Do we have one? Should we have one?
The Strategic Decision to Build or Grow Endowments
The Regulatory Framework of Endowments
Fundraising for Endowments
Investments – The Regulatory Framework
Case Studies – Real Examples from the Field
“Endowment funds for charities are, in my opinion, on the brink of change from a traditional investment fund of perpetual duration for the long-term support of a charity to a charitable fund of action.”
“The recent reforms of the disbursement quota rules, coupled with the ever-increasing sophistication of donors, will inevitably push traditional endowment funds from being plodding dinosaurs to fleet-footed gazelles.”
Calvin Fong, Vancity Community Foundation
The Legal Definition
Not much guidance here
Is it in the Income Tax Act?
The Right Definition?
Capital Intact and Income used annually for Charitable Purposes
The Understandable Definition?
The Organization’s Savings Account
Long-term cash flow ensures continuity of programs
Smoothes out the peaks and valleys associated with traditional fundraising
Reflects strength and stability of the organization
Decreases fundraising costs
Only a small portion of the donation actually goes to the “cause”
Donors getting full tax break for charitable funds not being put to full use
Will dissuade donors from supporting organization because it already has sufficient funding
Repeal of 80% expenditure requirement
3.5% disbursement requirement for charitable organizations – now applies only when investment assets exceed $100,000
Elimination of “enduring property”, “specified gift”, “capital gains pool”
Most charities sit somewhere in the middle of the two extremes
For endowment building to be successful, there must be a strategic decision to focus on it. There must also be a strategic imperative.
Board of Directors must support it
Senior staff must support it
Endowment fundraising is often synonymous with planned giving/legacy fundraising
It doesn’t have to be that way…or does it?
Organization that successfully integrate legacy gifts into the existing fund development culture will benefit most
Board support is critical – is it the best deployment of organizational capital?
Is there a case for support? Does the organization truly want to build its endowment?
Who is responsible for endowment fundraising?
Major gift fundraisers
Planned giving officers
How is the endowment funded?
The Donor, Mackenzie Investments, wishes to make a gift to a large Canadian University to establish a new Chair at the Business School. Mackenzie has never made a gift to this organization.
It is Mackenzie’s wish that the new Chair in Financial Planning Research be established and filled as soon as possible.
The University has limited funding outside the gift to support the new position.
The size of the potential gift is $1,000,000.
The University estimates that the cost to recruit the Chair will be $50,000 and the “upfront” required costs of securing the position(salary, moving expenses, bonus) will be $250,000
The University also expects to receive support from other donors and some
matching funding to support the long-term sustainability of the new Chair
How should we structure the gift?