When used strategically, endowment funding can be a powerful grantmaking tool that not only can address longstanding racial inequities but can also represent a direct transfer of power. By helping to secure a nonprofit’s financial future, an endowment can put it on the path to liberation, demonstrate trust, and give an organization the freedom to dream its biggest dreams.

Yet, endowment giving remains relatively rare among foundations and represents a small fraction of foundation giving, according to research from the Center for Effective Philanthropy.

Bucking that trend, in 2022 the Robert Wood Johnson Foundation (RWJF) launched its renewed endowment grantmaking strategy by giving endowment grants of $5 million each to three racial justice organizations led by people of color: UnidosUS, NAACP, and Faith in Action (FIA).

“If we truly believe in racial equity,” says RWJF President and CEO Richard Besser, “why would we not want to ensure the long-term financial stability of organizations that are so directly committed to racial equity and racial justice? We see contributing to endowments as one of the ways to help do that.”

This case study provides an overview of RWJF’s approach to nonprofit endowment grantmaking and explores how philanthropy can use endowment funding for equitable social change.1

Central to RWJF’s approach was the creation of an internal working group with members from the program, finance, and legal teams. Over the course of a year, the group conducted extensive research, learning, and thinking on endowment grants; held conversations with grantees, equity champions, and finance and investment professionals with endowment experience; and engaged its board. The case study explores that work in detail. While RWJF offers just one approach to endowment grantmaking, its experience can provide learnings for philanthropists, foundations, and other funders who seek to better understand what the path might look like.

It also must be said that endowment funding does not replace other types of funding you might already be providing to nonprofits. While such funding can be transformational for grantees, it may not be appropriate for every situation. Instead, endowment funding should be seen as an additional tool in your grantmaking toolkit to complement other grant types, each of which is used for a different strategic need.

Based on our discussions with experts in the field, here are ways that philanthropy can unlock the potential of endowment funding:

Embrace New Mental Models About Nonprofit Endowments

  • Endowments can prepare nonprofits to address new societal challenges and meet the ever-changing needs of the communities they serve.
  • Endowments allow organizations to think beyond survival and have the space to set ambitious goals.
  • Endowed organizations will still need funding.

Read the full article about endowment funding by Darren Isom, Jasmine Reliford, Cora Daniels, and Lyell Sakaue at The Bridgespan Group.