Building an Endowment

Why wait for one large, generous gift to start building an endowment that can help fund your organization’s operation? With only a few additional gifts each year, you can build a multi-million dollar endowment fund and become more financially self-sufficient.

Want to see how it can work? Download and use this spreadsheet to model different schedules and contribution amounts to find a combination that works for your organization.

Sample Endowment Growth Plan

Building Systems Replacement/Maintenance Plan

Whether your facility is brand new, in the process of being renovated, or desperately in need of repair, you need a Building Reserves Fund and a Building Systems Replacement/Maintenance Plan.

The Kresge Foundation, which has spent many years and millions of dollars supporting facilities improvements for arts and cultural organizations, has a great explanation of Building Reserves Funds and why they’re so important.

Planning for your building’s maintenance needs, and ensuring that you have the money you need to fix things when they break or need ordinary maintenance, is the responsible approach to stewardship of our nation’s built heritage. But instead, many organizations — probably most organizations — put off those expenses for another day, hoping that, someday, the gift of an endowment will magically solve those long-term facility funding problems.

A better approach is to begin building a Building Reserves Fund now. No matter how modest it is to start, every dollar saved will help to build a safety net for the future.

To help you get started, I’ve provided this Building Maintenance-Systems Replacement Plan, which includes some of the major building expenses that you might face for the next 20 years. You can adjust this based on the age of your building and its systems, using the following (conservatively estimated) life expectancy of those systems or building components:

Annual maintenance. Every 1 year.
It’s better to start with a more conservative (higher) budget for annual maintenance and then adjust it down as needed, to ensure that you have sufficient funds. Don’t forget to include manufacturer-recommended service intervals for major components like elevators and HVAC systems!

Computer systems, including video/networked security systems. Every 5 years.
Computer technology changes so quickly that you will likely need to swap out all of your computer systems that often!

Paint/glaze exterior windows and doors, as well as any wooden siding, soffits, and eaves, if present. Every 7 years.
This interval is based on recommendations from paint manufacturers, but — as we all know — keeping exterior wood surfaces painted is the key to preventing rot. Be sure to include equipment rental costs if the contractor will need a man lift to reach surfaces above the second floor.

Replace exterior HVAC compressor units. Every 8 years.

Repaint interior surfaces, replace carpet and/or refinish wood floors. Every 10 years.
A fresh coat of paint and an updated color scheme doesn’t must brighten those interior spaces. Remember that  your facility is part of your brand, and the way you care for it speaks volumes about your organization. If your spaces are up-to-date, that tells people that your organization is, too!

Replace smoke/fire/security system. Every 10 years.

Replace interior HVAC air handlers, heating components, dust filters and dehumidification units. Every 12 years.

Replace roof. Every 20 years.
Yes, the whole thing! I know it’s a big expense. That’s why you have 20 years to save for it!

To complete the spreadsheet, start with the current cost of these items. You might have this in an Historic Structures Report or you can work with an architect to help you come up with today’s prices.

Once you have a list of current prices, you can calculate what you’ll need at the appropriate intervals, adjusting for inflation. For example, perhaps your security system would cost $10,000 to replace in 2011. You can find a number of Inflation Calculators like this one online and use one of those to figure that by 2021, you’ll need nearly $12,250 to replace it (assuming that the cost of the security system is stable).

After you’ve completed your spreadsheet, you’ll have the information that you need to start deciding you’re going to pay for this. And that’s a topic for another post!

Your New NPO: The First Year!

Congratulations! You just established a new, volunteer-led non-profit organization dedicated to the preservation of one or more historic resources. So now that you’ve officially done all of your state paperwork and sent in your application for tax-exempt status to the IRS, what’s next?

Here are some ideas for first-year activities that will start you off on the right foot. Since it’s important to have goals for your organization’s growth and success, in each of the following sections, we’ve suggested a goal that you might set for your first year. It’s not important that you use these goals, specifically – just that you set some. (Don’t be afraid to be ambitious!)

1. Build Awareness

It’s important to establish a broad base of community support, particularly one that you can document through membership. This starts by making people aware of what you’re doing.

