The Capital/Endowment Campaign

HankRosso's Achieving Excellence

in Fund Raising 2nd Edition

Henry A. Rosso and Associates Eugene R. Tempel, editor

Foreword by Paulette Maehara

n JOSSEY-BASS A Wiley Imprint www.josseybass.com

Q^D " : ' CHAPTER TEN G^P

Building Endowment Edward C. Schumacher

T hink of endowment as putting money away "for a rainy day"—only these pennies last not just through one wet season but through many. Or picture an endlessly blooming rosebush that keeps producing beautiful flowers as

long as it is tended carefully and pruned judiciously. That's endowment—gifts given to provide an income for all time.

' WHY BUILD ENDOWMENT?

An endowed fund acts as a self-sustaining funding stream, one that may prove crucial to the financial stability of a nonprofit organization both in the present and into the future. Such a fund offers protection from the uncertainties of the economy and the instability of many other forms of funding. As outlined in Chapter Seven, endowment building is an important part of the total develop- ment program espoused by the Rosso model and one of the four major fund raising results. Both capital campaigns and major gift programs outlined here in Part Three can produce endowment gifts. However, this chapter deals specif- ically with types of endowment and special endowment initiatives that can be developed in mature fund raising programs.

Providing a stable income source is not the only enticement of endowment. By creating an endowment fund, an organization showcases its long-term mis- sion and vision, renews its commitment to donors and clients, and even begins

103

1 0 4 HANK ROSSO'S ACHIEVING EXCELLENCE IN FUND RAISING

to portray itself as a vehicle of fund investment and enhancement. Endowment funds often attract large current and deferred gifts; donors can feel committed to the present mission and also buy a bit of immortality with a contribution that lasts long beyond their lifetime.

Endowment Today Although endowment funds have been part of the overall fund raising programs of major institutions for some time, most nonprofits have not created and could not create endowments. Today things have changed; many more nonprofits have begun to use endowments to stabilize their finances and ensure their future. This chapter defines and describes endowment, provides tools for assessing readiness for endowment building, and offers ideas for beginning the process of endowment fund raising.

Endowment Defined Endowment is a fund of money to be held in perpetuity as directed by the donor. The money in this fund is invested in stocks, bonds, and other vehicles, and an annual income is derived from this investment; the principal remains intact. The return from the investment of this money may be used for the pur- poses of the nonprofit or as the donor directs.

Most endowments are permanent endowments; the principal cannot be touched and is invested in perpetuity to provide an enduring source of funding for an organization. This funding may be for specific projects or programs, or it may go into the general operating fund. Gifts to endowments can be made from many sources, including cash, property, or securities, and may be received as a lump sum or, in the case of deferred or planned giving, over time. Even monies earned from special events can be designated for endowment simply by placing them in a general or special endowment fund.

There are three generally recognized types of endowment funds: true endow- ment, term endowment, and quasi-endowment. We have already described a true endowment: the principal cannot be touched; only the earnings are spent. These earnings include interest and dividend income and in some cases port- folio appreciation as well. Most of these "true" funds are established by a donor, through a gift or bequest, with provisions that direct the earnings to a specific project or program. These funds are often named, and the original donor may add to the principal over time.

A term endowment functions as a true endowment until a specified event occurs, a specific period of time elapses, or a predetermined date is reached, at which time the principal may be spent. The income from term endowment may be either restricted, usually by donor instructions, or unrestricted, that is, not specified by donor instruction but designated for a specific use by the organization.

BUILDING ENDOWMENT 1 0 5

An organization may establish a quasi-endowment. This fund may be treated as an endowment but is not truly subject to the rules of true or term endow- ment; rather, it functions more like a reserve account. Investment earnings are spent for programs and projects, while the principal is protected; however, earn- ings can be used for various purposes, and the main fund may be utilized. This fund may be established with gifts or current operating funds and is generally used at the discretion of the board of directors.

Endowments may be held and managed by the organization receiving the funds, but they are often held and managed by an outside organization, usually a community foundation, a private foundation, or a private financial institution.

