endowment strategies: essential infrastructure and conversations with donors
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Create a Jewish Legacy of Western Massachusetts. Endowment Strategies: Essential Infrastructure and Conversations with Donors. Why Are We Here?. Building a culture of Legacy and endowment can be challenging. Now, time to engage in endowment building at your agency or synagogue. - PowerPoint PPT PresentationTRANSCRIPT
Endowment Strategies:Essential Infrastructure and Conversations with Donors
Create a Jewish Legacy of Western Massachusetts
Why Are We Here?
Building a culture of Legacy and endowment can be challenging.
Now, time to engage in endowment building at your agency or synagogue.
This is an ongoing process – it takes preparation, and activity.
Today will focus on key elements of the process you are undertaking.
Essential Elements for Endowment Success
An Overview
Building endowment is a proactive – not reactive process.
To be successful, you must create a strong infrastructure, understand the donor’s perspective, and engage in conversations.
The Paradigm Shift
Ten years ago – endowments were an embarrassment of riches
Now, fiduciary duty However, the urgency of current
programs must be balanced with preparing for the future
Why So Much Talk AboutCreating a Jewish Legacy?
The economy is tough and taking a toll on donors Since 2000 Now, uncertainty in markets, interest
rates, jobs, inflation, oil Affects all wealth/age groups
Why So Much Talk About Creating a Jewish Legacy?
Government grants are disappearing – greater needs with less available funds National Association of State budget
Officer – “Fiscal Survey of States” June 2008 - $48 billion shortfall in 2009 Cuts will occur in public health, elderly
and disabled, education, work force Federal government deficit at high
Why So Much Talk AboutCreating a Jewish Legacy?
Private foundation grants are shrinking
The number of charities reaching out to your donors is increasing 819,000 in 2000 1,128,367 in 2007
Board have a fiduciary duty to address mission
Understanding the Role of Endowed Gifts in Development
Planned gifts, legacy gifts, and endowment are closely tied
Annual gifts – from income “Lasting” gifts – from assets Continuation of the relationship with
the donor
The Fundraising Pyramid
ANNUAL GIVING
MAJOR GIVING
PLANNED GIVING
Donor Commitment
Nonprofit Contact
Building Relationship with Donors
The most exciting – and strengthening – element of this process is building closer relationships with donors – sharing their visions and goals
Conversations let you get to know a donor
It takes more than one conversation And it requires a strong infrastructure
Balancing Solicitations
One of the greatest concerns expressed by staff and boards is: How do you balance needs and solicitations?
You have limited staff and budget. And you cannot afford to lose current
revenue. You may feel you have to wait until the
time is “right” – but that day will never come.
An Exercise
As a group, tell me your greatest concerns about the impact of endowment on your ongoing fundraising.
The Infrastructure Required to Build Endowment
A Strategic Assessment
Your Strengths You have local and national resources. You have a strong, committed Jewish
community. You have a group of charities going to
the community at the same time – this will help in education and marketing
A Strategic Assessment Your weaknesses:
Most of your organizations are new to the process.
Most of your organizations have limited staff.
Staff is not trained in complex gift options.
It may not be easy to build infrastructure, assemble, and manage the volunteer team – and expand the marketing.
A Strategic Assessment
Your Opportunities: You’re creating a long-term resource. An endowment provides funds to
capitalize on opportunities or expand strategically.
You’ll have resources to respond quickly to critical and urgent needs.
You’ll have resources to take on new ventures not covered by annual revenue.
A Strategic Assessment Your Opportunities
You’ll have the opportunity to build stronger relationships with your donors – sets the stage for ongoing communications.
You can do it right – you’re starting at the beginning.
You can build strength in the Jewish community for Jewish causes.
There is an enormous transfer of wealth underway - $41 to $136 trillion
A Strategic Assessment
Your challenges: Articulating the case for
Legacy/endowment, and building it into conversations with donors.
Finding the time to prioritize the work. Changing the culture of your organization
to build donor relationships Positioning endowment to encourage
donors to make annual, capital, and endowed gifts.
An Exercise
Divide into teams and identify your organization’s greatest strengths and weaknesses in building endowment. You may select up to 3 of each.
The Case Statement
The internal case for support: Start by building the case among staff and
board Why do you need endowment? Take the board through the exercise of
answering these questions: Do you have a long-term purpose? Do cyclical economic variances impact annual
fund? Do you have new programs you want to
pursue – but no dollars?
The Case Statement
The questions, continued: Do you anticipate future needs not
currently funded? Is there more competition for annual
gifts? Are you dependent on grants? Are you losing donors through
mortality, or a move from the community?
