Every Nebraska Community Foundation affiliated fund volunteer wants to see their community thrive, and one of the most powerful tools for ensuring long-term prosperity is an unrestricted endowment.
But unrestricted endowments can be one of the more difficult things to fundraise for, not because they aren’t important, but because donors may not know what they are, or may not be able to visualize their potential for impact.
Think of unrestricted endowment fundraising as an opportunity to have a conversation about a donor’s dreams for the future. What do they love about your community? What are their ideas for how it might be improved? An unrestricted endowment can be used to make all kinds of hometown dreams come true.
What is an unrestricted endowment?
Let’s say you’ve planted an apple tree in your backyard. At first, it’s nothing spectacular, just a frail sapling that bends in the wind. But you can see its potential, so you tend to it with care. The tree slowly stretches upward, sprouts limbs, and in a few years begins flowering. Before long, you’re harvesting a modest number of apples. Eventually you’ll find yourself with a big, beautiful tree and an annual abundance of fresh fruit for yourself and your community.
An unrestricted endowment is like that apple tree. Except the tree is an investment account. And the apples are money.
Much like a retirement account, an unrestricted endowment generates investment income for your community year after year. It isn’t designated for any specific use or project, making it a source of funding for whatever dreams your hometown concocts. Because the principal remains untouched, it grows with every gift – and so does the annual payout. The fund advisory committee stewarding the unrestricted endowment account can grant the funds in ways that they determine will fulfill its mission.
So, it’s important your fund advisory committee gets the message out there: if you want our community to thrive well into the future, support the unrestricted endowment.
Promoting your fund’s unrestricted endowment also demonstrates faith in the community’s future. A contribution to the endowment symbolizes belief that your hometown will remain vibrant and that there will continue to be people passionate enough to use those funds to further the march of progress.
How do you explain an unrestricted endowment?
We’ve compiled some examples and language that you can use in your community as you promote your unrestricted endowment.
[FUND] is focused on building a permanent unrestricted endowment. The endowment is an important tool to keep our hometown growing, thriving, and improving for future generations. It creates a steady stream of revenue for community needs today and those that arise in the years to come.
All contributions to the endowment are invested and continue to increase. Each year, [FUND] will grant out a portion of the income earned by the unrestricted endowment to local projects and programs that are enhancing quality of life in [COMMUNITY]. The principal—and your gift—remains intact and grows forever.
Examples of unrestricted endowment marketing campaigns are also available within NCF’s resources library, particularly under the case statements section.
Current and planned gifts are both effective ways to grow an endowment and the most successful funds are actively seeking both!
Unrestricted Endowments and Five to Thrive
Connecting your unrestricted endowment with the very real promise of ongoing and future prosperity is a particularly powerful method of promotion, one empowered by the transfer of wealth and NCF’s Five to Thrive campaign. The transfer of wealth is vital to building Greater Nebraska, as it could ensure billions of dollars remain in our state to jumpstart brighter futures.
Nebraska Community Foundation’s 2021 Transfer of Wealth Study, an update of similar studies in 2001 and 2011, found that $950 billion would change hands between generations through the next 50 years. In just a decade, the number is still staggering – $100 billion.
No one expects all that money to remain in Nebraska – much of it will pass to inheritors living outside our state. But we do hope Nebraskans will allot just a small portion of that wealth for their communities. Even 5% of $100 billion would mean $5 billion reinvested in our state. Just imagine what our communities could achieve with that level of generosity.
That’s the impetus behind the Five to Thrive campaign. Volunteers across Nebraska are encouraging their friends, family, and neighbors to consider designating just 5% of their estate plans to community causes or organizations like NCF affiliated funds.
An unrestricted endowment is an ideal home for that 5%, as it will remain in a community for years to come and, alongside other gifts, help generate ever-increasing annual earnings. Those earnings, as mentioned before, become our hometowns’ dream capital. If residents can dream it, then an unrestricted endowment can help fund it. If your affiliated fund is interested in starting a Five to Thrive campaign locally, NCF can offer lots of support. Contact your Affiliated Fund Development Coordinator to get the process started.
Endowments in action
Unrestricted endowments are a tool to help your community adapt to the future and be resilient, either by investing in unique community building opportunities or helping fill in a gap. Endowments are also being used as “margin of excellence” capital to help Greater Nebraska communities amp up their people attraction efforts.
Keith County Foundation Fund (KCFF) has used payout from its now $12 million endowment to invest more than $420,000 into housing and infrastructure capacity since 2015. Keith County currently stands alone in having an unrestricted endowment of over $10 million, but it’s an aspirational example for the entire network. The size of the endowment has also influenced how KCFF volunteers approach grantmaking.
“We wholly agree it’s important to put our grant payout dollars to work as soon as possible,” said Pam Abbott of the KCFF advisory committee. “It’s also important to note that great things take time to develop. Our multi-year payouts for our focus areas ensure sure-footedness for these focus areas that we grant to, and it allows us to assess the impact for positive change we didn’t necessarily expect.”
In just the last six months, affiliated funds throughout the NCF network have used payout from their unrestricted endowments in a variety of ways. For places like Boone County, that means investing in early childhood education and after school learning. In Diller they’ve created a Youth Serviceship Camp aimed at developing future leaders and inviting them to give back. Dozens of NCF communities are hosting paid college interns who return to their hometowns for the summer with fresh eyes and big ambitions.
Others are focused on adults and seniors. Nebraska City’s CBAF has long supported non-traditional scholarships. Brown County has made a multi-year commitment to help fund its local nursing home. Perkins County is supporting English language learners who are new to the area.
For so many NCF communities, it’s about investing in the unique assets that define their place. Butler County made significant investments in the Bone Creek Museum of Agrarian Art. Red Cloud is supporting heritage tourism related to Willa Cather. Valley County is nurturing a thriving local arts community. Columbus helped catalyze a state-of-the-art children’s museum that will draw visitors from miles around to the City of Power and Progress.
The power of an unrestricted endowment comes from the freedom it enables volunteers to grant to projects that best fit their community’s desires and goals.
“We don’t know what our needs will be in the next 10 to 20 years,” Abbott said. “Our endowment payouts will foster the ability to always allow for us to respond to any needed adaptation. And we should be responding to necessary adaptation to remain sustainable.”
