Feldsteinco LLC

Endowment

Accelerator

PROGRAM

Feldsteinco LLC has created a new programme organized around helping you snowball the growth of new endowments - A common sense approach to raising significantly more endowment money.

 

Institutions can greatly enhance their impact by continuously increasing their endowments in a perpetual solicitation programme. We know how to help institutions efficiently and cost effectively secure new endowment gifts. Fresh, 21st century fundraising thinking is needed if you want to see your endowment snowball.

Your institutional vision prospectus needs to set forth with emotive language what endowment growth will mean to your institution and its mission and unique impact on society.  We are not talking about basic operating needs. The compelling endowment rationale must be ferreted out and eloquently expressed. Donors establishing or augmenting endowment funds want their gifts to make something important happen that would not occur otherwise.

 

As Warren Buffett has observed, “Life is like a snowball. The important thing is finding wet snow and a really long hill.” Because of the time value of money and the dramatic power of compounding, endowment growth should not be delayed. It is necessary  to take a long-term perspective and, like Buffett, think of every million dollars, pounds, or Euros as ten million someday.

ENDOWMENT  FALLACIES

Not every institution is in the position to raise endowments, but for the many that are, here are some of the common fallacies:

“Endowment is the hardest money to raise.” 

  • For institutions that already have an endowment, this statement  is simply untrue.  What is true is that 1) endowment gifts tend to be among the larger gifts an institution receives  and can have a disproportionately high impact on Donor Lifetime Value in a number of situations, 2) the fact that an institution may not have a large number of endowment prospects does not at all mean  there is not a strong market, it usually means that rather  it is a  rarefied market at an altitude where the air is very thin, 3)while the number of major prospects may be relatively small, the individuals are often among an institution’s closest supporters, 4) an institution’s  solicitation success rate for truly qualified endowment prospects is often very high

“Endowment giving is only done by the rich.”  

  • It is true that endowment gifts don’t have significant annual economic impact on an institution’s  budget unless the funds are at least $500,000.  It is also true that for  institutions with major donor  constituencies in the hundreds of people, , there are few worthwhile  opportunities to establish what can be called small endowment funds. So in terms of lifetime giving, for many institutions, it is certainly true that their endowment fund-raising focus is on the very rich.  But in raising money, that is of course where one wants to be.  

 

“It is a waste of time to secure endowments under $250,000-$500,000.”  

  • For institutions with  thousands and tens of thousands  of constituents, particularly museums, performing arts organizations, and leading hospitals, there is a clear opportunity to develop an endowment   product and work with donors to create endowment funds starting at $100,000.  The economic and other  advantages are considerable and include:

    • By motivating these donors to set up  initial endowment funds , you are establishing a permanent asset in their name (or in the name of someone they wish to honor), and they can be induced to add to their Fund over time.

    • Having established a named endowment and joined your Endowment Society, their relationship with your institution has  just become closer and this should lead to other gifts of various types

    • You obviously have a new gift you wouldn’t have had otherwise.

    • Their Donor Lifetime Value has increased significantly.

    • They are now more likely to make planned gifts.

    • Their gift will motivate others so there will be a snowballing effect

 

“Endowments are vitally important because they provide a predictable income stream.” 

  • While endowments  provide a predictable income stream in stable and rising financial markets,  their true importance lies in the fact that they provide the resources for institutions to do new and unpredictable things, over and above the basic operating budget.   Such new and unpredictable things can range from establishing major new programs or initiatives, to recruiting new top talent to new or existing positions, to mounting extraordinary productions or exhibitions, to providing new access to under-served constituencies, etc.

ENDOWMENT GIFTS as contrasted with BUILDING FUND GIFTS. They have different physical properties.

Nailing  down endowment gifts should not be thought of  in the same way as securing capital gifts for buildings.

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Capital gifts are finite. A contribution to a building fund is made and the institution utilizes the money for the project.

Endowment gifts on the other hand are infinite. The gift is made and the principal is invested. The funds grow. A $50,000 endowment gift can one day be worth $500,000 (or more). In a building campaign, an institution has to think short-term to get the building paid for. With an endowment fund, the institution can think long-term. Obviously, you want the initial endowment to be as large as possible and endowed positions and programmes, of course, have specific price tags. But because an endowment will grow, the financial ROI on an endowment gift is greater than the comparable ROI on a building gift of the same amount.

Financial services firms understand this, which is why they get even more excited about seeing new investment accounts than new checking accounts.

 
Since the 1980s, significant growth in endowment values has been fueled at times much more by investment gains than by new gifts. Capital growth should  not be  left to the asset management side alone.

We  invite you to talk with us about whether your institution is in the position to enter in to our Endowment Growth Programme. Many institutions wanting to raise new endowment gifts need to expand their professional resources and talent and outsource much of this work so they can administer and create change.

WE CAN HELP YOU

  • Turn endowment fund-raising into an ongoing business unit

  • Accelerate progress and assure that more new endowments are secured annually

  • Implement executive and volunteer processes to cultivate and solicit new endowments with snowballing momentum  

  • Establish consensus on priority endowment prospects and develop solicitation and engagement strategies

  • Creatively communicate endowment opportunities to excite donors and develop and price the “donor products” to attract and recognize major new endowment gifts  

  • Set up new and distinctive recognition clubs for endowment donors  

  • Establish your endowment growth horizons, setting forth benchmarks for new endowment gifts over the next 18 months, 5 years, and 10 years  

  • Guide your engagement with donors who have previously established endowments and measure the effectiveness of your interactions going forward  

  • Develop protocols and reports to donors on returns and expenditures and impact from the annual draw on their endowments  
     

Fortune favors the bold.   Success will hinge on creativity, urgency and action: what you communicate, whom you solicit, when and how you ask for the gifts. The result can be highly cost effective major new endowment growth for your institution, a programme that snowballs and pays for itself right away.