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This Month's topic:
Endowments
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is available from:
The
Learning Institute for Nonprofit Organizations (LINO):
This
link will take you to a whole array of wonderful online training from LINO.
Programs include Board Governance, Social Entrepreneurship, Resource
Development, Volunteer Management, Strategic Planning, and Marketing.
Peter Brinckerhoff provides the "Mission-Based
Management" training module.
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| This Month's Topic: Endowments |
Each month, this area provides with a
number of my favorite and most helpful sites regarding the topic of the month.
|
Management
Tip of the Month
Each issue, I start with a discussion
of my management perspective on the month's topic, and give you a few hands-on
ideas to consider. |
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Recommended Publications
Here, I provide you with my
recommendations on the best printed materials available that can help you
become more mission-capable in the area of Endowments. |
Technology
I provide you with some good ideas for
uses of tech to better your organization in the area of
endowments.
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Marketing
Tip
So much to say, so little space to say
it.....and marketing has an enormous impact on
endowments...
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Next
Issue
In June we'll look at an issue that can help
many nonprofits: Mission Uses of technology.... Magic bullet or tool?
Check in next month and see. |
Websites of the
Month
Here are my recommendations for websites of interest
on this month's topic, endowments..
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Top
Management Tip of the Month
Endowments-for everyone?
Endowments are often thought of as the
territory of the big, well-established nonprofits. I've had a hundred people
say the following to me in some form: "Hospitals and colleges have endowments,
right? But not small organizations...."
Nothing could be further from the truth. Endowments
are one resource that every nonprofit can and should tap. Why? Because you
should use all the resources you have to do all the mission you can.
I am sure that to some readers, putting money away
is counterintuitive to doing to most mission, because they equate doing the
most mission with doing the most mission now. And therein lies the rub:
if you spend all your money now, you can't do mission in the future. As I have
said for years, no money, no mission. Good stewards know that financial
strength is mission strength. Financial empowerment enables mission
empowerment. Endowments won't make your organization financially stable all by
themselves, but they are one part of a strategy to get there.
Your organization may already have an endowment, if
so, you may find some tips here about how to manage it better. More
importantly, if you have not yet started your endowment but want to, read on.
Some issues for consideration:
1. Starting an endowment is not hard, or
expensive. You can start small ($10) as long as you have board action
setting up the rules of the endowment (that it is a restricted fund, that
earnings can be used under certain conditions, that principle cannot be used in
other than extraordinary circumstances, etc.). If you set up your endowment as
a restricted fund in your existing corporation, you don't have to set up a new
nonprofit to house your endowment. There are some situations where you might
want to spin off the endowment, and we'll look at those in a bit.
2. Endowments can give you long term
stability. Simply starting and having an endowment means that you are doing
a good thing: thinking long term. Far too few nonprofits think beyond the
current fiscal year, or even past the next payroll. Having an endowment means
you are being a long-term steward, forcing yourself to not spend every dime you
have right now.
3. Endowments can provide new sources of
revenue. Endowments can provide a competitive advantage in fund-raising,
since you are giving a potential donor the option to give "the gift that keeps
on giving" rather than only the choice to give for bricks and mortar or for
current operations. Having another option, one that by its establishment
declares your organization is going to be around for a long time, provides a
great message to a donor.
4. Endowments can bring criticism. Reality
check: while no one ever seems to have a problem that Hospitals and
universities have endowments, smaller organizations are often criticized for
having two nickels to rub together. And some funders look down on a grantee who
already has any money at all. While this attitude is, to say the least,
short-sighted (why invest in an organization that is financially shaky?), it is
a reality in some communities. Thus, your board and staff should carefully
consider the pros and cons of starting an endowment, including the public
relations issues that may ensue. Which leads me to my next point.
5. You will need to get some help. Most
communities now have community foundations, who provide a variety of wonderful
services, including holding the endowments of many local nonprofits in one,
well managed place. The vast majority of these foundations also provide help in
starting your endowment, so check them out first. (Note: In the
Websites of the Month section, I provided you a link to the community
foundation finder from the Council on Foundations.) Also, of course, work with
your accountant and attorney to assure you comply with your state and funder
requirements.
6. You may have to go outside. What this
means is that, in some situations, nonprofits feel it best to set up a second
nonprofit to house their endowment. There are a variety of reasons for this,
including wanting to separate control of the funds, donor perception that
funders will take away donations from the main nonprofit, or funder
restrictions. Whatever the reason, this option is more expensive than simply
having a restricted fund. Carefully think through why you want to set up a new
corporation before you make this jump, and consider your local community
foundation as an option as well.
If you found this hint helpful, there are
lots more management, marketing, and technology ideas for you in the "Ideas"
section at www.missionbased.com.
Check them out--they're free.
And, remember to take a look at the
Mission-Based Management
Blog.
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Top
Print Resources
My recommendations for
texts on Endowments are shown below.
