Think of your favorite nonprofit organization. What benefits does it offer to our community? What services would be missing if it closed its door? How would it affect our community?
Increased competition for limited charitable dollars has taken its toll on many worthwhile organizations. A vast majority of nonprofits are being asked to serve more clients with less funding and fewer staff members.
Nonprofits that have weathered these challenging times are typically fortunate enough to have a strong endowment.
An endowment consists of donations that are carefully invested to yield a steady, reliable source of income to the organization in perpetuity. Endowments help maintain financial stability.
Just as your household has a checking account and a savings account, strong nonprofits have operational dollars and endowment dollars. A nonprofit’s endowment acts as a long-term savings plan that supports its operations and ensures its success into the future. Does your favorite charity have one?
A typical endowment distributes anywhere from 3-5 percent of its funds each year to the charity for operational or programming purposes.
I know of a nonprofit organization whose endowment is so large that the annual distribution supports its entire fund-raising efforts. This means that 100 percent of donations received from businesses, individuals and families go directly to this organization’s programs. That’s right; zero percent goes to administration fees.
Would you like to give to an organization that covers all of its administrative costs on its own? I would. A nonprofit’s stability can be measured by its endowment, which demonstrates the organization’s commitment to continue supporting its community.
It is important to support your favorite charity’s immediate annual goals, but if you can add to its endowment at least once a year, your gift provides longevity as well as annual support.
Support of an endowment can also be made through planned gifts such as charitable gift annuities, gifts of appreciated assets, gifts designated in a will or estate plan or gifts through a life insurance policy, individual retirement account, 401(k) plan or real estate.
Contributing to or establishing an endowment can be one of the most significant things you can do for a nonprofit, because it is truly the gift that keeps on giving!
We’d love to help you. Please reach out to the Community Foundation for Palm Beach and Martin Counties at (561) 659-6800 or visit www.yourcommunityfoundation.org to get started.
Sheila Kinman, CAP® is the Vice President for Development at the Community Foundation where she helps donors design and fulfill their charitable giving goals. She is also a Charted Advisor in Philanthropy (CAP®), a designation that provides knowledge for guiding charitable individuals, businesses and foundations.