Stop Living On The Edge
Reserves, said the Executive Director. That was the thing that kept her up at night. They went on to explain that the organization lived, like too many nonprofits, right on the edge, and there was zero financial cushion. She thought about simply moving some operating funds to a reserve account, but the fact was there was absolutely no extra. Every dollar they raised immediately was earmarked to keep the organization’s doors open.
Having reserves really isn’t—or shouldn’t be—optional. Every organization should have a minimum of three months’ of operating budget in a liquid account, preferably one that is invested and earning interest on the funds in there so that reserve can grow. When that grant doesn’t come in, that donor doesn’t make a gift, the roof needs repairing, or you are about to lose your most valuable employee unless you can find money to give them a raise, unless you have the ability to make those ends meet, you stand a very good chance of not being able to stay in business.
How does an organization that already is barely making ends meet create those reserves? And how might they be able to actually plan for the future?
One way is via a legacy program. That is, getting your existing supporters to commit to leaving some portion of their estate to your organization. Often these funds are designated as endowment, but endowment carries with it the expectation that your organization will never dip into principal. For many organizations, that is the rub. There are times when the last thing that is needed is a big endowment-getting through the proverbial night is much more important.
Planned giving, of course, isn’t a simple or a quick solution.
Raising money is always a long game. Fundraising is all about relationships and that requires resources. Resources you probably don’t actually have. However, the good news (and you do need some good news, don’t you?) is that implementing a legacy program need not be onerous.
Mostly it is marketing—letting your donors know that as they are considering a gift for today, it would be awesome if they would also consider a gift for tomorrow.
They don’t even have to tell you that they’ve done this—though, of course, that would be ideal. The point is not to count your yet to be earned dollars, but rather to provide an impetus to you donors to leave a legacy via a simple bequest.