Begin by building an initial email-newsletter mailing list:

  • Rent booth space at your local community events, and – in addition to providing information and offering fun, engaging activities and merchandise – ask people to sign up for your email newsletter.
  • Ask all of your board members to provide a list of their friends and contacts. Don’t be shy —seriously, if your board is not willing to send a letter to their friends asking them to consider becoming a member, then you have a real problem. People can always opt out of an email subscription to your newsletter.
  • In every communication you send out (digital or printed), be sure to include a request for the reader to become a member, along with a link to your website’s membership page and/or a membership form.

GOAL! See how many people you can sign up for your newsletter in the first three or four months, then try to double that number in the next eight or nine months.

Once you have established your mailing list and communicated with people a few times …

2. Hold a Membership Drive

In your first year or two, this could substitute for an annual appeal or annual fund drive.

I would send this letter out over the board president’s signature. Be sure to include:

  • A personal statement from the Board President about their interest in and passion for preserving the resource(s)
  • The organization’s mission statement (what you are trying to accomplish, generally)
  • The plan for what you’re trying to accomplish in the next year
  • How membership fees will be used to advance the organization’s mission
  • A statement that the donation will be tax deductible or, if you’ve applied for 501(c)(3) but haven’t received a response, a note to that effect, explaining that you expect to have the tax-exempt status determination letter from the IRS in hand soon, and will be able to provide a tax-deductible donation then.

If you haven’t already done so, you’ll need to decide what “benefits” to offer your members. This does not have to include giveaway items like tote bags or coffee mugs. In fact, the more creative your member benefits are, the better! Experiences, rather than products, can make excellent member benefits and may be accomplished at little or no cost, as well. Examples include member-only events, such as a hard-hat tour of the building in its current condition (after they sign a waiver of liability); a commemorative tchotchke, the cost of which is sponsored by a local business; or a cocktail party or other celebration when you achieve an important milestone, for which the food/drink/etc. has been donated by a local business or sponsored by a donor.

GOAL! Two possible goals for your membership drive include (a) to convert more of your existing email newsletter recipients to members, and (b) to increase your membership numbers overall.

It’s important to set your goals in writing, think through how you will measure your success, implement your plans accordingly, and debrief afterward to explore what went well and what could be improved in the future.

3. Programming

Even as a young organization, you should have some sort of regular programming that helps to build awareness for the historic resources that you want to preserve. Having a schedule of regular programming also gives your organization more credibility and legitimacy. It’s not too early to begin!

Here’s an example of an easy, inexpensive program for your first year. It should not be too difficult or time-consuming to schedule four or six lectures a year about topics that are relevant to the historic resource. If you have four core board members, each of you could take one quarter of the year and be in charge of one of these lectures — finding a speaker, scheduling a space, publicizing it to members and the public, etc. (Be sure to work together as a group to coordinate the topics.) You should start planning this early so you can publicize them — and also give your speakers lots of notice. (I’d find and ask all of them immediately! Then follow up to make sure they remember about it, two months before the event — two weeks before — and then two days before. You can’t be too careful. People are busy.)

Topics might include:

  • History of the family or people most closely associated with the historic resource(s)
  • History of the property and its place in your state’s architecture. If the property is designated as a local or state landmark, or listed on the National Register, ask your speaker to talk about what the relevant designations mean.
  • Something interesting about preservation, such as a presentation by someone who can talk about how a similar property was successfully preserved, adapted for reuse, incorporated into a new development, etc. It’s helpful to show people that there’s a precedent for doing what you’re trying to do, and making it work, so I’d look for someone who could speak to that process and what it took to get it done.
  • If you are working with architects to do an Historic Structures Report, Master Plan, etc., you could build their presentation into this programming series.

Recruit volunteers to provide refreshments, ask a local donor or business to sponsor newspaper ads for the events (after you find out how much those ads would cost), and be sure to have membership forms for everyone who attends – don’t by shy, ask everyone to join!

Each event should include a sign-in sheet with a volunteer there to make sure people sign in and provide their contact information, if they’d like to receive your monthly newsletter. The program could start with an introduction by the board member who’s in charge of it, talking about the organization and its mission, and introducing the speaker. At the end, the same person could manage a short Q&A and then ask everyone to become a member.

GOAL! Hold one programming event or activity each quarter.

