Why Your Nonprofit Needs an Endowment (Even If You're Small)
- Sheree Cannon
- Apr 8
- 3 min read
Updated: May 14
How building long-term financial stability starts with one clear decision—not millions in the bank
Sheree Cannon | Nonprofit Strategist & Consultant | Author
© Sheree Cannon. All rights reserved.
Introduction
Many nonprofits believe they’re “not ready” for an endowment. It’s something they imagine for large institutions, universities, or legacy foundations—not small or mid-sized organizations still focused on annual campaigns and day-to-day operations.
But here’s the truth:If your mission is meant to last, your funding should be too.
This white paper explains why building an endowment—at any stage of growth—is a powerful act of stewardship and sustainability. It’s not about having millions now. It’s about having the mindset, structure, and intention to support your mission long-term.
What an Endowment Really Is (and Isn’t)
An endowment is a pool of donated funds set aside and invested to generate income—income that supports your organization year after year, even when the fundraising climate shifts.
What it’s not:
A savings account you tap when things are tight
A signal that you’ve “made it” as an organization
A replacement for your annual fundraising strategy
An endowment is a financial foundation—one you can build over time, starting small and growing with intention.
“The best time to start an endowment was five years ago. The second-best time is now.”
Why It Matters—Especially for Smaller Nonprofits
Too many nonprofits are caught in a cycle of financial urgency. Even successful organizations feel stretched, chasing grants or donor dollars just to keep programs running.
An endowment begins to break that cycle by:
Creating a reliable stream of income
Attracting major donors who want to leave a legacy
Supporting leadership transitions and long-term planning
Signaling to funders and partners that you’re thinking beyond survival
Protecting your mission during economic downturns or funding gaps
Even a modest endowment can provide breathing room. And for many nonprofits, that space changes everything.
Common Myths That Hold Leaders Back
“We’re too small to think about this.”
Small organizations benefit most from long-term support. You don’t need millions. You just need a plan and a place to start.
“Our donors won’t understand or support this.”
Legacy-minded donors want to fund stability. You just need to communicate why it matters and how it works.
“We need to focus on immediate needs first.”
You can do both. Building an endowment doesn’t replace your annual fund—it complements it. And it grows slowly, by design.
What Starting an Endowment Really Looks Like
It might begin with:
A board-designated reserve
A small portion of unrestricted bequests
A campaign to fund your first $50,000
A major donor who wants to plant the seed
A “legacy circle” of supporters committed to future gifts
You’ll also need:
A clear Investment Policy Statement (IPS)
Board education on endowment purpose and policies
A case for support tailored to long-term sustainability
Strategic language in planned giving and donor outreach
It’s not complicated—but it is intentional.
What It Signals to Your Community
When you begin building an endowment, you tell your stakeholders:
“We believe in the future of this mission.”
“We are responsible stewards—not just reactive leaders.”
“We are building a nonprofit that will still be here for the next generation.”
That message builds trust. And trust builds giving.
Conclusion: Start Where You Are, Grow What You Can
You don’t need to wait until you “arrive” to build long-term sustainability. In fact, your stability depends on not waiting.
Endowments aren’t just for the large or elite. They’re for any organization committed to enduring impact. Yours included.
You don’t have to know every step. You just have to take the first one.
