Rollercoasters and Hamster Wheels? Ugh!!
Sustaining Your Organization Over the Short and Long Term
Are revenue rollercoasters keeping you awake at night? Is the special event ‘hamster wheel’ eating all your time and energy? Are annual fund deadlines causing too much stress?
I liked rollercoasters when I was young. Now, not so much.
In the last decade alone, we have had two major crises that have tested the strength of nonprofits. The Great Recession, the first crisis, upended nonprofit revenue streams as services were called upon to expand to help those impacted.
2020 proved, yet again, that events beyond our control can impact a nonprofit’s vital services to the community and its revenue streams. The public health crisis, created by the the COVID-19 pandemic, followed a similar patterns – organizations were expected to do more and serve more while concurrently pivoting fundraising strategies. This is especially true for nonprofits serving communities of color, who have experienced the pandemic at disproportionately high rates.
There are tools to help your non-profit, specifically designed for these uncertain moments: an endowment. You may be asking, how does an endowment help? Isn’t that only for the mysterious, far away future? For nonprofits, an endowment certainly does provide support for the long-term of an agency and its mission, but also helps in the near term by offering a growing, reliable revenue stream. Endowments grow through long-term investment gain and additional gifts. As the endowment grows, the revenue stream also grows.
An endowment can also be a break glass in case of emergency type of fund. If you can access the endowment principal, you can draw on it during moments of difficulty. For some, that may be now.
How do you start an endowment?
- Bequests: You can use a bequest to your organization to establish an endowment. This is a common way that many agencies start an endowment.
- Major donors: You can combine gifts of several major donors to start an endowment. (A more formal way is for your board of directors to spearhead an endowment campaign.)
- Reserves. You can use financial reserves (perhaps from excess donor gifts) that have accumulated over time.
We encourage you to begin conversations at your organization about endowments. When will the next crisis hit? What will it look like? How will it impact your critical services to the community? We cannot predict the future, but we do know that an agency endowment can help your organization weather whatever the future brings.
The Greater Milwaukee Foundation has been working with endowments for over 100 years. Feel free to reach out for additional guidance on how an endowment can help your organization fulfill its mission and achieve its vision.
Contributed by AFPSEWI member, Mark Maurice, MBA, CFRE, Philanthropic Advisor, Greater Milwaukee Foundation