If you can just manage to accomplish that much programming in your first year, fantastic! Remember: don’t be too ambitious about what you can accomplish with a small volunteer board. Under-promise and over-deliver.

4. Publicity

It’s important to do two things in terms of publicity: a) Communicate regularly, and b) Be prepared for big opportunities.

The first part is easy: You need a newsletter that goes out at least quarterly and preferably monthly, so that your organization is in front of people all the time. You do not need to have a ton of news in it, nor does this need to be fancy or expensive. I suggest using something like Constant Contact so that people can sign up online but also manage their own subscriptions through SafeUnsubscribe technology. You can also format the same content as a PDF and print it for those people who prefer a paper copy.

Try to create a committee of three or four volunteers who are good at this sort of thing and who could just be in charge of the newsletter. If you don’t have anybody in mind, go out and recruit them! Ask everyone who is already a volunteer if they know a friend who has those skills and could volunteer a few hours a month to get that done. In many cases, people will volunteer for something that’s straightforward like that, if they know the time commitment isn’t going to escalate.

Second, you need to get someone with professional public relations experience to help you prepare for big milestones. You probably know what big events are likely to happen, at some point:

  • The organization receives an award
  • The organization receives a large gift or grant
  • The organization holds a successful event
  • The organization accomplishes a major goal

You may be able to find a volunteer from your local chapter of Public Relations Society of America who can help you develop press releases for things like this ahead of time, at their leisure, and also advise you on how best to position your organization to capitalize on media opportunities, with a media kit, interview-able people (who are well prepared!), and a strategy for using the announcement to build your membership base and position you for fundraising success.

GOAL! Establish a regular schedule of communications, including with your local media, and make a friend who is a PR professional.

5. Fundraising

Everyone asks me, “How do we get big grants?” I think the best strategy is to first establish that broad base of support (in this case, financial support) from the community, then apply for a few small grants. Demonstrate your ability to complete projects successfully, then ask for more money.

Let’s begin by talking about “community support.” Your membership fees provide a good start, and you can make another appeal for contributions in your newsletter and on your website. Be sure to explain how much money is needed, how it will be used, and what part of it you are hoping to raise from members.

Next, your Board must contribute over and above their membership fees. Many foundations ask specifically how many Board members donate and the amount of total annual Board Giving – because if your own Board isn’t committed enough to give or raise funds for your cause, why should the foundation give? Consider setting a modest but impactful goal for a Board Challenge. For example, you might ask the Board to contribute or bring in 25% of a total project or program budget.

Employer matching gifts can make a big difference, so don’t forget to remind your potential donors about those!

You should also go to local businesses and organizations and make a personal appeal for help. You might make a list of local businesses and divide that up between board members. Go to the business/organization, meet with the owner or manager, and be prepared to leave behind information about the project (a one-page project description with membeship/donation form and return envelope).

Once you have funds coming in from your board/members/local businesses, make relatively small grant requests — mentioning, of course, that your community has already donated X% of the cost. Be sure that you are capable of doing what you propose to do, if you get the grant, and don’t create programming or projects just because money is available. Focus on delivering your mission!

After the successful completion of a fundraising campaign, consider taking out an ad in your local newspaper to thank everyone for their donation and list your business donors by name, if that’s all right with them. This demonstrates that your organization is successful and enjoys strong support.

GOAL! You should always have a fundraising goal, whether it’s to raise the money you need for a special project or for some percentage of your annual operating needs. As with membership, evaluate and debrief afterward so that you will know how to improve in the future.

If you can accomplish these five things in your first year, you will be off to a great start! Just remember to “plan your work and work your plan.”

After you get the grant: Prepare for the final report

Now that you’ve received a grant, you can take some steps right away that will save time and make your life easier later. One of my favorite sayings is, “Begin with the end in mind.”

1. Start a file for the grant.

Whether you prefer an electronic or paper version (or both), you’ll need some way to gather and organize all of the paperwork pertinent to the grant, its management, and whatever reports you are required to submit. Even if it’s duplicative, keep each grant’s information separate. Trust me! It will be easier in the long run.

