Editors’ note: This article, first published in print during Sep/Oct 2005, has been republished for Nonprofit Quarterly with minor updates.

In the first article in this series, which appeared in the last issue of the Journal, we discussed what an organization needs to have in place to set up an endowment. In this article, we will look at the first steps in carrying out a campaign to develop an endowment.

Before we get into the how-to’s, there an interesting historical footnote here. One of my mentors, the late Hank Rosso, always said that the phrase “endowment campaign” is an oxymoron. A campaign, he would point out, begins and ends and has a goal. The goal is then broken down into parts and is summarized in a gift-range chart that notes specific gifts to be sought. An endowment, on the other hand, is a never-ending, open fund that can continue to receive gifts and for which there is no upper or lower limit on gift amounts and no gift sizes suggested. Further, endowments are traditionally funded by estate gifts, whereas campaigns, whether capital or annual, are funded mostly by gifts given during the donor’s lifetime. “An endowment is like a cathedral,” Hank pointed out. “It is never finished.”

“An endowment is like a cathedral,” Hank [Rosso] pointed out. “It is never finished.”

Hank’s perspective was formed from working primarily with organizations that everyone agreed needed to exist forever — hospitals, museums, universities, parks, and the like. People did not seem to leave money to organizations that had no existing endowment; so how could an organization start an endowment?

This conundrum gave me the idea that there could be a new way to think about raising funds for an endowment — through a time-specific campaign that, like an annual campaign or a capital campaign, would have specific goals and set out to raise specific amounts of money from a variety of prospects. This money would serve as seed money that could then be added to overtime.

Here’s an important way endowment campaigns differ from simply starting an endowment program: gifts sought during the campaign are from donors who will give over the next few years; gifts through estates are not the focus of the campaign.

In 1989 I proposed doing an “endowment campaign” to the Funding Exchange (a coalition of progressive community foundations). At first, with visions of sugar plums but little sense of reality, we set as our goal to raise $15 million over five years. The $15 million might have been possible, but after only a few months it was clear that we could not sustain the campaign for five years. We modified the goal to be $10 million over three years and formally launched the campaign.

I served as the chief fundraiser for this endowment campaign, which was one of the first times these two words had been joined. Many fundraising professionals advised against trying to raise an endowment of this size in a specific (and what they saw as a short) time period, citing a number of obstacles: donors need a lot of time to think about making endowment gifts, we were not institutions that people assumed needed to exist forever, and we were a coalition of 14 small organizations, the bad reputation of any one of which could bring down the whole. Moreover, the largest foundation in our coalition raised, at most, $500,000 a year.

We forged ahead, however, because most of our donors were younger people with inherited wealth who did not need years and years to consider a gift from assets, and because those who were familiar with the community foundations saw no end in sight to the need for their work. The endowment campaign also helped us put stricter standards in place for each local fund of the Funding Exchange, ensuring that money given would be well used and stewarded.

We were aware that failure would have been, to say the least, embarrassing. But we also had what seemed to us a solid plan, and we decided to see if we could make it work. As with any new venture, we of course made many mistakes along the way, but in the end, we met our goal.

What we learned in that campaign has become a model for many other organizations to launch their own endowment campaigns; these organizations have added information and stories to the knowledge base Endowment campaigns have now become so common that it is hard to remember a time when “endowment” and “campaign” were words that would not appear together.

Hank died before the successful Funding Exchange campaign was over, but he was an innovative thinker and devoted to seeing grassroots groups raise large amounts of money. I like to think he would be pleased with this new chapter in fundraising.

It is usually not worth the effort of starting an endowment to raise
less than $500,000 in principal.

A note of caution: Organizations with a donor base of very-low-income people need to think twice before launching an endowment campaign. Even if such an effort could be successful, it means the organization will end up with a kind of financial security that few if any of its supporters have. This can exacerbate a danger present in all endowments: a perception on the part of donors that the organization doesn’t need annual gifts and that in fact, the organization has lost touch with its base. A further danger is that donors will give to the endowment instead of to the annual fund. In that case, as the saying goes, you will have robbed Peter to pay Paul.


The process of getting ready for an endowment campaign may take months or even a year. The questions
raised by initiating an endowment campaign require strategic planning to answer, as they have serious implications for program, staffing, board development, and so on (see sidebar at right). Organizations find that they learn a lot more about their board, staff, and volunteers than ever before just by raising these questions.

This learning is important, but it will take a committed team with a clear understanding of what lies ahead to conduct a successful endowment campaign.

