September 12, 2009
We are new to Park City and are very happy to be here. Over the past couple of months I have read a number of stories about the funding problems that local (and national) nonprofit agencies are having. The Park Record made a good point in a recent editorial about the same people giving to multiple charitable causes. Those people are to be commended for their service to our community.
You know, up until the age of 21 we feel that we are immortal and do all kinds of things that, had we done some risk analysis, possibly we may have made different decisions. Goodness knows there was heavy betting I would not see 21! However, after we turn 21, we try to find ways to become immortal. We continue to do crazy things but the goals are different.
When I read about nonprofits that are having problems attracting donations, my first reaction is to find out if they have an endowment fund. Obviously endowments are much more strategic than the day-to-day collection of donations that will be spent immediately — and I understand the boards saying, "If we don’t collect this money today, we are out of business."
However, in my experience there are a group of people, including us, who are tired of constantly being bombarded to give, give, give without there being a potential solution at the end.
For this reason, I was the cofounder of the first endowment for a public elementary school in Frederick County, Md., (Liberty Elementary for their library and media center). Currently the school receives approximately $2,500 per year from the endowment to keep the library and media center up to date. We never had a goal to create a huge endowment fund, just one that would solve a problem.
When we moved to Iowa, the Linn-Mar School District had what they called an "endowment." When I was asked to join the board, I saw they were spending small amounts of the principal. We had very well-meaning people on the board who had great reasons to want to spend that money for the children. However, over 6 years I, then several members of the board, and finally the majority of the board, saw the advantage that saving the principal and only spending some of the interest would benefit the children more. Currently the Linn-Mar Foundation has over $500,000 in its Greater Cedar Rapids Community Foundation endowment with more money pledged. Now they may receive $25,000 per year from some of the interest in their endowment.
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What kind of an impact can that make to a nonprofit? Just think of the impact that a $1 million endowment gift can make to your favorite organization. In just 17 years, the endowment would have distributed the original $1 million gift over those years and continue to grow the principal more quickly through interest growth.
Tying this back to being immortal, giving to an endowment is a way to make impacts to your community that can make you immortal. Endowment funds continue to give long after you are gone — and can solve funding problems.
Trisha Worthington, executive director of The Park City Foundation, would be happy to discuss either creating an endowment or growing one with you. Or you can chat with me.
Bill Humbert’s business is RecruiterGuy.com, a nationally based recruitment consulting firm that typically focuses on one client at a time. Humbert is also one of the organizers of the Park City Career Network. You can reach him at (435) 649-0005.