You should plan to keep, at minimum, copies of the following:

Information about the grant

  • The original grant RFP, posting, or similar information
  • The original grant proposal
  • The grant award letter
  • The grant contract (if you receive one)
  • Any other correspondence to/from the funder

Financial Information

  • Disbursement letter from the funder (if you receive one)
  • Any matching, challenge, or reimbursement requirements, if applicable
  • Proof of gifts to meet matching or challenge requirements
  • List of gift amounts and donors
  • Copies of all invoices paid and receipts received for payment, related to the grant-funded work
  • Copies (front and back) of all cancelled checks for invoices paid on grant-funded work
  • A summary spreadsheet showing the project budget, income, and expenses

Project Information

  • Correspondence
  • Project plan and schedule documents
  • Meeting agendas and minutes
  • Lists of vendors and volunteers
  • Any informational and/or marketing materials produced for the project
  • Boilerplate descriptions of any partner organizations, and electronic files of their logos

2. Plan to document the project

Don’t wait until the work is done to think about the final report! Plan ahead to make sure that you have the documentation you need, when the time comes to assemble that report. Even if you are not required to create a final report, you should still plan to send one with a thank-you letter. You can also use this information for publicity and on your website.

First, you’re going to need photographs. In the case of a project that involves construction or changes to the physical environment, plan to capture:

  • “Before” photos to document the pre-project condition of the site, building, artifacts, etc.
  • “During” photos: any ribbon-cutting or kickoff-type events, staging of materials, work while underway, start or completion of any clearly defined project phases, craftspeople and volunteers at work, etc.
  • “After” photos of the completed project, particularly details that contrast the completed condition of specific elements with “before” photos; also, crew thank-you events, grand opening or unveiling events, etc.

If your project involves activities such as educational programming, photos throughout each activity will help to tell the story, with a mix of group, individual, posed, and candid photos.

Decide who will be responsible for taking pictures, the level of resolution desired, where the photo files will be stored, and how they will be organized. I recommend NOT using the date/time-stamp feature on your camera – the one that puts the date on the front of each photo. In some cases, those can be set (or accidentally reset) to the incorrect date, which just complicates things; in any case, the presence of text on the photo detracts from the image.

Take notes, too. If your project will last more than a few weeks, you will be glad that you’ve captured plenty of information while it was underway. This will also help you report knowledgeably to the Board of Directors and to any funder who requires an interim project report.

Try assigning one person (maybe an intern or enthusiastic volunteer) to “play journalist” and interview the different people involved in the project on a regular basis, then write articles for your organization’s newsletter.

If your project involves technical work, such as materials conservation, find a source who can explain those things to a non-technical audience, and include those explanations in your files in case you need them later.

If the project has generated CAD drawings, illustrations, or other images, ask the architect/designer for copies as .pdf or .jpg files.

Keep copies of all media coverage that you receive, including press clippings and your own press releases. PDF copies of your newsletters and website pages, describing the project and acknowledging donors, should go into the same media file.

3. Document obstacles, problems, delays, etc.

Inevitably, your project will not go smoothly; unexpected problems will arise to affect your schedule and budget. Be sure to identify and document these challenges, including

  • The date when the problem came to light
  • How the problem was identified and by whom
  • Potential responses or solutions considered, including which was selected and why
  • The timeframe for resolving the problem, including impacts to schedule and the date(s) when the resolution was selected and completed
  • Detailed descriptions of impacts to budget, with documentation of any quotes, estimates, bids, and actual costs
  • Lessons learned from this experience, to be applied to the rest of the project

I know this sounds picky, but two years down the road, when you’re trying to explain to a previous funder or a new potential donor what happened and why you weren’t able to get the work done as expected, you will be glad that you have all of this information on hand. It’s difficult to recall details after time has passed, and when you’re in the thick of it, things can happen quickly – you will be under pressure to resolve the issue and move forward, so it’s especially important to capture this information.

4. Don’t count on your vendors or contractors to do any of this work for you.

They have their own jobs to do. This is your job.

5. Allow plenty of time to prepare the final report.

Ideally, you’ll have several weeks of dedicated time to get this together.  Plan for that. The final grant report is your primary deliverable to the funding foundation or agency, so this is not the time to slap something together the day it’s due. The quality of your report may significantly affect your ability to get another grant.

