Better Giving Sustainability Funds: The Power of an Endowment
Posted: May 4, 2026
Author: Tim Stirrup
Better.Giving Sustainability Funds: The Power of an Endowment
(Fundraising that goes further - as an example of what this enables)
Introduction:
In the realm of philanthropy, nonprofits of all sizes strive to make a meaningful and lasting impact. While the primary focus often lies on fundraising and immediate needs, it is crucial for nonprofits, even small ones, to consider the long-term stability and sustainability of their operations. Those immediate needs often get in the way of the planning needed for long term financial stability.
One effective strategy to achieve this is by establishing an endowment. In this article, we will delve into the significance of endowments for nonprofits, discuss the historical difficulties associated with creating and maintaining them, and present five compelling reasons why nonprofits should consider embracing the ‘Sustainabilty Fund’ approach offered by Better.Giving.
The Historical Challenge of Establishing Endowments:
The first form of endowment can be traced back to the Islamic world during the 7th century, known as a "Waqf." In this practice, a person, usually of considerable wealth, would donate a piece of property or other assets for religious or charitable purposes. The Waqf was intended to be a perpetual endowment, with the principal of the donated asset preserved and only the income used for charitable purposes. These endowments were used to fund a variety of public works, including hospitals, schools, and mosques, serving a fundamental role in the social infrastructure of Islamic societies.
The practice of Waqf continues to this day. But throughout history, as the idea of endowment spread, building and maintaining endowments has posed several challenges.
Historically, large-scale endowments were mainly associated with prestigious universities, cultural institutions, and well-established charitable organizations. Smaller nonprofits often struggle to gather the necessary resources to create and sustain an endowment due to limited access to funds, a lack of awareness, and a focus on immediate needs. However, recent trends indicate a growing recognition of the importance of endowments for both small and large nonprofits.
Indeed, the Chronicle of Philanthropy recently highlighted how a large charitable foundation granted funds to nonprofits to enable operating reserves - creating their own endowment. The effect on one nonprofit that was on the brink of financial disaster was immense. Read more about that here.
Six Reasons Why Having an Endowment is a Great Idea:
Long-Term Stability:
Endowments provide a solid foundation for a nonprofit's financial security by generating a consistent stream of income. This stability enables nonprofits to continue their mission, regardless of economic fluctuations or changes in donor patterns.
Attracting Donor Confidence:
An endowment demonstrates a nonprofit's commitment to sustainability and responsible financial management. Donors can be more inclined to contribute when they see their gifts making a lasting impact, further solidifying the organization's financial position. Donors like to see nonprofits take care of their donations and nonprofits that have a long term vision.
Financial Independence:
By establishing an endowment, nonprofits can reduce their reliance on external funding sources and diversify their revenue streams. This financial independence empowers them to navigate through challenging times and seize new opportunities without compromising their core values and programs.
Enhanced Program Flexibility:
A well-funded endowment allows nonprofits to expand their scope, develop new initiatives, and respond to emerging needs in their communities. This flexibility fosters innovation and ensures the organization remains relevant and impactful over the long term.
Legacy and Perpetuity:
Endowments enable nonprofits to leave a lasting legacy by providing perpetual support for their causes. It allows organizations and donors to extend their impact across generations, leaving behind a positive imprint on society.
The Importance of Endowments to Larger nonprofits:
Endowments play a vital role in the success of larger nonprofits, allowing them to sustain their operations, expand their programs, and make a broader impact. According to the 2019 Giving USA Report, charitable organizations in the United States received $47.9 billion in gifts and bequests to their endowments. This substantial support allows larger nonprofits to build substantial reserves, fund research initiatives, offer scholarships, and establish long-lasting community programs.
Four Pitfalls to Watch Out For:
Over Reliance on Endowment Income:
Nonprofits must strike a balance between utilizing endowment income to further their mission and ensuring the long-term growth and sustainability of the fund. Over reliance on endowment income may lead to the depletion of principal funds and compromise the organization's future.
Inadequate Governance and Oversight:
Proper governance and oversight are essential to protect the integrity and purpose of an endowment. If they own their own endowment, nonprofits should establish clear policies, develop investment strategies, and regularly review the fund's performance to ensure its longevity. Furthermore, longer term governance will also increase donor engagement.
Insufficient Donor Engagement:
Nonprofits must actively engage with donors and communicate the impact and importance of their endowments. Neglecting donor stewardship and failing to demonstrate the value of an endowment may lead to decreased contributions and reduced long-term support. Some donors can also be put off from making a donation if they think a nonprofit is too ‘wealthy’ because of their endowment. nonprofits must have great communications in place to show how both funding for day to day costs AND feeding the endowment are important.
Failure to Adapt:
Nonprofits must adapt to evolving trends and market conditions. Neglecting to reassess investment strategies, staying abreast of changing regulations, and failing to respond to shifting donor priorities can hinder the growth and effectiveness of an endowment.
How can Better.Giving help mitigate against these pitfalls?
Better.Giving allows donors to donate to Better.Giving’s own board-designated endowment, that assigns the funds for the benefit of a particular nonprofit, granting out the income from that donation to be sent solely to the nonprofit of the donor’s choice.
We call this our Better.Giving Sustainability Fund.
It provides the opportunity for nonprofits to secure their future and expand their impact, and for donors to leave a lasting legacy, but without the extra work and expense for the nonprofit of creating and managing their own endowment.
It gives donors an easy route to choose what proportion of their donations go directly to a nonprofit’s bank account for immediate use, or into the Sustainability Fund on behalf of the nonprofit.
Once a donor has donated into the Better.Giving Sustainability Fund, Better.Giving allocates 25% of the quarterly yield BACK into the sustainability fund assigned to the nonprofit, to grow it over time and mitigate against inflation. 75% of the yield is granted to the nonprofit for immediate use.
As the sustainability fund grows, then the quarterly income increases and nonprofits have a better view of longer term income.
For donors wanting to practice Waqf, there is often no simpler way. For those wanting to practice zakat, tzedakah or tithing using crypto, Better.Giving enables this cheaply and easily.
Better.Giving removes some of the potential pitfalls and enables nonprofits to leverage the power of endowments, enhance their effectiveness and concentrate on working towards creating a positive and lasting impact on the communities they serve.
While challenges and costs have historically hindered smaller nonprofits from embracing an endowment strategy, the increasing awareness of the importance of endowments, the numerous benefits they offer and the simplicity and cost effectiveness of Better.Giving’s Sustainability Fund have opened doors to greater financial stability and sustainability.
Endowments should not be for the few, but for the many.