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Windfall Gifts: What’s on your Mind?
We asked registrants for today’s upcoming webinar to tell us what questions they have about accessing or planning around windfall gifts. What interests you in this topic? We won’t necessarily be able to cover all of this ground in our 90-minute discussion, but below is my sorting of the questions that people are asking. I’d say that the queries are falling into four main buckets:
How do nonprofits get access to large or unexpected gifts?
- As a nonprofit that has not yet received a windfall gift, what steps can we take now to address chronic budget issues and better position ourselves to attract transformational gifts?
- How can we shift our mindset and expectations to align with the evolving behavior of funders who are looking for long-term impact rather than viewing these gifts as one-time windfalls?
- Do all small nonprofit organizations have the same opportunity?
- For many of the windfall gifts, there is no channel to apply. Do you have advice for organizations looking to increase their chances of receiving one?
- How can I get big funders to believe in our impactful work?
- How can we raise our profile sufficiently to even be considered for a gift like this?
- How did you get the gift?
- Under what circumstances should nonprofits make specific asks for transformative gifts?
- Was the windfall grant solicited or unsolicited? If it was solicited how did they look for and apply for it?
- What is the most effective way(s) to position your organization to receive windfall gifts?
- Which internal processes and systems can be put in place to attract unexpected large gifts?
What accounting questions might arise?
- Would the gift cause a problem with the public support test, “tipping” the nonprofit into a private foundation?
- How can a charity navigate tipping rules?
- Are these grants truly unrestricted – are there no stipulations from the funder?
- How long do you have to spend the money or are you able to keep it over time?
- How do you account for these funds?
- How do you get your finances in order to project 3-6 months out?
- Investment guidances, interest income, related taxes, fees, pitfalls?
- What the regulations say and what is the correct way for a fiscal sponsor to manage the multi-year awards?
The Million Dollar Questions: How do we plan and allocate?
- How can nonprofits thoughtfully and conscientiously continue programmatic work designed around windfall grants when the cash is expended without considerable layoffs or internal cultural changes?
- How can we make the rest of our windfall grant last and regenerate? How can we leverage these funds?
- How can we plan at the beginning of a windfall grant to ensure we don’t have to “reverse course” after the grant and reduce staffing, programs, resources at the end of the windfall period?
- How did you develop an investment policy to address this increase in cash?
- How do organizations best prepare for “the cliff” that happens when time-bound, restricted windfall gifts end?
- How do orgs navigate hiring new staff if they receive a windfall gift, especially with the knowledge they might not be able to sustain that many people’s wages once the gift is spent?
- How do we plan for such a gift?
- How do you sustain the project after the windfall has been spent and your core funding remains flat?
- How does an organization tell its story years after receipt of the windfall grant to explain the decline in revenues?
- How have others dealt with the expectations of the windfall gift?
- How should nonprofits look at their goals year-over-year in light of a transformative gift? Since you book it all in the year of the pledge but likely it is spent over a number of years, how should orgs manage operating expenses (fixed and variable) so as to not get over-extended when replacing a large gift can be very hard to replicate?
- How to select appropriate resources for growth and development?
- How will you sustain whatever gains were received with the infusion of resources?
- How should boards work with staff to plan for this unexpected gift?
- How to think about new hiring with windfall gifts when there is only so long that the money will last–or how to make the money last/use it as an investment to grow the organization more permanently?
- I’d like to know whether windfall gifts have actually launched any organizations into a new level of effectiveness for the long term, and how organizations shifted their internal structures to best use the gift.
- I’m looking for windfall policy examples that balance short term wishes and long-term investment.
- Is there best practice to be shared on budgeting after a significant windfall gift? How do you temper of the organization the desire to grow too quickly with solid financial planning?
- I’ve always been told that if an unexpected large gift comes in, it should go into an endowment that is restricted so that the organization cannot touch the principal— only the interest. What is the current thinking on this?
- Might it be helpful for boards to agree on a course of action, before such a grant is ever received, let along contemplated? (e.g., if we won the lottery, how would we keep from blowing all the money)
- One of the biggest challenges we have faced in the wake of receiving a windfall gift is where to invest the funds we are not currently using and how to balance investment for financial stability with investment into new and expanded programming. I would welcome others’ insights into this issue.
- Our focus has been on maximizing long term impact from these gifts and we would welcome insight into how to balance immediate and long term benefits.
- What advice you give for “windfall” grant recipients on treating it as “growth” versus “operating” capital.
- Can a “windfall” grant become an endowment?
How do we navigate crowding out of support from other supporters?
- What are some of the unintended consequences that have resulted from these windfall grants? What is the resistance for more funding being structure in this way?
- What are some tips for communicating the windfall to persons internal and external to the organization?
- How can we message supporters that we received a gift without discouraging them from continuing their support?
- How do organizations encourage board members to continue to fundraise, even after receiving a windfall?
- How do you position news of the receipt of this type of gift with your existing supporters?
- How do you temper the expectation of future large gifts? How do you keep fundraising when you’ve received such a large gift – donors see you’ve received a huge gift and may be hesitant to give?
- How have others reported chronic issues with budgets and windfall grants to stakeholders to gain alignment and understanding?
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