Why endowments matter now, more than ever

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In today’s philanthropic landscape, nonprofits are facing an undeniable reality: everything costs more. From operational expenses to program delivery, the financial pressures are mounting. At the same time, a generational shift is quietly underway, while past generations of philanthropists pass the torch, fewer donors are stepping up in the same ways. That’s why sustainable funding isn’t just helpful anymore, it’s critical.

The answer for many nonprofits lies in investing in an endowment.

An endowment is a permanently invested fund established by a nonprofit or a donor, designed to generate a dependable stream of income every year, forever. At the Pinellas Community Foundation, we call this forever funding. It’s one of the most strategic tools available to ensure that the causes we care about today continue to thrive tomorrow, and far beyond.

A signal of strength

When a nonprofit holds an endowment, it sends a clear message: we are in this for the long haul. Endowments signal strength, foresight, and resilience. They provide the freedom to plan for the future with confidence, not just react to immediate needs or chase one fundraising event after another.

In a time of inflation, funding uncertainty, and economic unpredictability, endowments offer:

• Predictable annual income that supports operations or specific programs
• Freedom from short-term fundraising pressures that can sideline mission work
• A financial cushion during recessions or emergencies, ensuring programs aren’t paused just when they’re needed most

A simple yet strategic tool

Establishing an endowment is easier than many people think. Whether initiated by a nonprofit or a donor, the process typically involves creating an agreement with a trusted steward, such as Pinellas Community Foundation. For donors, a tax-deductible gift is invested, for long term growth. Each year, a small portion (usually 3-5%) is distributed to the nonprofit, creating a reliable stream of funding, while protecting the fund’s long-term value.

This model:

• Encourages long-term planning
• Diversifies revenue streams
• Builds lasting resilience

It’s not just smart. It’s sustaining.

What happens if a nonprofit closes?

It’s a fair question, and one we hear often. What happens to an endowment if the organization it supports no longer exists?

At community foundations like PCF, we have what’s called variance power. This allows us to redirect endowment funds to support a similar mission if the original organization ceases operations. This important safeguard ensures that the donor’s intent is honored and that the impact of their gift lives on.

Responsible stewardship: Trust is earned

Strong endowments depend on strong oversight. At PCF, we take that responsibility seriously. Every endowment is managed with:

• Professional investment managers
• Independent oversight and an engaged board of directors
• Guidance from independent third-party advisors
• Annual reporting and transparency for both nonprofits and donors

We believe in public accountability, donor recognition and ensuring that every dollar entrusted to us is working as hard as it can.

How to start or grow an endowment

There are multiple paths to building an endowment. Some nonprofits choose to launch capital or endowment campaigns that focus on future stability, not just immediate needs. Others grow their endowment organically, year by year.

Donors also play a pivotal role. Many create named endowments for causes they love, supporting a general mission or a specific program, such as youth arts education, mental health services, or environmental protection. These are powerful ways to ensure personal values live on in perpetuity.

Another option? Planned giving.

Endowments can be funded through:

• Bequests in wills
• IRA or retirement account designations
• Life insurance policies
• Charitable trusts

Even a modest legacy gift can have a profound, permanent impact. And each year, the organization benefits from the donor’s vision, with their name honored in gratitude.

A legacy of love

Endowments are more than just financial instruments. They are legacies, living expressions of care, commitment, and belief in a better future. They ensure that the work we’re passionate about today continues to serve our communities for generations to come.

So whether you’re a nonprofit leader seeking sustainability or a donor hoping to leave a mark that outlives you, consider this: You have the power to plant a seed that grows forever.

And institutions like Pinellas Community Foundation are here to help.

Your investment in forever starts today.

Meg Lokey is the Pinellas Community Foundation’s Director of Philanthropy.