Opinions expressed by australiabusinessblog.com contributors are their own.
An endowment is a fund that can be invested and used to support the general activities of a non-profit organization (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 nonprofit organizations are required by their governing records to keep 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 to spend right away – perhaps you wanted to use your gift for future education programs or other projects that would benefit people who might need your help later – making a donation would be your grow money (and any future donations) over time without immediately depleting your funds.
Related: How to raise money even if you don’t have “traction.”
If you had planned to donate $5 million over ten years, but only wanted to spend it ($500,000) at the beginning of each year, creating this kind of fund would give you stability in giving over several years, while still allowing donors some flexibility as to when exactly those dollars are spent each year as needed within certain parameters.
Here are five ways to make sure you grow your giving(s).
1. Learn to invest wisely
The most important part of building a substantial endowment is investing wisely. The key to this is knowing how much money you want to invest, how much money you already invest and what your investments will yield.
An excellent way to start is to find out how much money you currently have in savings – your liquid portfolio. This can include checking accounts and savings accounts with physical institutions such as banks or credit unions, brokerage accounts such as 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 biggest rewards.
2. Find clarity about your goals
Determine what you want to achieve with your donation. What is it for and how is it 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 donation is intended to fulfill a specific purpose, make sure you have a clear understanding before committing any money.
You can also take this opportunity to define your giving vision by outlining what success will look like five years from now. What will your organization look like when all objectives have been achieved? How much impact has your institution made on society in general?
This information will help determine how big or small a donation should be each year to achieve both the goals and their mission within five years.
Related: Raising Money Without Lying
3. Research your donors
Find out as much information about your donors as possible. You need to know who they are, what they care about, their relationship with the organization and how involved they are. When a donor has a birthday coming up, it’s always great to send a thank you note and tell them how important they are to the organization.
It is also essential to understand each donor’s financial needs: how much money should they give away in any given year? Which causes are they most closely associated with? What are their family dynamics like? Knowing these things will help you make sure your communications are tailored specifically to this person so 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 essential 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 may relate to the bigger picture of your organization or project. You should always try to meet them on their level and never sell yourself short in terms of what you can offer them as an organization or individual (building trust).
5. Make sure your donors are happy
Once you start attracting a donor base, make sure they are happy with their experience. This is important because it affects the likelihood of them giving again.
You may be wondering, how do I know if my donors are happy? And what should I do if not? Well, there are plenty of ways to track your donors’ experiences and see how well your organization is meeting their needs.
Tools like Google Analytics can help you see how many people are visiting your website, where those visitors are coming from (e.g. search engines vs. social media), which pages people view most often on your site, and how long they stay on each page before they leave or click away for good (or hopefully not).
Now that you know where to start, it’s time to move in the right direction. Building a solid endowment is a process and takes time, but if you follow the steps above, it will be easier than you think.