing a combination of the ideas above to create an endowment fund, and remember, in order for it to truly be an endowment fund, you can’t touch the principle. So, this can’t be money that you set aside and then decide to take a little bit here and there as you are trying to build it up.