Subscribe to Entrepreneur for $5
Subscribe

5 Ways to Fundraise and Grow a Solid Endowment

A growing endowment is critical to the future of any nonprofit entity, but it can be challenging to achieve. Here are five strategies that can help you grow your endowment in effective and sustainable ways.

By
Opinions expressed by Entrepreneur contributors are their own.

An endowment is a fund that can be invested and used to support a nonprofit organization's general operations (or otherwise earmarked component). Unlike funds set aside for one-time or one-year support, an endowment allows the organization to plan for the long term. Many nonprofits are required by their governing documents to maintain a certain percentage of their assets in an endowment to ensure its perpetual existence.

For example, if you were interested in making a charitable contribution but didn't want it spent right away — perhaps you wanted your gift to go toward future education programs or other projects that would benefit people who need your help down the road — then creating an endowment would allow your money (and all future donations) to grow over time without depleting funds immediately.

Related: How to Raise Money Even When You Don't Have 'Traction'

If you had planned on donating $5 million over ten years but only wanted it spent at the beginning of each year ($500k), then creating this kind of fund would give you stability in giving throughout multiple years while still allowing donors some flexibility around when exactly those dollars get spent each year as needed within certain parameters.

Here are five ways to ensure you're growing your endowment(s).

1. Learn how to invest wisely

The most important part of building a substantial endowment is investing wisely. The key to doing this is knowing how much money you want to invest, how much money you're already investing and what your investments are producing.

An excellent way to start is by figuring out how much money you have in savings right now — your liquid portfolio. This can include checking accounts and savings accounts with brick-and-mortar institutions like banks or credit unions, brokerage accounts like Charles Schwab or Fidelity Investments, retirement plans such as IRAs or 401(k)s, mutual funds and stocks.

Related: Your Energy Is Like Currency. Invest It Wisely to See the Greatest Rewards.

2. Seek clarity about your goals

Identify what you want to achieve with your endowment. What is it for, and how will it be used? Do you want to support a particular program or initiative, or are you trying to raise money for an entirely new project? If the endowment is meant to fulfill a specific purpose, then have a clear understanding before committing any funds.

You can also use this opportunity to define the vision of your endowment by outlining what success looks like in five years. What will your organization look like when all its goals have been met? How much impact has your institution made on society in general?

This information will help determine how large or small a gift needs to be made each year to meet both objectives and their mission within five years.

Related: How to Raise Money Without Lying

3. Research your donors

Discover as much information about your donors as you can. You need to know who they are, what they care about, their relationship with the organization and how involved they may be. If a donor has a birthday coming up, it's always great to send a note of appreciation and tell them how important they are to the organization.

It's also essential to understand the financial needs of each donor — how much money do they have to give away in any given year? What causes do they most strongly align with? What does their family dynamic look like? Knowing these things will help ensure that your communications are tailored specifically for this person so that you don't waste time or resources on mass emails and newsletters.

4. Build a relationship before asking for gifts

Building relationships with your donors is key to getting them interested in your cause. It is also essential to understand their motivations for giving, financial situation and philanthropic interests. In addition, you should know their personal interests that could be tied to the bigger picture of your organization or project. You should always try to meet them at their level and never sell yourself short in terms of what you can offer them as an organization or individual (build trust).

5. Ensure your donors are satisfied

Once you start attracting a donor base, you will need to ensure they are happy with their experience. This is important because it will affect the likelihood of them giving again.

You might be asking yourself: how do I know if my donors are happy? And what should I do if they aren't? Well, there are plenty of ways to track your donors' experiences and see how well your organization meets their needs.

Tools like Google Analytics can help you see how many people visit your website, where those visitors come from (i.e., search engines vs. social media), what pages people view most often on your site and how long they stay on each page before leaving or clicking away for good (or hopefully not).

Now that you know where to begin, it's time to get going in the right direction. Building a solid endowment is a process and takes time, but if you follow the steps outlined above, it will be easier than you think.

Entrepreneur Editors' Picks