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Philanthropy Journal of North Carolina – Thinking ahead is critical

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By Todd Cohen

Charities are taking a beating.

To cushion the ups and downs of the economy and stock market, charities must pay attention to raising and investing endowment dollars.

Scrambling year-round to pay bills, charities steal time and energy from delivering services.

But charities are starting to turn to endowments as an ongoing source of income.

At least $41 trillion should change hands between generations over the next 50 years, with at least $6 trillion of it going to charity, say Boston College researchers.

Charities that gear up to tap that wealth are more likely to get some of it than those that are not prepared.

To get started, charities should enlist board and staff leaders, helping them understand the importance of future income, and recognize that cultivating donors may not produce planned gifts for years.

Planned giving can involve complex gifts, but also can be as simple as encouraging backers to remember the charity in their wills.

Staff fundraisers need to carve out regular time – even if only a day or a few hours a week – to visit donors and involve them in the charity.

The charity also should form a committee to oversee the endowment, deciding how to divvy up the assets among different investments, such as stock, bonds and hedge funds.

The committee should include experts in financial services, taxes and accounting, and should hire managers to make investments and advisers to track the managers’ performance.

In gearing up for planned giving, which also can be a tool for thinking about long-term plans and goals, charities can turn to resources such as community foundations, the National Committee on Planned Giving and the National Center for Family Philanthropy.

To face the future, which will be even tougher than the present, charities must work now to cultivate donors and create endowments.

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