The Power and Promise of Endowments

Posted by on Jan 28, 2019 in Perry's Blog | 0 comments

On January 10th 2019, the Augusta Museum of History hosted its signature event of the year:The Jimmie Dyess Symposium. The rotunda and the balcony of the museum were crowded with attendees. A highlight of the program was a short video which explained two awards received by Marine Lieutenant Colonel Jimmie Dyess: the Medal of Honor (for heroism in combat) and the Carnegie Medal (for civilian heroism).

We can learn much from Andrew Carnegie. He was the richest man in America in the early years of the 20thcentury. He also was the most creative philanthropist in American history. Two important secrets to his success were:1. Being very generous in giving to worthy causes (he gave away more than 90% of his wealth). His munificence encouraged others to be generous. 2. Establishing endowments for his foundations and institutions. Many of the organizations he established more than one hundred years ago are thriving. The well-invested endowments, in most cases, have grown. After studying Carnegie’s life, I have become a big fan of endowments, large and small.

The following is an examination of how endowments work here in the CSRA. Let’s look at the Augusta Museum of History. This award winning museum has two separate endowments. The Museum Endowment and the Jimmie Dyess Symposium Endowment. 1. The Museum Endowment provides about $50,000 each year in support of the museum’s annual budget. Yet this endowment continues to grow. 2. The Dyess Symposium Endowment will insure that this event will continue for many decades into the future

In a recent meeting with the director of the Community Foundation of the CSRA, Shell Berry, we discussed endowments. Shell, who may be the most knowledgeable person in our area on issues relating to non-profit organizations, reminded me of the various ways endowments contribute to the mission of many organizations in the CSRA. Incidentally, many of our local endowments are managed by Shell’s foundation.

So how large are endowments in the CSRA? They vary quite widely. Here are some examples.
1. A relatively new church in Martinez (Church of the Holy Comforter) has a small, but rapidly growing endowment. It has grown to $3000 in less than a year.
2. A historic church in downtown Augusta has an endowment of $2.5 million.
3. The Augusta Museum of History’s endowment has passed the $1 million mark.
4. The Jimmie Dyess Symposium Endowment exceeds $200,000.
5. The endowment of a large retirement community in Evans is $3 million.
6. The regional Boy Scouts’ endowment is $1 million.
7. The Community Foundation of the CSRA has an endowment of $18 million. This foundation distributes more than $700,000 each year to worthy non-profits in our area.

It is important to note that some people choose not to contribute funds to the annual budget of their church or other non-profit organizations. There are various reasons for this attitude. 1. They don’t respect the current leader or leaders. 2. They are not comfortable with present policies. 3. Their top priority is insuring the long-term health of the organization. They feel an endowment, rather than the annual budget, best serves that goal. Hence, fund raising activities—both annual campaigns and capital campaigns– which do not provide an endowment option may be missing an opportunity.

Dan Rogers, the director of our regional Boy Scouts, recently shared with me an important point. “… million dollar endowments grew because of many, many small gifts, and that even a $500 gift to an endowment makes a difference.”

How are funds usually allocated from an endowment? In order to deal with the ups and downs of the stock and bond markets, many organizations use a three-year average of the market value of the endowment. Then they use a distribution rule (sometimes called a “spending rule”) to determine how much money to give to the operations of their organization.

This approach helps smooth out the inevitable swings in the market and provides more consistent support. At budget time each year, it is nice know that endowment funds will be available. A well-managed endowment, on average, will earn more through its investments than it distributes in support of the underlying organization. This insures that the endowment will grow in size and its ability to give consistent, if not increasing, amounts to support the nonprofit’s important mission.

In short, endowments are the geese that lay many golden eggs. They remind me of my friends who give year after year after year to worthy causes.

An additional point: Some of the most important sources of funding for endowments are bequests. The next time you review your will, you might consider increasing support for your favorite charities.

If you wish to learn more about endowments, Shell Berry can help. She is a delight to work with. Her number is 706 7241314.

Comments are closed.