An endowment campaign has the same structure as an annual fund campaign, a major donor campaign, or a capital campaign: it has a financial goal, with a giftrange chart and a time line for how to meet that goal. For all the similarities of the steps, however, in each of them there are subtle and not-so-subtle differences between endowment campaigns and other kinds of campaigns.

Carrying out an endowment campaign includes forming a committee of solicitors, compiling a list of prospects, and developing creative materials that describe the campaign and its benefits. Then, the prospects are prioritized and solicitation begins.

A further danger is that donors will give to the endowment instead
of to the annual fund.

Two Important Questions

In the first article in this series, we discussed two critical questions that an organization needs to think about before raising money for an endowment:

  • Does everyone in the organization agree that your group should exist permanently?
  • What will endowment income be used for?

Some groups spend up to a year doing the work to answer these questions. For an in-depth discussion of this planning phase, see GFJ, Vol. 24 No. 4, July/August, 2005


Once you have established a goal for your initial endowment efforts, you’ll be able to plan out how to raise that amount of money.

The Goal

To determine a goal for your endowment campaign, you need to decide how much annual income you want the endowment to provide and how much principal it will take to generate that amount of interest. A financial adviser will be able to help you with projections. Generally, an organization can safely assume that they can take the equivalent of 5 percent of the principal out every year and still maintain principal. What this means for an organization is simple: to generate $50,000 a year will require an endowment of around $1,000,000; to generate $200,000 a year will require an endowment of about $4,000,000. As you can see, an endowment is not a quick fix to a cash flow problem!

There are two ways to think about getting to your goal: one is to conduct a campaign for that goal. If you need $1 million, your campaign goal is $1 million. If that is out of your reach right now, but you think you could get to, say, $250,000, the second method is to conduct a campaign to “seed” your endowment fund. You raise a decent amount of money and do not draw anything out of it until it gets to the goal you want. Once the campaign is ended you keep raising endowment funds as part of your fundraising work, but without the intensity of a campaign. Having some money raised will help donors feel more assured that their endowment gift is joining existing money and therefore that the endowment is a real entity.

The problem with the “seeding” approach, however, is that too often the endowment does not grow beyond the small amount raised by the campaign. The endowment principal is not enough to generate the kind of interest that will really help with the annual fundraising crunch and, because donors were told their gifts were going to an endowment, it would be unethical to spend the money raised.

If you decide to seed an endowment with a campaign, then, be sure that you have a plan in place for having the endowment grow after the campaign is over.

Sometimes groups just want “something to take the edge off ”— the “stiff drink” approach to endowments. They want a pot of money that generates $5,000 to $10,000 a year, so they only need $100,000 to $250,000 set aside. An endowment campaign is not the vehicle to raise this small amount of money. For any need of less than $25,000, an organization should simply increase its annual fundraising goal, perhaps by diversifying to a new strategy or being more aggressive with current donors. It is usually not worth the effort of starting an endowment to raise less than $500,000 in principal.

Of course, however much money you decide to raise in your campaign, you should always be seeking and accepting additional endowment gifts. But keep your endowment moving by setting a large enough goal to be meaningful.

The Gift-Range Chart

Once you have a goal, you need to create a gift-range chart. A chart of gifts to seek in order to raise $1 million is shown below. With an endowment campaign, the amount you seek in the lead gift is generally 20 percent of the goal (in an annual campaign it is usually 10 percent) and all the gifts are fairly large. When you establish the top end of your gift-range chart, figure that one gift is to equal 20 percent of the goal, two gifts each equal 10 percent of the goal, and three to five gifts make up the next 10 percent of the goal. In this way, only six to eight donors contribute 50 percent or more of the total goal.

Goal: $1,000,000


$200,000 1 20%
100,000 2 20%
50,000 4 20%
25,000 5 12.5%
10,000 10 10%
5,000 20 10%
2,500 20 5%
1,000 25 2.5%
Total Gifts 87 100%

Generally, gifts of less than $1,000 are not sought (although all gifts are gratefully accepted). Because donors have several years to pay off these gifts, $1,000 is affordable for even lower-income people. For example, a pledge of $28 per month, which is relatively affordable, in three years adds up to $1,000.

A pledge of $28 per month, which is relatively affordable,
in three years adds up to $1,000.


The time line for an endowment campaign is usually not less than two years and definitely not more than five. It begins after the discussions of whether to do a campaign and the time taken for a feasibility study (more on feasibility studies later in this series), and includes the time for researching prospects and developing materials.

Two years is the minimum because it usually takes the best part of a year just to solicit the lead gifts (many of the lead donors will have to be talked with several times) and to create appropriate materials; it can take another year to solicit all the other gifts. Three years allows for the unforeseen to be dealt with and the maximum number of donors to be solicited.