,, History and Growth ..,.rt...-.:-,:.,,*. -i Endowment is not a new concept; many private universities were founded with large endowments, and some long-established nonprofit groups boast very old endowment funds. Two late-twentieth-century trends, however, boosted both the need for endowments and their chances of success. -

Beginning in the 1980s, nonprofits saw their government and private corpo- rate funding drop dramatically; organizations were forced to become more cre- ative and sophisticated in their search for dollars. In the 1990s, the stock market exploded, and investment profits rose radically. In numbers tracked by INDE- PENDENT SECTOR (2001b), the total dollar value of receipts from endowment and investment income increased from $5.1 billion to $31.5 billion between 1977 and 1996.

More recently, the growth of community foundations as agents for nonprofit endowments has spurred the creation of endowment funds among even the smallest of organizations.

The current world of endowment funds and fund raising is an unbalanced one. A study conducted in 2000 by the Spectrem Group found that groups in the United States held nearly $600 billion in endowments (Billitteri, 2000). According to the 2000 National Association of College and University Business Officers (NACUBO) Endowment Study (Klinger, 2001), colleges and universities hold the lion's share of these funds, with more than $239 billion in endowment assets, and yet, says NACUBO, only a limited number of nonprofit higher edu- cation institutes in the United States have endowments. The same study shows that forty-one universities and colleges held endowments worth $1 billion or more, with Harvard holding the largest single endowment in the nation, valued at nearly $19 billion (Manetta, 2001).

INDEPENDENT SECTOR (2001b) has compiled statistics that show that educa- tion and scientific research receive more income from endowment and invest- ment than any other part of the nonprofit sector, but slowly other sectors are creating and benefiting from endowment funds. In the two decades from 1977 to 1996, arts and culture organizations saw their receipts from endowment and

1 0 6 HANK ROSSO'S ACHIEVING EXCELLENCE IN FUND RAISING

investment rise tenfold, from $100,000 million to $1 billion. In the same period, social and legal services increased their receipts from endowment and invest- ment, with income rising from $200,000 million to $1.8 billion.

Despite this growth, endowment funds remain misunderstood and underuti- lized. At the same time, continuing struggles for funding and an uncertain eco- nomic future make endowment ever more desirable and necessary.

ENDOWMENT FUND RAISING

There are many ways to include an endowment fund in your general fund rais- ing program. Endowment can be integrated into your planned giving program (see Chapter Twelve) by establishing an endowment fund and soliciting planned gifts specifically for this fund or by promoting the establishment of named endowment funds as part of the planned giving process. You may choose to solicit endowment gifts as you would annual gifts (see Chapter Eight)—asking on an ongoing basis for current cash or equivalent gifts for the fund through face-to-face meetings or special mailings.

It has become quite common to include an endowment fund raising element within a capital campaign (see Chapter Eleven); this is an obvious combination as you raise money to build a facility and solicit the funds to ensure its long- term use and maintenance at the same time. You may wish to conduct a strict endowment campaign, which follows the general rules and structure of a capi- tal campaign but focuses solely on building the endowment fund.

Strategies Successful endowment fund raising combines the best techniques used for annual giving with the special strategies employed in capital campaigns. For endowment fund raising efforts to succeed, there must be an ongoing year- round process of cultivation, solicitation, and recognition; it can never be set aside or considered finished. Endowment campaigns may be used to kick off the start of a fund, but the fund needs to always be part of the organization's overall fund raising plan. A permanent staff member should be assigned to run the endowment program year-round, to make it a priority for the organization, and to promote it to the whole community.

The strategies used to cultivate and solicit endowment gifts mirror those used for major gifts and capital gifts. Endowment fund raising is generally focused on a small group of donors and aims to generate large gifts over a period of time; therefore, the pace of this fund raising is often slow. Large amounts of time are spent on cultivation, proposals are specially tailored for each prospect, and numerous one-on-one meetings must take place.

