Endowment Fundraising - ACSO Presentation August 8, 2008
Transcript of Endowment Fundraising - ACSO Presentation August 8, 2008
Banking on the Future: Why Endowments?
Association of California Symphony OrchestrasAugust 8, 2008Walnut Creek
Katherine E. AkosGreg Lassonde, CFRE
Organizational readiness Administrative components Methods for building Questions on topic welcome
throughout Q&A last 15 minutes for general
questions
Why Not Endowment
Organizational needs are all immediate
Strong history using planned gifts for operational use Guide Dogs for the Blind St. Anthony’s Dining Room AIDS organizations in earlier years
Board not ready to make commitment
Need reserve or rainy day fund in place
Organizational Readiness Organization will continue in
perpetuity Board ready and willing to oversee A plan in place to build
Current gifts Deferred gifts
Administrative systems identified/established
Expenses budgeted
The Launch
Develop a case statement The need for endowment Specific program components listed Program component and total goals Time period to achieve goal stated www.plannedgivingcoach.com
How Much Is Enough?
20% of operating budget example $1,000,000 total operating budget 20% = $200,000 5% draw: $4,000,000 fund = $200K
draw Assumes 8% yield▪ 5% draw▪ 3% inflation
Use the Case Statement
Work the board Start with development committee Move to finance committee Full board discussion Case convinces a few board members to
give Board resolution at passage of case
statement Basic premise achieved for
marketing efforts
Board Resolution
Under auspices of Investment Committee Gifts into endowment include
Current gifts so designated All matured planned gifts▪ Some policies will include capital use▪ Few policies will allow operating use
Will follow (newly created?) endowment policies
Will follow (newly created?) investment policies
Endowment Policies
Guide establishment and operation Cover many terms including
Definition of endowment Separate nature of funds Spending policy Exceptions to policy Oversight and investment Administration and monitoring Etc.
Endowment Draw
Spending policy typically 5% - 5 ½% 12 – 20 trailing quarters average
Offsets unusually high gift or investment years
Smooths out economic downturns
Accounting Standards
UMIFA (Uniform Management of Institutional Funds Act)
UPMIFA (Uniform Prudent Management of Institutional Funds Act [pending])
FASB (Financial Accounting Standards Board)
GAAP (Generally Acceptable Accounting Principles)
Investment Policies
Provides authority to Investment Committee
Delineates responsibilities Defines ethics and conflicts of
interest States investment objectives Lists an asset allocation strategy Determines criteria for investment
strategy Sets meeting and communications
schedule Define performance evaluation
Gift Restrictions
FASB 116 & 117 Permanently restricted
Only a donor can restrict or remove restriction
Temporarily restricted Time Purpose Combination of time and purpose
Unrestricted
Unrestricted Endowment
Oxymoron? 3,000 Google hits (mostly higher
education) San Francisco Symphony campaign aka
quasi-endowment Board-designated endowment
What a current board restricts, a future board may remove such a restriction
Unrestricted Endowment
Generally poor reasons to remove restrictions Repeated annual budget shortfalls Increases in budget not sustainable through
earned or contributed revenue in second year Good reasons to remove restrictions
Capital needs Special campaigns Program start
Donor disclosure at time of gift is crucial
Sources of Endowment Gifts
Current gifts Endowment campaign One-off gifts
Deferred gifts Proactive planned giving program Gifts only “over the transom”
Usually from assets (not income)
Naming Opportunities
Keep a current list at hand Attach a price tag Don’t under-value Consider term of years vs. perpetual Provide ample and visible name recognition Include a mix of chairs and programs
Have a generic list for “pool” (smaller gifts) “New Compositions Fund” Steers restricted giving toward acceptable uses
Naming Opportunities
Named funds should: Provide stewardship Encourage others to step forward Be coordinated with annual fund efforts
Gift Acceptance
Agreement document Terms clearly delineated▪ Name of fund▪ Pledge term if not a single payment▪ Cy pres clause▪ Investment and endowment policies referenced▪ Forms of recognition specified
Include finance department Restrictions acceptable and correctly
documented System in place for reporting fund performance
Stewardship
Hold gift celebration that is appropriate and consistent for giving level
Token gifts should be mission-focused
Named funds should be visible to patrons
Visibility should promote other opportunities
Annual fund reporting Strict fund accounting General narrative report Combination of the two
Endowment Campaigns
Usually conducted with campaign counsel Feasibility study with case prospectus Extensive case statement Creation of campaign committee Guidance of staff during solicitation
Without counsel Usually smaller campaigns
Expectation of 100% board participation
Campaign Solicitation
Top down / inside out Quiet phase (typically 1-2 years)
Lead gift (10-25% of campaign total is common)
Usually 50%-75% of total raised All one-on-one
Public phase mostly for smaller gifts One-on-one; direct mail; telemarketing
Multi-year pledges common
Campaign Solicitation Type Gift only (coordinated with annual fund) “Comprehensive” - often multi-year commitments
Campaign gift Annual fund increase
Triple ask (true comprehensive campaign) Campaign gift Annual fund increase (match for new AF gifts) Consider joining legacy society
Planned Giving Program
Ongoing source of endowment funds Proactive program will be more
successful Board policy will direct gifts to
endowment Some policies include capital uses as
well Use for operations is the exception Consider a 10%/$100K maximum
operations cap Encourage 100% participation of life
trustees Aim for a minimum of 50% board
member participation
Planned Giving Program
Use a survey to meet one-on-one Board members and
honorary/emeritus/life trustees Former board members Long-term stakeholders Major donors
Direct mail; newsletter; any opportunity
Marketing premise: “Your Gift Will Live On Forever”
Companion Documents
Gift acceptance policy Board resolutions
Establishing endowment Launch or reinvigorate planned giving
program To conduct an endowment campaign
Staff documents Endowment procedures Investment procedures Planned giving procedures
Final Thoughts
Partner with a community foundation Chronicle of Philanthropy on line article:
philanthropy.com/free/articles/v16/i05/05002201.htm
Presentation / attachments(www.acso.org)
Endowments are: usually a helpful vehicle involve much responsibility can be easy to establish and operate are not for the faint-hearted