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How to Grow a Successful Endowment Fund

Nonprofit tips to building and growing your nonprofit endowment fund

Not sure if an endowment is right for your organization? Starting a nonprofit endowment can be a great way to enhance your organization’s financial stability, create an ongoing source of income and provide an avenue for future gifts.

At the Saint Paul & Minnesota Foundation, we work with nearly 200 organizations and manage more than 400 endowment funds.

We recently asked a few of our nonprofit endowment fundholders for their insights into starting a nonprofit endowment fund. Here are some of their best tips.

When establishing your endowment fund, what worked?

Anna Zaros, donor engagement manager, Center for Victims of Torture:

Since we’ve started the fund, we’ve had some great success in fundraising. We’ve recently experimented with offering more targeted asks to donors – asking donors to give to a particular program or project that we know they are really passionate about. We’ve found this to be very successful. At times, when those asks include planned gifts such as charitable gift annuities or donor advised funds, we reached out to the Foundation to help inform us of what to offer our donors.

The Foundation staff are experts in these more complex giving vehicles and it has helped our fundraising team to be able to lean on them to ensure the information we are providing donors is correct and easy to understand.

What advice do you wish your organization had before you started an endowment fund?

Jennifer Downham, chief development officer, Minneapolis Parks Foundation:

My first question or suggestion would be to take a realistic assessment of your organization and mission... Is it something that is perceived as a smart long-term investment?

Does a significant percentage of your donor base have a long-term relationship with your cause?

I believe that relationship is critical to the decision to make an endowment gift. Also, ask your donors if your organization is already included in their estate plans... If you hear of a few future donations, that is a helpful indicator that the idea is promising.

Eric Nesheim, executive director, Literacy Minnesota (formerly known as Minnesota Literacy Council):

I think establishing an endowment fund is a good idea for a nonprofit, and it can be a great option for donors.

In our case, when a large donor wanted to donate roughly $500,000 on short notice, the endowment was the perfect place to put it. Large, unexpected amounts can be problematic to use in the course of a fiscal year budget, especially for smaller nonprofits. Endowments can be an answer that minimizes that challenge and maximizes a donor’s impact over time.

My advice to other organizations would be to find leaders within your organization who share a passion for the difference an endowment fund will make and leverage them in helping reach the goal.

Mary Margret Brown, director of development, PROP (People Reaching Out to People)

These are just a few of the insights our partners shared about the benefits of establishing an endowment. If you’d like to learn more, check out “Running on the Power of Giving” to see how Crescent Cove established and grew their endowment fund. You can also check out our nonprofit endowment resources.

Still have questions? Our expert staff are always happy to have conversations about endowments. To learn more about starting a nonprofit endowment fund, contact gift planners Mariah Brook (651.325.4269) or Elizabeth McCray (651.325.4297).

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