Endowment Invasion Policy

Dear Kim:

We have a small endowment at our 75-year-old organization and we want to grow it so that it provides more income. Someone said that before we actively promote the endowment we need to have an “invasion policy.” I’ve never heard of that! We are very non-violent and not interested in taking over any other group. Can you enlighten?

~Peaceful Co-existence is Key

Dear Peaceful:

An invasion policy describes the circumstances under which your organization would be allowed to spend the principle of your endowment (“invade the corpus”).It sounds violent, but it actually describes something very prudent. You may already have such a policy in the minutes that authorized setting up an endowment in the first place. Basically, you want to have the flexibility to be able to spend some of the endowment principle in an emergency, or possibly to borrow it to buy a building or something, without giving yourselves easy access to the principle. I have seen organizations where two or three generations of board and staff built a nice size endowment, then left, and the new board members burned through it. This is poor fiscal policy and really tends to make the donors mad. To see an example of an invasion policy, ask your local community foundation or any organization with a larger endowment than yours.

Good luck!

~Kim Klein