The Effective Exit

BEYOND SUPPORTING AN ENDOWMENT

Helping a grantee establish an endowment may seem like a logical next step at the close of a long relationship. But, warned an experienced grantmaker, “an endowment is not for everyone.” Instead, he urged funders to think about providing smaller sums for more focused purposes. Some possibilities:

• Establish an “incubation fund” that allows the organization to experiment with new ideas.
• Support hard-to-fund “infrastructure” staff positions, such as internships or a development or research director.
• Create a reserve fund to smooth out the budget of a grantee that relies on public funding (which is often delayed) or an uneven income stream.
• Provide a recoverable grant that lets an organization undertake a project that could open up a new income stream, such as a special service.
• Offer a low- or no-interest loan that enables the organization to leverage commercial funding for capital improvements.

For advice on the ins and outs of supporting an endowment, see GrantCraft’s Providing for the Long Term: Supporting Endowments and Investable Assets. Or read more about loans, recoverable grants, and related instruments in GrantCraft’s Program-Related Investing: Skills and Strategies for New PRI Funders.