Recently, our Vice President of Development & Stewardship had lunch with some friends who are winding down their service on the board of a very effective San Diego nonprofit organization that is supporting foster youth.
The organization has a clear vision and mission, a strong management team, and a really good strategy they’ve been able to implement which has increased the number of youth whose lives have been transformed through their work.
Thinking out loud, they wondered “What’s next? How can we ensure the organization maintains its good work after we are no longer involved?”
One good answer to that question is to build an endowment – a permanent pool of assets, in which only a portion of the earnings are spent.
This will ensure the organization has a steady income stream long after passionate, committed and effective volunteers move on. An endowment also provides a vehicle for donors who want to make a long-term investment in an organization through an estate gift.
Importance of Endowments
While it’s true that funding 100 percent of an organization’s costs is not a good idea (because the organization should have to justify to its donors and the broader community that it is worthy of ongoing philanthropic support), having at least a portion of the regular operations funded from an endowment can ensure that during difficult economic times or when government funding declines, the organization can continue its important, impactful work.
In Jim Collins’ book, Good to Great, he makes a case that successful companies have leaders who figure out what they can do better than anyone else and they build the company around that.
Community foundations can be the best at managing endowments for organizations and individuals in particular geographic regions now and forever. They are community-based organizations, with volunteer boards and staff who care deeply about the health and well-being of the region.
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At The San Diego Foundation, we manage endowments for individuals who want to ensure their charitable legacies are effectively stewarded now and long after they are gone.
The Foundation also manages endowments for organizations that want a third party manager who will ensure the endowment is protected from future boards who might be tempted to use the funds for immediate needs.
San Diego will become a better place when more individuals and organizations establish endowments for the health of our community FOR GOOD, FOREVER.