Usually two to three years is the ideal amount of time to conduct a campaign. A fourth year can be used as “wind down” period. Five years is the maximum amount of time an organization can sustain interest and passion for a campaign while maintaining their annual fundraising.

Important to understand is that pledges to the endowment can be paid over five or more years, even if the campaign is finished in less time. However, someone will need to be responsible for follow-up with donors until their pledges are completed.


In thinking about the actual solicitation team, it’s valuable to review what we are asking for when we ask donors to consider an endowment gift so that the solicitors can be matched to the task.

An organization has three financial needs: most pressing and constant are its annual funding needs. Occasionally, a group needs new computers, a new building, renovation of an old building, a satellite office, and so on. For these it needs capital funds. Groups that want to be around for the next 50 or 100 years need an endowment fund.

Donors can help an organization with three kinds of gifts: gifts from their own annual income; gifts of assets such as stock, bonds, real estate, art and so on; and gifts of all or part of their estate.

Traditionally, endowments are funded by gifts from estates. This is why traditional endowments cannot be conducted as campaigns, because the receipt of the gift usually depends on the death of the donor as well as the time it takes to settle the estate (which can be years). Some groups have counted the unrealized value of bequests as part of their endowment campaign goal, but this is both foolish and unethical. A donor can change their bequest intentions any time before the donor’s death, so even when a donor has promised a bequest, it may not happen if there is a change of heart or circumstance. Only irrevocable gifts such as trusts can be counted toward a goal. (For more on bequests go to www. leavealegacy.org). For information on other forms of planned giving, go to your local community foundation or to their website, or to the National Committee on Planned Giving at www.ncpg.org.)

In conducting an endowment campaign, organizations are asking donors for assets, given during the donor’s lifetime. Although gifts made from a donor’s annual income are certainly welcome, they will never be as large as assets or estate gifts because even the wealthiest donors reserve the bulk of their income for their own needs.

Conventional financial planning dictates that one should “never touch principal.” Yet principal is what you are asking these prospects to share. In a sense, you are asking people to transfer some of their “endowment” to your endowment. This is a process that requires thought, commitment, and careful consideration.

In forming a committee, then, you are looking for people who are comfortable asking donors for assets; usually, these are people who have made an asset gift themselves. The people on the solicitation team should include members of the board and people who will make large gifts to the endowment campaign before it is publicly launched. While this is the ideal scenario for any campaign, for an endowment it is imperative that those who are asking know what it feels like to decide to give a gift that one cannot give very often. The role of volunteers in these campaigns cannot be overstated. Staff can ask, and do, but even then a staff person will need to have made a endowment gift in addition to their annual gift to be an authentic solicitor.

To form the solicitation team, first identify the people closest to the group who can make the largest gifts. Then, a team consisting of a board member and a staff member asks each of the potential solicitors for their own gift first, then invites them to be on the team (it is assumed that each board member will help start off the campaign with a gift of their own). Some members of the solicitation team are usually identified during the discussion about whether to have an endowment. They are the ones who argue in favor of it and say that they will give to such a campaign.

A general easy rule to follow in soliciting capital or endowment
gifts is to ask for a gift that is ten times the donor’s annual gift amount.

All the solicitors must be people whom the donors trust to have gone through this process. Plus, there is something very convincing when a person can say, “My husband and I have accumulated a nest egg of $100,000 over many years of saving. It is for our retirement and for emergencies. But the threat to reproductive rights/ environment/our children/world peace is bigger than our need for a nest egg. We want to make sure that Important Group is able to do their work and not have to struggle so with fundraising. So we are giving $10,000 to the endowment as our investment in our community’s future.” Even someone with no real assets can be a good solicitor as long as they have given a significant gift. In one organization, a board member postponed buying a new car. He described his gift this way: “My old car can be coaxed into a couple more years of use, and in the meantime I am going to give the equivalent of a car payment on a new car for two years, which will make a gift of $5,000. I don’t have any real assets, but I can give by postponing getting an asset, and my gift will have far more permanence than a new car.”

In another instance, a solicitor described her gift this way: “I put some money aside every month for my two week vacation each year. This year, I vacationed at home. I saw friends, I planted a garden, I read books, I went to free events at my library, and I gave the money I had saved for a trip to the endowment. I had a great time; so although my gift was significant for me, it was not painful.”

The solicitation team can be formed slowly. It can start with two or three endowment donors. As more donations are received, new donors can be asked to join the team.


Once you have set a goal, created a gift-range chart, and formed the beginning of a solicitation team, there is one final planning step: identifying a critical mass of prospects for your campaign.

The next article in this series will discuss how to find prospects and whether to do a feasibility study.