If you’ve followed my advice so far, you should have what you need for the final report – but go back over the requirements and make sure you haven’t forgotten something. You might need to scramble to collect information, images, etc. retroactively, and that takes time.

6. Final thoughts

If the foundation or agency requires you to put together your budget in a way that doesn’t reflect reality or make sense, just roll with it. I’ve run into this before, and it’s honestly just easier to give them the information that they want, even if it’s based on your original budget estimate numbers and the actual budget is completely different, or if they have some weird way of calculating what you “actually” spent.

You may have questions about the required format or content. Try to get all of your questions together and send one concise list to the grants officer, rather than multiple emails asking questions as you get to them. Your performance in terms of communication with the grants officer is super important and tells them a lot about you. I’ve had funders give my clients grants just because the funder knew I would make sure everything was completed as promised and that their grant report would be done on time and provide the information they needed. Make it easy for donors to do business with you, and they will be more likely to continue doing just that.

Tell the funder if their gift functioned as seed money that enabled you to get additional funding. This is critical information that they want and need to know. Don’t assume that they are aware of your fundraising efforts or results.

Make sure that the information you’re providing with your grant report is clearly organized and makes sense. If necessary, include an index page that describes each document that you’ve provided as backup. You may want to annotate that to provide further clarification. Try to anticipate the funder’s questions and answer them in advance.

Lastly, say “Thank you.” Write a cover letter for your grant completion report that expresses your appreciation for the gift that you were given and its impact on your organization. However, be aware that many funding organizations do not want a plaque or chunk of crystal or clock. Your sincere thanks and recognition of their gift are most appropriate.

I hope this will help you be better prepared to submit a terrific grant completion report that impresses your donors and positions you for additional funding. (These tips apply to interim reports, too!)

Grants, Reimbursements, and Matching Funds

Congratulations! You’re applying for a grant, or you were just awarded one. So when will you receive the money, and what are you required to do before you get it? The answer to that question will depend on what type of grant it is.

Some funders simply write a check. Others require or challenge you to raise matching funds. In some cases, you must spend the money first, before you can receive the grant as reimbursement. In this post, we’ll discuss all three of these scenarios.

Be sure that you understand the structure and requirements of each grant before you apply, and incorporate those requirements into your fundraising strategy and project budget.

Simple Grants

The easiest type of grant to receive is one that comes with no requirements. You apply, your application is approved, and the foundation or agency sends you a check.

You will still have reporting requirements – established by the foundation or by common courtesy. In my next post, I’ll discuss grant contracts and managing and reporting on grants.

Challenge Grants

Depending on the size and length of your fundraising campaign, you might consider being open to a challenge grant. This means that the grantor would promise to give you a gift if you can raise some additional amount of money. If you’ve ever listened to an NPR radio station’s pledge drive, this is a tactic that they use often. The benefit – to the grantor, to you the recipient, and to other donors – is that every dollar raised is leveraged to bring in more money. In addition, a challenge grant can be motivating for many donors who want to help you reach that goal.

Challenge grants can come in different forms. Here are just a few examples:

  • If you raise $10,000, the grantor will match that dollar-for-dollar with a $10,000 gift.
  • If you raise 80% of your goal, the grantor will give you the other 20%.
  • The grantor will match every dollar you raise, up to $2,500.

If you are open to challenge grants, be sure to mention that in your cover letter or grant application. You might also ask several loyal donors to pool their gifts as a challenge grant.

Matching Grants

The term “matching grant” means that you are required to raise some amount of money to “match” the amount of the grant. The money you raise in addition to the grant is called “the match.”

Matching grants are similar to challenge grants, with the exception that the timing for your raising the match may vary. For example, a matching grant might require you to have the match in hand before you apply, or within some period of time after you receive the grant. Alternatively, a matching-grant donor might only require that you show proof of the match in your final grant report.

You can use two matching grants to match each other. For example, one of my clients received a $30,000 grant from the Texas Preservation Trust Fund and $25,000 grant from the Houston-Galveston Area Council, both of which required a $1-to-$1 match. The TPTF grant provided the full match for the H-GAC grant. In order to satisfy the TPTF match, we then only had to raise another $5,000.