The Six Greatest Concerns
How can we hold money for the future, when there are so many needs today?
We will appear rich.
We don’t want restrictions on gifts.
Won’t endowment giving hurt annual giving?
These gifts seem complicated.
This process costs money.
The Case Statement
The external case – why donors should give Should inspire vision Should inspire passion Should be urgent Should involve the donor
See page 15 – Ray Lynn Wilbur statement
An Exercise
Make a list of the top five elements of your case for support.
Gift Acceptance Policies
Primary benefit is to maintain discipline, while opening doors to additional assets
Often come late in a development program as charities move beyond cash and marketable securities
There is organizational and board liability for mistakes.
Gift Acceptance Policies – Why?
1. Decisions on a case by case scenario are inconsistent.
2. The glittering appeal of the gift obfuscates good judgment.
3. Without policies, you may send mixed signals to donors.
4. Good policies will keep donors from making mistakes.
Endowment Policies
Location and form of endowment Spending policy Minimum fund sizes Broad areas of endowment How decisions are made Publication and stewardship Investment management Other issues
Effective Data Management
Data is gold – the key to prospecting Data is key in building relationships It’s about more than membership or
annual giving – it’s about who they are and how they relate to your organization
Others can not sort, remember, or analyze what’s in your brain – unless you reduce it to data.
Key Data
Name, address, contact
Electronic as well
If family, key decision makers
Method of solicitation, contact
Personal interests
Family structure and interests
Volunteer history
Giving history Use of services
Sound Fiscal Management The scandals of a few have created
concerns about all No longer get “the benefit of the
doubt” – and you shouldn’t - you should have sound policies.
Dual controls and active board review
Standards for donor response Transparency to public
Building the Legacy Team
You need staff and volunteers – but will need to work with the resources you have
Rely on outside help for technical advice and guidance
Rely on staff and board to ensure key infrastructure is in place
Rely on volunteers to have conversations with donors.
Building the Legacy Team
Be patient – endowments and legacies take time
Remember you’re working with your best donors
Build a well-informed, motivated, inspired team
Each individual should understand the role they play in success
The Role of the Board
Engage in planning Participate in endowment design Ask questions! Ensure accountability Review regular report on progress Support process in budget Provide support in outreach Adopt policies, including ethics Consider a gift!
The CEO’s Duties
Drive strategic planning
Oversee case statement
Ensure board is on board
Make regular reports to board and staff
Recruit planned giving committee
Define endowment form Draft resolution to
commit gifts to endowment
Assign oversight of endowment
Set goals Establish way to
distribute Support calls
The CFO’s/Treasurer’s Duties
Work with development staff to create endowment agreement
Review administrative requirements
Make checklist for endowment support
Work with investment committee
Prepare quarterly and annual investment reports
Follow through on receipt of gifts
The Development Officer
Work with CEO/ED on case statement
Identify budget needs
Prepare marketing materials
Make calls on donors
Prepare gift proposals
Close and report gifts
Follow through with CFO/Treasurer
Contact donor after fund operational – send update
The Volunteers
Embrace learning curve!
Learn to articulate the case.
Consider a personal Legacy
Give thought to the impact of your gift.
Make the calls! Get help when you
need it.
Setting Goals and Objectives
Shaping expectations on goals – two common mistakes The expectation the endowment will
address short-term funding issues Expecting planned giving to generate
instant returns
Begin with Conceptual Goals Building the financial base of your charity Identifying new donors – and cultivating
connected donors Creating a marketing program to create
greater visibility Creating visibility for endowment and gift
planning Improving infrastructure Engaging board and volunteers
Next, Set Specific Goals
Year One Strengthen data management Building donor information Create prospecting process Adopt key policies Create marketing plan Update current marketing platforms to
include key messages Develop method of tracking calls
Next, Set Specific Goals
Year One (continued) Create recognition society Make calls on top 50 prospects Obtain endowment gifts from 50% of
the board Obtain endowment gifts from 20% of
former board Train staff/board on
endowment/planned giving
Next, Set Specific goals
Year Two Raise board participation to 75% Obtain 10 additional endowment
commitments from former board Make calls on top 75 prospects Celebrate success at 1-year mark Send letters to 500 endowment
prospects Create professional advisory council Expand staff to support activities
Next, Set Specific Goals
Year Five 150 members of the recognition society $2 million in endowment assets $10 million in endowment
commitments 150 ongoing solicitations per year Active committee/task force Active advisory council
Track Indirect and Direct Revenue Producing Activities
Indirect: Number of prospects qualified Number of records reviewed Number of training sessions/volunteers
trained Number of telephone contacts, written
contacts, personal contacts Number of seminars, events
Track Indirect and Direct Revenue Producing Activities
Direct Gift commitments – irrevocable and
revocable Cash revenue
Drafting the Implementation Plan
Start with your goals Incorporate infrastructure needs
(from assessment) See page 28
Task People responsible Staff/volunteer resources $$ resources Timeline
Tracking and Reporting
Update progress on quarterly basis Report internally - one page report
for consistency Report externally – thank donors
and report impact
Basic Marketing Strategies
Opportunities for Donors
Creating a Legacy is a joy – not a burden.
