An endowment is a structured pool of funds (called a corpus) kept separate from the operating funds of an organization. The corpus of the endowment is invested and a portion of the annual revenue becomes available to the parish for mission related costs. In theory and in practice, an endowment should grow over the years and contribute greater and greater amounts of revenue as time goes on.
Should you have an endowment?
I know of one ministry to the poor, for instance, that has chosen not to have an endowment because they have prayerfully discerned that it would interfere with their ability to trust in God for the provision of their ministry. On the other hand, the endowment that helped found Oxford University 800 years ago is STILL providing students with a world-class education.
The idea of having an endowment can also be a bit daunting to a parish or ministry that is struggling to bring in enough money to keep operations going. The idea of getting large gifts that would be unavailable to pay current expenses frightens some leaders away from using this very useful fundraising tool.
An endowment is really just that… a fundraising tool. An endowment gives a donor a way to make an impact that will last much longer than their initial gift. It is a particularly useful tool in the world of planned giving. When people are thinking of disposing of their assets after their deaths, making a perpetual impact with their gift is very appealing. Having an endowment for planned gifts also actually encourages current major gifts, because the donor can see that the parish or ministry is planning for the future. Having an endowment gives the impression that the parish or ministry isn’t going anywhere.
Get the help you need to succeed
One great resource that is available to many ministries is your Diocesan Catholic Foundation. Though not all dioceses currently operate a foundation, many have created one that exists as a separate corporation from the diocese for legal purposes. Many of these foundations will help set up, manage, and administer the legal requirements of an endowment for a small fee, making the revenue available on an agreed upon schedule.
Some Diocesan Foundations have skills and resources available for you to market your endowment. You will still be responsible for telling your donors that they can make an endowment gift. Marketing for an endowment can range from very simple to quite complex, so you’ll need to gauge how much time your organization is willing to commit.
In it for the long haul
Know that forming an endowment will never be a pressing need. Urgent matters will always get in the way, unless you decide to make it a priority. Endowments also take many years of committed support before they begin to bear fruit. Planned gifts, a major source of funds for an endowment, take years to come to fruition. You need to focus on the long-term benefit so you can push through the years (yes, years) when doomed to failure. Remember that most fruit trees take 5-7 years before they yield a viable crop. Commit to at least that amount of time before beginning your endowment adventure.
Looking for more articles about planned giving? Try these:
- What is planned giving?
- Should I start an endowment?
- What is a bequest?
- Why are life estate gifts great for planned giving?
- What is a legacy society and how does it help with planned giving?
- What is a charitable gift annuity?
Check out The Fundraiser’s Playbook for a full list of fundraising articles.
Would you like to learn more about raising money for Church and Ministry? Check out Letters From The Almoner, now available on Amazon.com. Image courtesy of Pixabay.com, via Creative Commons License, no rights reserved.