Tag Archives: Endowment

Starvation Diet

A friend who serves on a nonprofit board asked me whether her organization was drawing enough from its endowment each year. “Probably not,” I answered. Then she described her organization’s endowment spending policies. I was right.

Endowment spending policies are often discussed at board meetings, but rarely questioned. And the amount taken annually from the endowment in most cases is too little.

To understand what’s going on, we have to look at the social and power dynamics. Continue reading

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An Approach to Funding That Might Actually Work

As you may know, I’m a bit of a skeptic about the efficacy of traditional endowments. In an earlier blog post, “THIS is the Rainy Day,” I urged nonprofits with endowments to increase their spending rate in tough times and down markets, rather than following the common wisdom and lowering their annual draw (and fiscally starving themselves in the process). My point was: There are needs now. Let’s fix them. Let’s spend a bit more from the endowments today to prevent chronic problems from continuing tomorrow. And then we can then go out and raise new funds to build up our capital. Continue reading

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All Bequests Are Generous; Some Can Also Be Smart

Those of you with an oil-burning furnace may be familiar with efficiency percentage tags.

If you don’t heat with fuel oil: When the oil company maintenance crew comes at the beginning of each winter to service your furnace, they leave behind a tag declaring its operating efficiency. If the tag reads 90%, you’re doing really well. If the tag reads 60%, it’s time to get a new furnace. You’re wasting a lot of fuel.

If I were to hang an efficiency tag on charitable bequests, most would be around 75% — and a few would be at 15%. Continue reading

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