BUILDING ENDOWMENT 1 0 7

Planned Giving v Endowments are often confused with planned giving or estate gifts. Although many endowment gifts come in the form of planned gifts, it is important for both the organization and its donors to distinguish between the two. As dis- cussed in Chapter Eleven, planned giving refers to giving vehicles, such as char- itable remainder trusts, life insurance, donor-advised funds, or wills, which direct donations to a nonprofit organization during the life of the donor or upon the donor's death. An endowment is the actual fund of monies that have been given to the organization, with the direction that only the income from its investment be spent. An endowment may be funded in part by a planned gift, and many planned gifts are designated as endowment gifts, but they are not to be confused. - - -. , > - . \:.,

GETTING READY FOR ENDOWMENT FUND RAISING

Most nonprofits can have an endowment. Endowment fund raising can be as simple as a wills-and-bequests program or as complicated as a full-blown planned giving program. In either case, there are some factors that must be in place before you start. There should be a clearly defined fund raising staff posi- tion, that of development officer or other similar job title. In addition, there should be an annual fund or other ongoing giving program, volunteers, and a donor base. Access to a community foundation or the other legal and financial organizations needed to run an endowment are also necessary. Although a planned giving program is not a prerequisite for beginning an endowment fund, as mentioned before, one ought to be in place to ensure the success of the fund.

Since so many nonprofits are now doing endowment fund raising, there is no need to start from scratch. Create a study group, which includes the devel- opment director, the board finance chair, the board fund raising chair, and other interested parties, to embark on a research project. Research the endowment funds of other similar organizations, interview someone in your community who has helped start an endowment fund, and interview someone from the local community foundation; even if you don't use the services of the founda- tion for your endowment, it will have plenty of knowledge about such funds. All the information the study group gathers will be valuable later when the process of education begins.

This study group will also want to conduct a brief internal feasibility study to see if the organization is ready to start an endowment fund raising program. This feasibility study is really a set of answers to a long list of questions designed to help you assess your chances for success.

1 0 8 HANK ROSSO'S ACHIEVING EXCELLENCE IN FUND RAISING

Assess Your Donor Base Begin the study by analyzing your donor base to ensure that you have endow- ment donor potential. Compile information on the number of active donors you have and the number of donors at each giving level. You need not only look at the highest giving levels; even donors who have consistently given $500 a year to your organization for two or three years may be potential endowment donors.

Prospect research, both informal and formal, is an important component of good endowment fund raising. It is essential that the capacity of prospects be assessed and that time is spent seeking information that points to leadership gift prospects.

Look especially at your top donors. What is their cumulative giving over the past five years? Have they given planned or major gifts? Review your planned giving program. How many donors do you have, and what types of gifts have they given?

What is the age range of the donor list? What is the age range of your top ten donors? Are they good candidates for planned gifts, and are they in a phase of life when they are looking at wills and making plans for their estates?

How many of your current board members are among the top ten donors? Board members are often good first endowment donors, just as they are good first capital and major gift donors.

Assess Your Fund Raising Program This is perhaps the most important part of the study. Do you have the donor base to make the investment in endowment fund raising worthwhile? Look closely at your annual giving program: How old is it? How much income does it generate each year? What size gifts do you receive? Are donors segmented by gift size and approached differently based on gift size? Do you have major donors, corporate and foundation donors? The answers to all these questions will help you determine how big to make the endowment program and how fast to get it going.

Assess Your Organization How old is your organization? Institutional age generally denotes stability, and endowment donors want to give to stable organizations. Does the community know who you are, what you do, and how you do it? Is your mission accepted by the community as an important one? Are the organization's values clearly stated and demonstrated in public documents and public acts? Do you have a long-range plan in place that shows you know where you are going in the future? *• ' :*•••: -'-x .%<$£. :: v-*Hs.,; .. «••:.;_>• v

Does the organization maintain a comprehensive list of names and addresses of members and constituents, business prospects, clients served, and other inter-

BUILDING ENDOWMENT 1 0 9

ested parties? Is there a program or system for keeping past board members involved with the organization? Are there publications and other vehicles for promoting endowment giving?