If you want more information on these
recommendations, click on the cover image. You will go the page about the book
on Amazon.com. There, you can look at more info about the book, and read some
reviews before you decide whether or not to purchase or look for this book at
your local library.
Note: If you want more
recommendations on publications in a wide variety of areas, including
nonprofit endowments, go to the publications section of my website:
http://www.missionbased.com/publications.htm
Again, If you don't find enough choices there, type
"Nonprofit development, endowments" at Amazon.com and you'll have more
choices than you probably want!
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Top
Technology Ideas .
Tech help in starting an endowment
There are many ways that tech can help with an
endowment, and the most common would be in software to help raise the funds to
go in the endowment. I'll leave that to the fundraising professionals, and turn
my attention to managing the money in your endowment.
Most good accounting software will allow you to
manage multiple funds (and even multiple organizations) pretty easily. If you
are not sure how to do that, seek some technical assistance from an expert,
either your accountant, or a certified expert in your software. Here is a
list
of good nonprofit accounting software from NPower.
Note: Most software companies support online
discussion groups where users help each other directly. I use these
groups regularly to get answers very quickly for arcane little problems that
the Help feature doesn't cover. Go to the manufacturer's website, look in the
support area, and the groups are usually linked there. A second way to get help
is on an "experts" website, like AllExperts.com.
Remember that reporting is perhaps even more
important with your endowment than with the rest of your funds. As you set up
your accounts, develop a good set of regular reports on the fund, its earnings
etc. Transparency is crucial, so start early.
What else beyond software? Well, you want to let
people know you have an endowment....so make sure you get an area up on your
website about the endowment, its purpose and uses right away, including the
ability for a reader to donate to the endowment with a credit card or Paypal.
Make sure that this part of your website is prominantly linked to your
organization's home page.
Second, consider adding a line to your email
"signature" noting the endowment, and including it's URL. That way, every time
you send an email, you remind people about the endowment. Suggest (or require)
other staff that they do the same.
As always, tech is an accellerator, not the
solution, but it can help with your endowment if you think it through
carefully.
If you found this hint helpful, there are lots more
management, marketing, and technology ideas for you in the "Ideas" section at
www.missionbased.com. Check them
out--they're free.
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Top
Training Schedule for Peter Brinckerhoff
Below you'll see the date, location, and topics
of public training I'm scheduled to do in the next few months. For more
information on a particular speaking engagement, get in touch with the contact
person listed in the right hand column, or
email me.
For more information on my availability throughout
the next 12-18 months, available topics, sample agendas, and fees go to
www.missionbased.com/training.htm
Marketing Tip
Endowments are marketing gold! Or
not.
Endowments provide some great marketing
opportunities as well as some marketing challenges. We'll deal here with the
challenges, and leave the opportunities to the development
professionals.
As I noted in the Management Tip, not everyone sees
an endowment as a good thing. Some funders, some supporters, and often the
press, may look at an endowment as a cash pile you should spend first before
you ask for or get any further funding. And, while they wouldn't expect that
from a hospital or college, they may for your organization. So what can you do?
First, establish the reason for your
endowment. What is the endowment for? Why are you establishing it? Under
what conditions can the endowment be used, and what happens to the endowment's
earnings? Have your board explicitly establish the answers to these questions
in organization policy. Doing so not only focuses you on the why and how of the
endowment, but gives you answers to the most common questions you will be
asked.
Second, be prepared to answer questions in
person, but also in writing. Have material on your website about the
endowment, and what its benefits are for the people you serve. This written
material serves not only as backup to an oral presentation, but also as
documentation of what you are doing and why.
Third, do your homework. Research what other
organizations of your type, and/or size have endowments in your community to
allow for comparisons, and to document that what you are doing is not
particularly unusual or illegal.
Careful planning to respond to the public, press,
and your funders is crucial to make sure that the establishment of your
endowment is seen as a good thing, as prudent stewardship, and not as a
"scheme" by anyone. An endowment should be a win-win-win for the organization
and the mission it provides. A little work up-front on marketing will help that
to become a reality.
If you want to see more about this in detail, take
a look at more about my book
Mission-Based Marketing; Second
Edition
If you found this hint helpful, there are lots more
management, marketing, and technology ideas for you in the "Ideas" section at
www.missionbased.com. Check them
out--they're free.
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Top
Future Topics in
2005-06 for the Mission-Based Management Newsletter....
| June |
Mission Uses of
Technology |
| July |
Sustainability |
| August |
Entrepreneurship |
| September |
Ethical Employee
Benefits |
| October |
Internal
Communications |
| November |
Board
Recruitment |
| December |
Better
Budgeting |
| January,
2006 |
Generation
Change |
| February |
Accountability |
| Send me
your topic suggestions at peter@missionbased.com |
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You asked, so here they are:
Past Single-Topic Issues of the Mission-Based Management Newsletter...
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Copyright 2006,
Corporate Alternatives, inc. |
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