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Endowed Fund Compliance: Keep Calm, Make a Plan, and Report On!


Person holding a pen writing on a piece of paper surrounded by gavel and balance with green overlay and the blog title: Endowed Fund Compliance: Keep Calm, Make a Plan, and Report On!

Endowed fund compliance—that item on all our lists that we know we need to do, but many of us just don’t know where to begin! There are so many questions: 


Is this really my project to manage? 

How do I know what is expected?

What are the guidelines and how do I get started? 

I don’t know what to do!


Understanding the Significance of Endowed Fund Reporting

Before delving into more of the specifics of building your compliance program, let's take a moment to appreciate why endowed fund reporting is such a vital component. It serves as a bridge between your organization and its donors, providing them with a clear picture of how their contributions are making a meaningful impact. Effective reporting not only meets compliance requirements but also enhances donor engagement, fostering a sense of trust and satisfaction.

 

First things first, don’t panic. There are many resources to help your organization tackle endowed fund compliance.

  

It starts with a plan 

Endowed fund compliance can be a daunting task, but with proper planning and collaboration, organizations can establish effective programs. Our essential guidelines will help you navigate it successfully.


With some forward thinking, you’ll be able to build a compliance program, put automation in place (the technology that makes us more efficient), and in no time feel better about the state of all your endowed funds. We know this seems overwhelming at first, but once you’ve built the foundation, you will feel relieved knowing your organization is properly utilizing and spending your donors' funds. Building your program will take time, buy-in from leadership and a commitment to collaboration; however, compliance is most effective when everyone is working together for a common goal, ensuring we spend the donors’ funds and report on those funds in a transparent way.

  

Grab on, we’ve got you covered!  

 

 

Here are the top 10 things you need to know about Endowed Fund Compliance:
  1. Endowed fund compliance must be done: Ensuring compliance with endowed fund regulations is not optional; it's a necessary responsibility for organizations managing endowed funds and your organization’s investment practices must be compliant with both the Sarbanes-Oxley Act and UPMIFA.

  2. It doesn't have to be completed by donor relations: While donor relations is a crucial partner, compliance involves multiple departments, including finance and accounting. It's a collaborative and important effort. Everyone needs to understand their unique role.

  3. Donor relations should be a partner: Make sure that donor relations is engaged as a strategic partner to effectively communicate with donors, to provide updates and ensure transparency about fund usage. It’s ok to report on your financial data and impact reports separately. This allows for a second touch point with your donors.

  4. Your organization's accounting policy should address endowed fund spending and responsibility: Clearly define in your accounting policy how endowed gifts are to be spent, and who bears the responsibility for ensuring compliance.

  5. It's hard to ask for additional gifts when money hasn't been spent: Efficiently utilizing endowed funds demonstrates stewardship and helps build trust, making it easier to approach donors for additional support. Ensure the money is spent appropriately, which is what your donor expects, BEFORE you ask for something more..

  6. Don't give donors a reason not to trust you; be transparent: Transparency is key. Keep donors informed about fund usage, impact, spending policies and any changes in the organization's approach to endowed funds.

  7. Sharing impact based on spending is good, but put the spending into meaningful reports and stories, not transactions: Provide donors with comprehensive reports and stories that highlight the meaningful impact of their endowed funds, rather than overwhelming them with transactional details.

  8. Donor Bill of Rights: Adhere to the Donor Bill of Rights, respect the wishes and intentions of donors while ensuring responsible fund management.

  9. Compliance isn't just about spending–it is equally about the intent of a gift: Understand and honor the original intent of endowed gifts. Compliance is not just about financial transactions but also ensuring the spirit and purpose of the donation are respected.

  10. Continuous monitoring and communication: Regularly monitor compliance, adapt to any changes in regulations, and communicate these changes to both internal stakeholders and donors to maintain  strong relationships built on trust.

 

Remember, endowed fund compliance is an ongoing process that requires collaboration, transparency, and a commitment to honoring donor intentions.

 

Bonus Tips:
  • Develop an Escalation Process: Establish an escalation process for situations where donor relations teams may face challenges in encouraging spending from units. Provide training for all parties involved to navigate these situations effectively. Be sure to follow all local and national guidelines, and in the States, particularly those from the Attorney General's office.

  • Conduct a Compliance Risk Assessment: Assess potential risks by conducting a thorough compliance risk assessment. Identify areas where compliance might be lacking or challenging, and determine strategies to mitigate these risks. This step is crucial in tailoring your compliance program to the specific needs and challenges of your organization.

  • Utilize Technology for Efficiency: Embrace technology and streamline your reporting process. Digital platforms and software can automate data collection, analysis, and reporting, allowing you to focus more on crafting meaningful narratives and less on manual tasks.


Endowed fund compliance doesn't have to be an intimidating task. By following these guidelines and incorporating best practices, nonprofits can establish robust compliance programs, foster trust and ensure the responsible management of endowed funds.


Endowed fund reporting is an art and a science. It requires a delicate balance of honoring donor intentions, highlighting impact, and maintaining transparency. As donor relations professionals, our role is pivotal in building and sustaining meaningful relationships between donors and our organization.


Incorporate these comprehensive guidelines into your plan, and you will turn endowed fund reporting into a powerful tool for donor engagement and philanthropic success. Remember, every report is an opportunity to inspire, connect, and express gratitude to those who make your organization's mission possible. Happy reporting!


P.S. If you're looking for more guidance on fund compliance, check out this webinar recording where we discussed the key activities donor relations staff should prioritize within fund compliance programs.


Resources:

CASE:


NACUBO:


Investopedia:


National Council of Nonprofits:


 

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