Donor can select the charity and purpose for Legacy
The gift can involve or honor family The gift should fit within context of
other planning Opportunity to give back Opportunity to change the world
Challenges to Donors It is uncomfortable to talk about
bequests or death – “I’ll take care of it later.”
How do I balance family with charity? Where do I start? Why do you need the money? I’m not wealthy. This is complicated. My family doesn’t live here.
The Many Facets of Donor Motivation
Commitment to role of organization in Jewish community
Deep religious faith Commitment to “give back” Services provided Contribution to quality of life Personal gratitude for success
The Many Facets of Donor Motivation
Memorial Facilitating change Desire to influence or control
activities Guilt Tax incentives
Donor Motivation: High Net Worth Philanthropy Study 2006 Study Focused on philanthropic profile,
motivations and goals of high net worth individuals (income >$200,000, assets >$1 million)
3.1% of all U. S. households 98% of group made gift to charity in
2005
Type of Gift Vehicles Used
Type of Gift % Who Have Created
Capital campaign 64.6%
Bequest 41.2%
Stocks/mutual funds 31.8%
Created foundation 19.5%
Created donor advised fund 15.9%
Important Motivations for Giving
Motivation % of Respondents Citing
Meet critical needs 86.3%
Giving back to society 82.6%
Reciprocity 81.5%
Bring about a desired impact 68.5%
Nonprofits should do what government cannot do
64.4%
Factors That Would Prompt Additional Gifts
Factor % of Respondents Citing
Spent less money on administration
74.8%
Donor can determine impact of gift
58.3%
Donor felt more financial secure
52.0%
Donor received better return on investments
46.6%
Donor not already financially committed
40.2%
Center on Philanthropy at IU Bequest Study
Report in March 2007 Combined high net worth with
surveys in Indiana, St. Louis, Memphis Goal to identify potential bequest
donors, and donor motivation 48.4% had a will
FindLaw 44.4% (2002) NCPG 42% (2000)
Age Demographics for Those With Bequest in Place
Age Bequest Study HNW Philanthropy Study
30-40 8.9% 1.4%
40-50 28.1% 9.4%
50-6- 21.9% 19.3%
60-70 20.6% 27.5%
70-80 11.0% 25.1%
80+ 8.9% 17.3%
Age Demographics for Those Willing to Consider a Bequest
Age Bequest Study % of Sample
30-40 18% 18.2%
40-50 28% 28.8%
50-60 24% 18.3%
60-70 5% 10.9%
70-80 3% 7.8%
80+ 1% 3.7%
Bequest Intention Potential
>$25,000
$25,000 to
$49,999
$50,000 to
$74,999
$75,000 to
$99,999
$100,000+
Bequest currently in place
6.6% 7% 7.6% 6.5% 10%
Would consider putting a bequest in place
28.4% 34.6% 28.8% 25.99% 35.63%
Giving Interests – Generational Differences
Younger donors are less likely to contribute to religious causes.
Generational Differences
After controls were factored, age had little impact on amount.
Motivations varied by generation – but not as varied as you would imagine.
Motivations for Giving – Generational Interests
Millen. Gen X Boomer Silent Great Overall
Basic needs poor
39.4% 39.6% 44.9% 46.7% 52.3% 43%
Better com-munity
34.3% 39.4% 35.9% 34.5% 36.7% 36.7%
Self help
28.5% 34.3% 38.6% 41.3% 43.9% 36.7%
Better world
44.5% 37.3% 33.8% 31.9% 26.5% 35.4%
Help – those w/ less
28.7% 27.8% 27.8% 28.5% 21.7% 27.9%
Generational Difference
Educational level affected donor motivation College degree more likely to cite
“responsibility to help those with less” and less like to “meet the basic needs of the poor.”
Identifying the Best Prospects
Internal: Multi-year donors Members Major gift donors Long-term leadership Long-term volunteers Current board Corporate leadership Staff
Finding the Best Prospects
External Community investors Always start internally
Educating Prospects (Marketing) Integrating the Legacy Message in
Current Platforms Annual report Website Annual fund solicitations Substantiation and “thank you” letters Stationery Newsletter Board meetings Annual appreciation luncheon
An Exercise
As a group, let’s brainstorm to identify current marketing platforms that may be available to you.