Is the organization financially sound, that is, can it meet its current operat- ing needs and cover any deficits through annual and other giving?

Assess Your Leadership You will need the right people in the right places in order to pursue endowment fund raising. Think about the members of your board: Are they the movers and shakers of the community? Are they committed to the organization? Are they committed to building an endowment? Are there leaders among the group who are able and willing to lead fund raising efforts?

Does the board participate in other fund raising endeavors, as both fund rais- ers and donors? What percentage of the board gives to the annual fund or gave to your most recent capital drive? How many board members have named the organization in their will or given another type of planned gift? As with all fund raising, an active board whose members are willing to give and ask others to give is essential. Endowment fund raising will require intense board education: members cannot simply support the idea of an endowment program; they must understand how endowment works.

An endowment program is a time-consuming endeavor. Both the CEO and the development director must be committed to making it a success. You will need to determine who will oversee the endowment fund raising effort, how much time that staff member will devote to endowment, and how those efforts will balance with the person's other responsibilities. Details such as who will provide administrative support or research support for the program need to be determined before the program is launched.

It is important to make a commitment with funds as well as ideas. Obviously, you will need to fund a position or part of a position to run the program, but you will also need a budget for training the staff, for cultivating donors, and for paying legal and financial fees associated with the program and all the printing, mailing, and other costs associated with fund raising.

Assess Your Systems and Records ., , If you do not possess a fully computerized, accurate, and up-to-date donor data- base, you are probably not ready to begin an endowment program. If you do have a database, consider whether it allows for timely and appropriate gift pro- cessing and whether it has the capacity to handle the detailed research and cul- tivation information necessary for endowment fund raising. Are funds available to purchase a new system, if one is necessary, or to enhance the current sys- tem? How will the records of endowment giving be incorporated into those of annual giving and capital giving? Endowment dictates that detailed, complex

1 1 0 HANK ROSSO'S ACHIEVING EXCELLENCE IN FUND RAISING

records can be kept over time; you will want to track endowment income and outcomes, perhaps even as they relate to individual donors. •

The legal and financial aspects of endowment require that an organization have established and written gift policies and procedures. Take a careful look at these policies. Do they outline how to accept securities, real estate, bequests, or tangible personal property? Do the policies address investment practices, fund management, board oversight, and stewardship? Donors will want answers to all these questions.

THE PLANNING PROCESS

The planning process for developing an endowment initiative should involve key constituents and result in organizational policies related to endowments. Following are some of the aspects organizations should consider.

The Committee The board should create an endowment advisory committee (EAC), and a staff member should be assigned to this committee. The EAC will draft strategy, goals, and directions related to endowment creation and fund raising. The board then reviews the plans and sends them to the finance and development com- mittees for approval. The staff develop a basic endowment fund raising plan and plan an endowment retreat.

. . • - - - • ' - - • — , i • *

, The Endowment Retreat There will be many questions to be answered at the endowment retreat: Which type of endowment will you have? Who will manage the endowment? How will the CEO, board members, and others be involved in the endowment program? Who will train them? How will the endowment program be integrated with the organization's current fund raising programs? What cultivation activities will be introduced? Who will solicit prospective endowment gift donors? Who will develop written materials for endowment? What programs or projects will you choose to endow? . >-

The endowment retreat is the beginning of a long process of education. Many board members, even those with sophisticated legal and financial background, do not truly understand endowments. As mentioned before, they may have endowment funds confused with planned giving or other giving vehicles or view them as something too complex and overwhelming for nonprofits to undertake. The education process begins with the board and will continue with staff and donors as the endowment moves forward. : *

BUILDING ENDOWMENT 1 1 1

Legal and Professional Counsel The creation and management of an endowment fund requires expertise in sev- eral legal and financial matters. Whom do you need to bring in to do this work? Are there people already in your organization who can take on this work, or do you need to hire outside agents? Do you already have relationships with orga- nizations that can advise you in these matters? Be cautious. Just because a board member is a lawyer does not mean that he or she is qualified to run an endowment fund. That said, some organizations do rely on board, staff, and volunteers to create, invest, and manage their endowment funds. Others choose to hire trust companies or financial advisers to do the managing.

