The world has more billionaires than ever before. As an ageing generation prepares to transfer around $2.1 trillion to family or to causes over the next 20 years according to a UBS estimate, charities are looking for new ways to attract their support.
An endowment — a type of donation where the principal amount is invested so that a nonprofit organization can benefit from the income on a long-term basis — is an excellent but underutilized vehicle through which to channel some of this wealth, according to Ben Morton Wright, president of fundraising consultancy group Global Philanthropic.
“Philanthropists increasingly understand the power of the endowment and the legacy that it creates. Charities need to catch up with this thinking.”— Ben Morton Wright, president of Global Philanthropic
Endowments have frequently been misunderstood by charities, which have a tendency to see them as burdensome tools that lock away resources, he suggested. But on the contrary, charities should be actively pursuing endowments, he said, or they risk missing out on large tranches of steady, long-term funding.
“These moments of mass wealth transfer are also moments of deeper reflection by many about their personal legacy and their long-term impact on the world,” he said. “If some of this wealth is to be given away, then where better than into endowments?”