Non-profit endowment creation

Atvelonis
Mon, 25 Jul 2022 14:55:34 +0000

Hi Friends,

I'm in the (very) early stages of creating a financial endowment fund for a small non-profit community organization I help out with. I feel they're a good fit for such an investment vehicle: their current revenue stream fluctuates a bit and many of their events rely heavily on attendance fees for funding, which is unrealistic when they attempt to cater to lower-income demographics. However, they have a relatively wealthy patronage that tends to remain involved for years or decades, and I believe they have the institutional stability to operate more complex financial instruments.

I pitched the idea of an endowment at a high level to the Chairwoman last week, and the Board is interested in moving forward. We haven't decided how exactly we want to structure the endowment yet: restricted endowment, quasi-endowment, etc. We also haven't determined exactly how much money we should fundraise for a principal investment, what our portfolio spread should look like, and how much of the annual interest we can afford to spend. (I have estimates, but they're not final.) I'm particularly interested in resources that can help the institution plan for inevitable economic downturns.

Has anyone here done this kind of work before? If so, would you be willing to chat about some of the nuances of organizing it, and/or do you have recommendations on reading material to help with the creation and maintenance of such a fund? We plan to receive consultations from an accountant and a lawyer, but I don't have much formal background in finance and would welcome any experience, advice, warnings, or external resources Tildesians can offer.

Thanks,
Atvelonis

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