Institutionally Related Foundations ^Jli

It is possible and often preferable to establish a separate and independent (501)(c)(3) organization, sometimes called a "foundation," to raise and man- age an endowment. Tied to the organization through bylaws, articles of incor- poration, and linked boards, an institutionally related foundation can bring added staff and resources to endowment fund raising efforts.

The Community Foundation Another option open to nonprofits is the use of a community foundation. These grantmaking organizations are in the business of investing funds and support- ing nonprofits. They can help you establish your fund and administer it for very reasonable rates. They may also offer better fund growth, as your fund is often pooled with those of others; investment expertise; and greater visibility for the fund through their networks and publications.

-•• • p ' ' - - • ' . • • • •

Donor-Advised Funds Donor-advised funds have grown in popularity and assets over the past few years (Billitteri, 2001). Commercial brokerages, community foundations, feder- ations, and even some charities have set up donor-advised funds, in which donors may give cash or other assets, claim a charitable deduction, have the funds invested, and help direct the resulting monies to charities. Charities that choose to oversee such funds for donors usually require that the donors give them some portion of the funds in the account each year. Considered a planned giving vehicle, donor-advised funds could be used to augment the organiza- tion's own endowment fund. If you wish to offer donor-advised funds, be aware that they are complicated and may be perceived as competing with local com- munity foundations. ; - :i

1 1 2 HANK ROSSO'S ACHIEVING EXCELLENCE IN FUND RAISING

The Case for Endowment As with other types of fund raising, the success or failure of endowment fund raising can depend on the case presented to prospective donors. The develop- ment of a case should be comprehensive and cover all the components of the organization's success. Specifically, the organization needs to address both the nature of endowment funds and the reasons for giving to endowment. The case documentation (see Chapter Six) will serve as your main educational document to help donors understand the benefits of endowment giving.

Endowment is attractive and important to donors for a number of very dif- ferent reasons. Those reasons need to be customized to meet the needs of each specific donor. Here are some to consider: Endowment giving can translate into a little immortality, as the gift lasts long beyond the giver's lifetime. The gift can be made now, but in the case of many giving vehicles, the donor retains use or benefits from the funds until death. There can be many tax savings, including capital gains and estate tax relief. All these need to be highlighted in the case statement.

Documentation To build an effective endowment fund raising program, the following documents should be in place in the nonprofit organization: (1) a statement of board responsibilities related to endowment; (2) a statement of rules for fund raising and the creation of new endowments and rules for making additions to exist- ing endowments; (3) a statement that includes gift transfer rules, rules for the receipt of gifts, accounting policies, and procedures for endowment; (4) written investment policies, goals, and procedures; and (5) templates for distribution and endowment reports. ,, ; v

LAUNCHING THE FUND

As discussed in Chapter Three, the concept of the fund raising cycle is at the heart of Hank Rosso's fund raising philosophy. The fourteen steps of the cycle, when put into place, can be used to prepare for and carry out many types of fund raising, including endowment fund raising (see Figure 3.1 in Chapter Three).

Endowment fund raising is simply good fund raising. It can be done in a campaign format like a capital drive or in a lower-key, continuous mode like an annual fund. In either case, some of the basic premises remain the same. The first gifts to the fund should be leadership gifts, which set high giving expecta- tions and encourage other donations. Endowment fund raising highlights multi- year pledges and multiyear vehicles and both current and deferred gifts. It is a

5* BUILDING ENDOWMENT 1 1 3

very i n t e n s e t y p e of f u n d r a i s i n g , w i t h e m p h a s i s o n n u r t u r i n g c l o s e r e l a t i o n - ships a n d s p e n d i n g o n e - o n - o n e t i m e w i t h p r o s p e c t s .

