Comments on: Financing Not Fundraising: Kiss That Endowment Dream Goodbye

By: Nell Edgington

Nell Edgington — Tue, 12 Jun 2012 13:57:07 +0000

Claire,

I love your trust fund baby analogy and think your point about a nonprofit needing to justify its existence to the public on a continual basis is an excellent one.

I agree that endowments do make sense for some nonprofits, especially those that are much further down the road in terms of maturity, donor base, etc. I just think that for the vast majority of nonprofit organizations they just don’t make sense.

By: Claire Axelrad (@CharityClairity)

Claire Axelrad (@CharityClairity) — Tue, 12 Jun 2012 09:54:27 +0000

I agree it’s an interesting post. And, indeed, it’s magical thinking to hope an endowment will solve all of an organization’s problems. Even if it were possible to build an endowment large enough to fund your entire annual operating budget, it would proved deadening for the organization. It would be a bit like the trust fund baby who never gets a job and never creates anything of his/her own. There’s something essential and vital to the life of an organization when it’s required to justify its existence to the public on a continual basis. It’s how we know we’re meeting needs. If we aren’t, no one will support us.

Our world has limited resources, and we want them being spent on the organizations that do essential work. Things change over time (which is why many foundations decide at some point to spend down their resources and go out of business).

At the same time, I wouldn’t want to ignore the opportunity to build a nest egg. In fact, I’d go so far as to say that a mature, responsible nonprofit (much like a mature adult) should have BOTH a checking account (operating budget) and a savings account (endowment). One never knows when crisis may strike… or opportunity arise. It’s important to be able to respond when unanticipated events occur.

So… I think both are important.

By: Nell Edgington

Nell Edgington — Mon, 11 Jun 2012 14:22:22 +0000

Clay, I’m glad to hear the post got you thinking, that was my hope! I’d love to hear about your experiences that don’t match. Please feel free to add them here in the comments. But I’ll also look into an online discussion on the topic, that’s a great idea! Thanks!

By: Clay Myers-Bowman

Clay Myers-Bowman — Fri, 08 Jun 2012 22:08:02 +0000

Nell, this is a very interesting post and causing me to do quite a bit of thinking. I find myself mostly agreeing with your assertions, but also have experiences that don’t quite match. You should schedule an online discussion of these ideas. It’d be a lot of fun.