Encouraging Cash Endowment Gifts
Most if not all charitable institutions strive to build–up cash in their endowment in order to establish a reliable source of predictable income. Most, but fortunately not all major donors are increasingly reluctant to donate cash for endowment which will only enable their recipient charity to spend roughly 5% per year, e.g. $1 million cash gift yielding $50,000 per year. Often heard from potential donors: "I'll keep the principal and donate the interest annually!"
A key concern is that in order to make financial commitments which affect peoples' lives — student financial aid recipients, faculty appointees, scientific researchers, youth programs — a prudent institution needs to have a secure source of reliable income in order to make such term commitments.
Here are some suggestions to help persuade a donor questioning whether or not to keep his/her principle and donate the interest.
Value Added: Donors are often persuaded to make a gift to endowment if the institution can clearly articulate what can be done better, or more of, or eliminate the risk of losing as a result of increased endowment; with emphasis placed on people served and helped.
Identifying End–Use: Donors should be encouraged to give from the sense of urgency identified through the institution's intended end–use for their endowment gifts as contrasted with simply general, unrestricted use; again with emphasis on people who will benefit and be aided.
Naming Opportunities: In my years in philanthropy I have met very few anonymous donors. Most people like to have their names associated with worthwhile, highly–regarded institutions. Endowed funds named to honor donors should be established based on sound financial policies and practices.
Term Endowment: For a description of this technique to encourage cash gifts to endowment you can view our previous monograph: "Another Look at Endowment"
How are you marketing your organization's need for endowment?
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This article has been authored by Gary W. Phillips and must not be reproduced, in whole or in part, or otherwise distributed without prior written approval to do so. 12/07
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