Much like p l a n n e d giving, e n d o w m e n t fund raising h a s t o w o r k h a r d to p r o v e itself successful. E n d o w m e n t f u n d r a i s i n g is g e n e r a l l y n o t q u i c k . It t a k e s t i m e to develop r e l a t i o n s h i p s a n d t o d i s c u s s t h e i m p o r t a n c e of a n e n d o w m e n t gift. Often t h e c o m m i t m e n t t o e n d o w m e n t is m a d e t o d a y w i t h a gift t o c o m e later. The n u m b e r s d o n ' t a l w a y s l o o k so g o o d w h e n t h e y d o n o t c o i n c i d e w i t h m o n e y in the b a n k . S t a y i n g t h e c o u r s e is e s s e n t i a l t o get t h e o u t c o m e s y o u w a n t . Be clear a b o u t y o u r g o a l s a n d t h e r e a l i t y of e n d o w m e n t g i v i n g s o t h a t t h e b o a r d and others c a n u n d e r s t a n d w h a t a s u c c e s s f u l e n d o w m e n t f u n d l o o k s like.

Prospect Identification Every organization can find endowment prospects. The information on indi- viduals in Chapter Thirteen is helpful here. However, some organizations have the advantage of having a constituency more suited to endowment giving. Gen- erally, endowment donors are fifty years old or older, are past donors to the organization, and have a long history of giving. They may also have made an endowment gift to another institution. Prospect research, both formal and infor- mal, can provide insights into your donor base (see Chapters Thirteen and Twenty-Five). This ongoing process may look at a wider range of donors than you suspect. You want to look not only at individuals with high incomes but at those with large asset bases as well. Look closely at real estate holdings, art col- lections and collectibles, and other tangible property. ., v v .'•::• ,

The most likely prospect is already a donor to your organization and is someone who would like to see your organization continue to prosper beyond his or her life. Devoted donors such as these make great prospects for endow- ment giving. .,..'C,.-. , , . , , ' - , - . ,

Marketing Your Endowment Whether you are conducting a campaign devoted solely to endowment or with endowment as one element or are simply beginning your endowment program, you will want a prestigious event to kick off the fund raising. A well-done event can mobilize the volunteer leadership, provide an opportunity for prospect cul- tivation, and deliver your case in a wonderfully exciting setting. It is a great way to kick off a general marketing program as well.

You can use all the same vehicles to promote endowment that you use for planned giving—brochures, newsletters, special events. Once donors fully understand endowment, they are generally eager to participate. Package the endowment carefully, stressing the permanence of the funds, being specific about how they will be used, and focusing on naming opportunities. Gift agreements can often be used as part of the marketing program. Each gift agree- ment, like each giving proposal in a capital campaign, can give very specific

1 1 4 HANK ROSSO'S ACHIEVING EXCELLENCE IN FUND RAISING

information about the donor's gift and its uses. Designate and promote special types of gift giving for endowment; perhaps place all anniversary, birthday, and memorial gifts in the endowment fund.

Be creative when generating naming opportunities. We all know about nam- ing buildings or naming endowed chairs in a university department, but you can name many things within your organization. Name a program or project, name a staff position, name a classroom; name anything that is relevant to your group. It may seem odd at first, but it can be very attractive to a donor to know that her gift, say, to a food bank, creates the "Mary White Endowed Food Dis- tribution Fund," thus ensuring that the food bank always has the funds to hire a well-qualified person for this important staff position.

The Endowment Discussion It is in the discussion of endowment with prospective donors that we get to make our case. One of the truly different components of endowment fund raising is the nature of the conversation held with prospective donors. It is only in endow- ment that we can use words like legacy, perpetuity, and heritage. Here we have powerful language that gets people's attention and helps them see beyond their own lives. This is truly doing good forever. Good endowment fund raising rec- ognizes and uses the power of these concepts to involve donors in comfortable discussions about the vision and mission of the organization beyond their lives.

Endowment also offers the opportunity to memorialize the donor, the mem- bers of the donor's family, or close friends or to honor someone important to the donor. Once again, this recognition carries with it a "forever" connotation.

Solicitation People give to endowment for many of the same reasons they give to other funds:

• They believe in the cause and were asked to give to it.

