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Endowment Strategies: Essential Infrastructure and Conversations with Donors

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Why Are We Here? Building a culture of Legacy and endowment can be challenging. ... you have to wait until the time is 'right' but that day will never come. ... – PowerPoint PPT presentation

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Title: Endowment Strategies: Essential Infrastructure and Conversations with Donors


1
Endowment StrategiesEssential Infrastructure
and Conversations with Donors
Create a Jewish Legacy of Western Massachusetts
2
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.

3
Essential Elements for Endowment Success
4
An Overview
  • Building endowment is a proactive not reactive
    process.
  • To be successful, you must create a strong
    infrastructure, understand the donors
    perspective, and engage in conversations.

5
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

6
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

7
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

8
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

9
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

10
The Fundraising Pyramid
Donor Commitment
Nonprofit Contact
PLANNED GIVING
MAJOR GIVING
ANNUAL GIVING
11
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

12
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.

13
An Exercise
  • As a group, tell me your greatest concerns about
    the impact of endowment on your ongoing
    fundraising.

14
The Infrastructure Required to Build Endowment
15
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

16
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.

17
A Strategic Assessment
  • Your Opportunities
  • Youre creating a long-term resource.
  • An endowment provides funds to capitalize on
    opportunities or expand strategically.
  • Youll have resources to respond quickly to
    critical and urgent needs.
  • Youll have resources to take on new ventures not
    covered by annual revenue.

18
A Strategic Assessment
  • Your Opportunities
  • Youll have the opportunity to build stronger
    relationships with your donors sets the stage
    for ongoing communications.
  • You can do it right youre 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

19
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.

20
An Exercise
  • Divide into teams and identify your
    organizations greatest strengths and weaknesses
    in building endowment. You may select up to 3 of
    each.

21
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?

22
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?

23
The Six Greatest Concerns
  • How can we hold money for the future, when there
    are so many needs today?
  • We will appear rich.
  • We dont want restrictions on gifts.
  • Wont endowment giving hurt annual giving?
  • These gifts seem complicated.
  • This process costs money.

24
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

25
An Exercise
  • Make a list of the top five elements of your case
    for support.

26
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.

27
Gift Acceptance Policies Why?
  • Decisions on a case by case scenario are
    inconsistent.
  • The glittering appeal of the gift obfuscates good
    judgment.
  • Without policies, you may send mixed signals to
    donors.
  • Good policies will keep donors from making
    mistakes.

28
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

29
Effective Data Management
  • Data is gold the key to prospecting
  • Data is key in building relationships
  • Its about more than membership or annual giving
    its about who they are and how they relate to
    your organization
  • Others can not sort, remember, or analyze whats
    in your brain unless you reduce it to data.

30
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

31
Sound Fiscal Management
  • The scandals of a few have created concerns about
    all
  • No longer get the benefit of the doubt and
    you shouldnt - you should have sound policies.
  • Dual controls and active board review
  • Standards for donor response
  • Transparency to public

32
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.

33
Building the Legacy Team
  • Be patient endowments and legacies take time
  • Remember youre working with your best donors
  • Build a well-informed, motivated, inspired team
  • Each individual should understand the role they
    play in success

34
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!

35
The CEOs 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

36
The CFOs/Treasurers 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

37
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

38
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.

39
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

40
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

41
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

42
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

43
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

44
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

45
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

46
Track Indirect and Direct Revenue Producing
Activities
  • Direct
  • Gift commitments irrevocable and revocable
  • Cash revenue

47
Drafting the Implementation Plan
  • Start with your goals
  • Incorporate infrastructure needs (from
    assessment)
  • See page 28
  • Task
  • People responsible
  • Staff/volunteer resources
  • resources
  • Timeline

48
Tracking and Reporting
  • Update progress on quarterly basis
  • Report internally - one page report for
    consistency
  • Report externally thank donors and report impact

49
Basic Marketing Strategies
50
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

51
Challenges to Donors
  • It is uncomfortable to talk about bequests or
    death Ill take care of it later.
  • How do I balance family with charity?
  • Where do I start?
  • Why do you need the money?
  • Im not wealthy.
  • This is complicated.
  • My family doesnt live here.

52
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

53
The Many Facets of Donor Motivation
  • Memorial
  • Facilitating change
  • Desire to influence or control activities
  • Guilt
  • Tax incentives

54
Donor Motivation High Net Worth Philanthropy
Study
  • 2006 Study
  • Focused on philanthropic profile, motivations and
    goals of high net worth individuals (income
    gt200,000, assets gt1 million)
  • 3.1 of all U. S. households
  • 98 of group made gift to charity in 2005

55
Type of Gift Vehicles Used
56
Important Motivations for Giving
57
Factors That Would Prompt Additional Gifts
58
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)

59
Age Demographics for Those With Bequest in Place
60
Age Demographics for Those Willing to Consider a
Bequest
61
Bequest Intention Potential
62
Giving Interests Generational Differences
Younger donors are less likely to contribute to
religious causes.
63
Generational Differences
  • After controls were factored, age had little
    impact on amount.
  • Motivations varied by generation but not as
    varied as you would imagine.

64
Motivations for Giving Generational Interests
65
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.

66
Identifying the Best Prospects
  • Internal
  • Multi-year donors
  • Members
  • Major gift donors
  • Long-term leadership
  • Long-term volunteers
  • Current board
  • Corporate leadership
  • Staff

67
Finding the Best Prospects
  • External
  • Community investors
  • Always start internally

68
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

69
An Exercise
  • As a group, lets brainstorm to identify current
    marketing platforms that may be available to you.

70
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

71
An Exercise The Most Effective Marketing
Materials
  • What is the single most effective piece of
    endowment marketing material youve seen? Why?

72
Conversations with Donors
73
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, its driven by the donors
    interests so easy to do.
  • Planning is critical
  • Information
  • Calling strategy

74
The Secret for Success Its All About the Donor
  • Heres where you start
  • Information about the donors relationship with
    your charity
  • Info from public sources
  • Anecdotal information from staff

75
What You Must Know Before the Conversation
  • The strategy why youre there
  • Why you picked this donor
  • Basic gift options
  • Outright gifts
  • Gifts that pay income
  • Deferred gifts
  • Endowment options
  • What happens to the money

76
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

77
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

78
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.

79
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.

80
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?

81
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?

82
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?

83
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 dont want
    to pay capital gains.
  • Im worried about taking care of my parents and
    my children!
  • I have a child with disabilities they are my
    first priority.

84
Listen Carefully Financial Transactions
  • My brother and I are going to sell land we
    inherited from our parents tired of taxes,
    management, and conflict.
  • Ive decided not to pass the family business to
    my children I think Ill sell it now to
    maximize its value.
  • Im worried about having enough income in
    retirement I think Ill sell my stocks and buy
    tax-exempts

85
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.

86
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.

87
Seven Secrets for Success
88
1 Find the Right Donors
  • Its all about the donors
  • Commitment better indicator than wealth
  • Ownership is key
  • Find a way for each to participate

89
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.

90
3 Stewardship is King
  • Stewardship is king
  • Cant begin with campaign must begin earlier
  • Hard to find time when in planning make time
  • Set stewardship as campaign value

91
4 Spread the Endowment Building Responsibilities
  • CEO/ED duties
  • CFO/Treasurer duties
  • Development staff duties
  • Board and volunteer duties

92
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

93
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 dont send the message you dont need
    the gift any more.

94
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
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