Reimbursement Grants

Reimbursement grants require you to spend some or all of the grant amount before requesting payment. Generally, you have to submit copies of invoices and cancelled checks, and sometimes photographs of the completed work, with your request for reimbursement. This enables the grantor to be sure that you have done what you said you were going to do.

Since the terms of reimbursement grants vary widely, I find that it helps to make a plan and schedule for how and when we can apply for reimbursement, including the documentation required.

You might also be able to work with your vendors to move the reimbursement process along. For example, I have a client who had to raise $8,000 to pay for a Master Plan for their building restoration project. We received a $4,000 matching grant from the National Trust and a $1,700 reimbursement grant from the County Historical Commission. The National Trust doesn’t require you to have the match in hand right away, so we received that money immediately. By working with the architect to invoice us for $1,700 after the completion of an early milestone in the planning process, we can then submit our request for reimbursement to the CHC while the rest of the project is ongoing. That enables the client to have all of the grant funds in hand by the time the process is complete and they receive the architect’s final invoice.

Final Thoughts

  1. Don’t be surprised if you come across a reimbursement grant that also requires a match! This is a fairly common combination
  2. For all grants, record keeping is very important! You must keep copies of all invoices, cancelled checks, etc. in order to apply for reimbursement. You should also take pictures of the work being done, including before, during, and after the project is complete. If the project involves events, be sure to capture photographs of the different components of the event – not just a generic picture of a bunch of people in a room.
  3. Whenever you apply for a grant, whether you get it or not, send a thank-you letter after notification to let the foundation or agency know how much you appreciate the opportunity to apply. You would be shocked by how often people fail to say “thank you” – even when they receive a grant! With that said, most foundations do not want gifts or recognition plaques. A heartfelt letter from the Board president (and Executive Director, if you have one) is more meaningful.

Next time: Grant contracts, management, and reporting!


I recommend to all of my clients that they set up an endowment fund that will eventually contribute to (or fund entirely) the cost of organizational operations. Here are some thoughts on endowments for your consideration.

Don’t Wait for the Big Gift

I always tell my clients that they should think of endowments as organizational retirement plans. While it would be nice to get one big gift in order to fund an endowment, for many small organizations, that’s a bit like hoping to win the lottery.

Instead, your organization should follow the same sound fiscal principles that apply to saving for retirement and try to add some portion of its income each year to their endowment fund. Holding a special fundraising event every year, for example, could provide annual income to the endowment, and also helps to publicize the endowment to potential donors. Another option might be to direct a small percentage (for example, 5%) of all fundraising activities to the endowment fund. There are a lot of ways to approach this; the important thing, I believe, is to have a saving plan and stick to it.

Defining the Purpose

The Board of Directors needs to decide what activities the endowment will fund — general operating? Special programs? They might establish one large general endowment fund, or create multiple smaller funds in order to appeal to different donor interests: for example, separate endowments to fund educational programming, facilities maintenance, etc.

Starting the Endowment

Start the fund first so that it’s available for people to give to, rather than waiting for the gift and then establishing the fund. This allows your organization to accept small gifts and to work with donors to make planned gifts or bequests. This should be part of a comprehensive donor development strategy; if that’s not yet in place, establishing the endowment would be a good way to start working in that direction.

Legal Considerations

The Board will probably want to specify what kind of gifts the organization will accept and how those can be liquidated. (For example, it may not make sense for the organization to accept a gift of real estate.) This also lets the donor know what to expect.
The organization also needs to develop a policy for how money will come out of the endowment fund — for what purpose, who can withdraw it, how often can it be withdrawn, etc. That information probably should become part of the organization’s bylaws.

Financial Management

The money is going to have to be saved somewhere and managed appropriately. The organization should figure out first what level of risk it is comfortable with; it shouldn’t place its money with a financial manager who’s risk-averse if it’s not, and vice versa. The Board will also need to decide how much of the capital gains to reinvest each year or what percentage of the principal can be withdrawn, in order to keep building the fund over time.

Here are a few links that I’ve collected … some of this information is repetitive, but there are some good nuggets in there.

The Non-Profit Assistance Fund

Comerica’s Endowment Building Services and Endowment Management pages.

A book about endowment building from the Association of Fundraising Professionals.

An article that examines whether the organization is ready to have an endowment.

A recent article that I thought was good general information for thinking about development.