Raising Endowed Assets
Many large organizations and
institutions work to build endowments through significant donor investments, including the majority
of colleges, universities, and hospitals, but smaller organizations and entire rural communities can
greatly benefit from building endowments as well. An endowment is a type
of asset that is invested and put aside for the future so that the amount increases over time. Most
often, these donations are received as gifts in the form of money or other financial assets including
property. In some rural areas, gifts may include pieces of land that were previously owned by a
community member. Since these assets are invested, the interest from the investments can be used to
support programs and strengthen the financial outlook for rural communities and organizations. In
most instances, the assets that make up the endowment fund are set aside with certain parameters and
limitations made by the donor for how the money can be used.
Rural communities can use endowments in different ways, depending on the needs of the community and whether the
endowment is created with specific guidelines and/or restrictions in place. For example, communities can:
- Use a portion of the endowment to fund grant programs for community organizations
- Add to the principal amount of the endowment (the original amount that was donated), to ensure that
the endowment will continue to increase over time
- Use some endowment money to pay the person managing these funds
One successful approach for building endowments that benefit rural communities is the creation of rural community endowment
funds, which are often developed and managed by community foundations. The purpose of building a
rural community endowment is to create a local source of assets controlled by the community that can help
residents as well as community organizations in the future.
There are several steps in the process of building
an endowment. These steps can take time and effort and involve different community stakeholders. Some of the
steps for building a
rural community endowment fund include:
- Promoting the idea and need for a rural endowment to community leaders and known change agents
- Organizing local community stakeholders to begin the endowment and connect with the local
philanthropic community of individual and business donors
- Donating funds and designating the specific use of these funds by both community organizations and
- Using funds to create a new community foundation to manage the endowment or using funds from a
previously existing community foundation
There are many benefits to rural communities building endowments as they promote the sustainability of programs
and initiatives and create a positive outlook for the future. These endowments also create a community-driven
place for rural residents to donate gifts of any size and create an incentive for doing so since the donations
can be used toward a designated purpose. Another important benefit of endowment-building in rural areas is that
help to build non-financial community assets, including developing community leaders
who can serve as change agents in other capacities as well as sustaining important organizations that
contribute to the general well-being of community members. Similarly, these endowments can create a
positive outlook for rural communities that may have struggled financially and previously relied on
outside investments. Creating a mechanism for communities to control their own financial future can
Examples of Rural Community Foundations Building Endowments
- The Nebraska Community Foundation was founded in
1993 to help communities in the state engage with philanthropic organizations to build resources and assets.
The Nebraska Community Foundation aims to empower communities, develop leaders and change agents, and
provide tools for growth and sustained change. The foundation works toward these goals by helping
communities manage assets and develop leaders, directly funding initiatives, and helping build endowments.
The foundation manages a variety of endowments that help organizations throughout the state, including the
Brown County Hospital
Endowment Fund and endowments from individual donors aimed at benefiting organizations in
specific communities, such as Beaver
- The Red Cloud
Community Foundation Fund is an endowment also managed through the Nebraska Community Foundation.
Cloud is a town with a population of 1,000 people and has seen significant improvements in
community life since the creation of this endowment. These funds were created more than 20 years ago
and have grown substantially due to the individual donations of the Sibert family and other resident
donors. The foundation fund continues to provide matching grants to a variety of charities throughout
- The North Dakota Community Foundation administers the Community Endowment Fund
program. The program has 63 participating communities that are able to reduce administrative and
financial barriers to endowment development by working with the foundation. For example, the Casselton Community
Endowment Fund is managed by the foundation and administered by a group of local volunteers, who
raise additional capital and recommend grants that will benefit the community. Grants given out by the fund
are generally small, project-focused and are intended for nonprofit and government organizations,
such as public schools and cultural institutions.
- The Bath
Community Fund is administered by the Akron Community
Foundation in Ohio and was established by local residents with an initial endowment of $250,000 from
85 founding donors. Nonprofit and government organizations in the Bath community are eligible to submit an
application for funding. Health-related areas of interest for the fund include improving outdoor and
recreational opportunities and improving access to social services.
Considerations for Implementation
Since the performance of an endowment may be based on the specific investments and yearly growth from
these investments, rural programs and organizations may want to consider seeking professional
assistance and guidance about how best to manage these funds. Communities will want to consider how
much money will need to be set aside to pay for professional support if needed and what types of fees
can be expected.
In addition, since building an endowment is a tool to promote the future sustainability of organizations and
programs, the process for building
an endowment can be challenging and take time. Securing donors can be challenging in all locations,
but rural locations may experience unique barriers such as smaller overall investments and a more
limited number of donors willing to invest their assets in the community. The types of donations
provided to build an endowment in rural areas may look different from urban areas, with more small
gifts donated toward the endowment fund.
to building endowments in rural communities include:
- Local perceptions and understanding of the use of rural endowments may be limited, making it more
difficult to get started.
- Donations may be smaller in rural areas and may be more likely to be donations of assets in the
form of land or other non-monetary gifts, which may require more time to manage.
- Sustainability of the funds over time takes dedicated resources and management as well as a strong
team of people to lead the charge.
Resources to Learn More
Endowment for a Rainy Day
Describes the history of endowment funds and provides context around the growth and decline of these
funds in certain institutions. The article also describes the purposes of endowments, and suggests
that these funds should be set aside for future use to provide financial security.
Author(s): Weisbrod, B.A. & Asch, E.D.
Citation: Stanford Social Innovation Review, 8(1)
Provides definitions of commonly used financial and investment terms, including the definition of an
Should your Nonprofit Build
Describes the process for building an endowment and describes how endowments can be useful for the
sustainability of nonprofit organizations. Provides insight for organizations considering whether
they should work to build an endowment.
Author(s): Hager, M.
Organization(s): Nonprofit Quarterly