• They believe in the cause and have a linkage to it. ^ --

• They believe in the asker.

• They are dedicated to the specific project or program within the organi- zation that the endowment will fund.

• Their business or industry will gain from the gift.

• They would rather give to your organization than to the government— they want the tax advantage.

But endowment giving has its own special enticements: donors like the idea of perpetuity—giving beyond their own lifetime; they are pleased to know that their gift will grow with sound investment and spending practices; and they may

BUILDING ENDOWMENT 1 1 5

be impressed with the investment advice and proposed management of the endowment.

Within your endowment campaign, create a structured individual solicita- tion drive. A four- to eight-week drive provides a set amount of time for those involved in solicitation to make their calls and requests. Certain times of the year are considered best for asking for bequests for endowment: late spring, when people reexamine their wills or draw up new ones in preparation for long summer trips; winter, when people plan winter vacations and year-end tax moves; between Thanksgiving and Christmas, when people are in a charitable mood; whenever tax laws change; and around special anniversaries in your organization's or donors' lives.

One of the best methods for cultivating, soliciting, and ultimately recogniz- ing endowment donors is to create a special "endowment club." Club member- ship is attractive to many donors; if they know their friends are going to the club meeting, they want to go as well. The club is also an easy and effective way to involve board members in endowment giving and fund raising. Even the naming of the endowment club can be part of the process of board involvement.

The club gives the organization a chance to know the donors better, special opportunities to thank the donors, and a vehicle to stimulate and maintain inter- est in endowment giving. It is difficult to know the exact amount you will raise from bequests, trusts, and cash gifts, but statistics seem to show that for every fifty members in the club, you will realize $1 million. About 5 percent of the club members will eventually give 95 percent of your endowment gifts (Public Management Institute, 1980, p. 44).

There are several ways to solicit potential members for this type of club. The president, board chair, endowment committee chair, or executive director of your organization may sign a letter announcing the formation of the "Heritage Club" and asking for help in locating donors who may qualify for membership in it. The letter should be mailed to board members, staff members, major donors, and long-term friends.

Donor Recognition and Stewardship Endowment giving needs to receive special recognition. Donors have placed great trust in the organization and have assumed long-term financial account- ability. Make sure they know how the funds are doing, how important the ability to rely on the endowment as an income source is to the organization, and ways in which the organization is acting as a responsible steward of the fund. Remain responsive, no matter how long ago the gift was made. You have stressed its perpetuity; you must make the relationship between organization and donor a permanent one as well. Regular written reports on the progress of the endowment, on how the funds are currently affecting the life of the

1 1 6 HANK ROSSO'S ACHIEVING EXCELLENCE IN FUND RAISING

organization, and who the donors are is an essential component of both recog- nition and stewardship.

Find unique ways to honor the donor. Hold an annual anniversary party to *• showcase endowment results; this not only gives recognition but also provides an opportunity for further giving to the fund. Use your club as a way to recog- nize donors. Hold special club meetings, bring financial advisers in to speak with club members, and recognize the club in all general organization publications.

Recognize that endowment fund raising is not a onetime effort. It is labor- intensive. By its nature, it is an ongoing process of cultivating and soliciting gifts, investing and receiving income from these gifts, and recognizing the givers and the overall results of the gift. Plan to stay dedicated to your endowment fund raising program. Constant stewardship of past donors and of current prospects is essential. Both staff and volunteers must stay tuned in to the needs of the donors. Make sure stewardship and donor recognition are in your long- range plan and your long-range staffing plan. <

CONCLUSION

Nonprofit institutions have evolved into crucial and essential partners in our communities, acting as a "safety net" and emerging as both a civilizing and a stabilizing influence in society. Despite their crucial role, nonprofits have been consistently underfunded and are often forced to rely on inconsistent and unpre- dictable funding sources. Endowment building may be one solution for non- profits as they struggle to meet the ever-growing needs of our society. And as the idea of endowment building becomes more popular with donors and the practice more common with nonprofit organizations, fund raisers will need to grow more sophisticated in their development and management of endowments.