Create an Endowment/Legacy Brochure
A word from the Board Chair, Legacy Chair, President
The case for Legacy/endowment The endowment structure, options
in giving Basic giving options Two donor stories Reply form
An Exercise: The Most Effective Marketing Materials
What is the single most effective piece of endowment marketing material you’ve seen? Why?
Conversations with Donors
Making Calls on Potential Donors
The personal call is the most powerful, effective marketing tool you have.
Cannot be reduced to a formula. The good news is, it’s driven by the
donors interests – so easy to do. Planning is critical:
Information Calling strategy
The Secret for Success: It’s All About the Donor
Here’s where you start: Information about the donor’s
relationship with your charity Info from public sources Anecdotal information from staff
What You Must Know Before the Conversation
The strategy – why you’re there Why you picked this donor Basic gift options
Outright gifts Gifts that pay income Deferred gifts
Endowment options What happens to the money
Assembling and Training the Calling Team
The importance of volunteers Willing to be training and make calls Know the charity well Have made personal commitment Have participated in training
Training the team Role of endowment Purpose of Create a Jewish Legacy Strategy behind prospect selection Role of volunteer Basic gift options
The Top Fifty Prospects
Use identifiers discussed earlier Share list with volunteers Allow the volunteer to select 2 to 3
names they are most comfortable calling on
Setting Up the Call
Step One – review the info. Step Two – send the letter. Step Three – follow up. Step Four – set a time to meet. Step Five – follow the phone call
with a letter confirming the meeting time and place.
An Exercise: What Are Your Greatest Fears?
As a group, share the donor question or response you most fear as a part of this endowment conversation.
The Course of the Call
Establish a relationship with the donor How long have you been a donor to our
charity? When did you make your first gift – and
why? What are your concerns as you look out
10 to 20 years? What do you believe are our greatest
opportunities and challenges?
More Questions
What are the charitable interests you are most passionate about in the Jewish community?
How have you supported those interests? Do you realize you could create a fund
with our charity – either today or through your estate – that would address those priorities?
Would you like to talk more?
And Still More:
What is the most significant charitable gift you have ever made?
Why? What are your goals for you children,
grandchildren in philanthropy? Do you have an estate planner you
work with you can recommend to others?
Listen Carefully – Financial Needs
My CD income has been cut in half! The dividends and interest from my
investments has dropped dramatically. I wish I could sell my stocks – but I
don’t want to pay capital gains. I’m worried about taking care of my
parents – and my children! I have a child with disabilities – they
are my first priority.
Listen Carefully – Financial Transactions
My brother and I are going to sell land we inherited from our parents – tired of taxes, management, and conflict.
I’ve decided not to pass the family business to my children – I think I’ll sell it now to maximize its value.
I’m worried about having enough income in retirement – I think I’ll sell my stocks and buy tax-exempts
The Course of the Call
Share information about your charity.
Qualify the donor. Move the prospect to the next step. Ask for the gift.
Know the gift goals. Donor must be qualified. Determine amount and type to suggest. Set time to make the ask. Who should be there? Thank the donor.
The Follow Up
The follow up is key to your success – endowments are built overnight, and deferred gift decisions are not made on the first visit.
Make notes about the call, the information developed, and steps required for follow up.
Assess the value of the call. Make a list of follow up items. Send a thank you note for the call.
Seven Secrets for Success
#1 Find the Right Donors
It’s all about the donors Commitment better indicator than
wealth Ownership is key Find a way for each to participate
#2 Communicate Clearly and Consistently with Those Donors
Communication must express expectations.
Communication must be ongoing. Potential donors should be able to
identify themselves as the target and get key information on how to move forward.
#3 Stewardship is King
Stewardship is king Can’t begin with campaign – must
begin earlier Hard to find time when in planning –
make time Set stewardship as campaign value
#4 Spread the Endowment Building Responsibilities
CEO/ED duties CFO/Treasurer duties Development staff duties Board and volunteer duties
#5 Report, Report, Report
Boards love facts, figures and success.
They prioritize those activities heavily reported.
They must engage and take ownership of the results.
Treat every report like a donor call – provide stories, incentives, results, impact
#6 Never, Never Quit Building
The best campaigns reach goal and keep going.
Think about Harvard, Yale, etc……..they fundraise for endowment daily.
Also remember, many of these gifts will be revocable – don’t send the message you don’t need the gift any more.
Final Thoughts
Success requires a plan Focus on best prospects Make those calls Keep endowment visible Know the answers Stay with it! – building endowment
is an ongoing process