I had a lovely donor whose father had established an endowment for a very specific purpose in memory of her mother at the charity where I worked. In 1983, when the fund was established, the use was common. Nearly 40 years later, technology had made this fund obsolete. The charity struggled to find a way to even spend $5 of this fund given the enormous technology changes. I had met with the donor every year. One year, I decided to give the donor options for different ways to use the money. Here is what I offered.
Transfer the terms to a related, and broader, use
The fund was based in music. My first suggestion to the donor was that we alter the terms of the fund to go to another purpose related to music. This could include a concert, access to electronic music-sharing, or a scholarship to a young person to study music. In this way, I hoped the fund could continue to honour the spirit of the gift when making it more usable in a modern day context.
Allow the fund to go dormant with the interest going to the home charity
Another option was to allow the fund stay open but to cease underwriting activities. The donor's parents had had a long involvement with the charity and the father had donated $50,000 (about $120,000 today) to the charity. An alternative approach would be the leave the endowment intact and continue the name. This would continue the connection of the name with the charity and would also provide a small benefit to the charity in terms of the pooling effect in the endowment.
Transfer the money to another charity
The donor was quite clear that she wanted the funds to only be used for the original purpose. Since she felt so strongly on this point, the last suggestion was to transfer the endowment to another charity. I identified three charities that seemed to connect to the late mother's life and offered them as alternatives. Finally, the donor decided this was the best choice for her family.
While it can be difficult to walk away from an existing gift, or from a potential one, one of our roles as charity leaders is to be sure we can fulfill the terms of a gift. If not, it is important to work with a donor to find another use or to direct them to another charity.
Ann Rosenfield is a working fundraiser and the Editor of Hilborn Charity eNews.