Endowment Strategies: Essential Infrastructure and Conversations with Donors

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

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Essential Elements for Endowment Success
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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.

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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

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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

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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

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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

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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

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

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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.

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An Exercise

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

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The Infrastructure Required to Build Endowment
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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

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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.

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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.

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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

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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.

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An Exercise

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

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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?

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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?

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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.

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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

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An Exercise

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

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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.

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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.

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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

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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.

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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

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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

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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.

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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

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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!

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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Track Indirect and Direct Revenue Producing
Activities

• Direct
• Gift commitments irrevocable and revocable
• Cash revenue

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Drafting the Implementation Plan

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

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Tracking and Reporting

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

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Basic Marketing Strategies
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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

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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.

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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

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The Many Facets of Donor Motivation

• Memorial
• Facilitating change
• Desire to influence or control activities
• Guilt
• Tax incentives

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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

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

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Age Demographics for Those With Bequest in Place
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Age Demographics for Those Willing to Consider a
Bequest
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Bequest Intention Potential
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Giving Interests Generational Differences
Younger donors are less likely to contribute to
religious causes.
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Generational Differences

• After controls were factored, age had little
  impact on amount.
• Motivations varied by generation but not as
  varied as you would imagine.

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Motivations for Giving Generational Interests
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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.

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Identifying the Best Prospects

• Internal
• Multi-year donors
• Members
• Major gift donors
• Long-term leadership
• Long-term volunteers
• Current board
• Corporate leadership
• Staff

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Finding the Best Prospects

• External
• Community investors
• Always start internally

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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

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An Exercise

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

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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

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An Exercise The Most Effective Marketing
Materials

• What is the single most effective piece of
  endowment marketing material youve seen? Why?

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Conversations with Donors
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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

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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

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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

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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

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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

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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.

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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.

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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?

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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?

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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?

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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.

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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

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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.

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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.

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Seven Secrets for Success
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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

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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.

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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

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4 Spread the Endowment Building Responsibilities

• CEO/ED duties
• CFO/Treasurer duties
• Development staff duties
• Board and volunteer duties

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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

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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.

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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