Establishing a Legacy Endowment

Our goal is for your rural library to create a permanent, self-sustaining legacy endowment fund that can be adapted from these guidelines and suggestions.


Rural libraries in unincorporated areas need funds for capital improvements, operating and other expenses. Many potential funding sources provide modest, and often unreliable, funding. A library’s own funding efforts also typically yield modest results, leaving these libraries economically vulnerable.

Why should your rural library establish a legacy endowment fund?

A legacy endowment, funded primarily by members of the community the library serves, is an excellent way of providing a permanent, stable, and predictable source of funding for your library. This fund will secure the library and its vital service to the community for future generations. It is an insurance policy that allows rural libraries to become self-sustaining in an economy that is continually fluctuating.

Give your community an opportunity to support your library now and for future generations.

Community members recognize the vital importance of their library in providing a higher quality of life for all residents. Consequently, many library patrons and community members will welcome the opportunity to contribute to your library’s long-term stability by putting aside a percentage of their estate for their library in their wills.

Course of Action: An Example.

An initial goal could be to raise $1 million over 10-20 years (or less) from residents who bequeath a percentage (e.g., 5-6% or more) of their estate to the library, typically payable after their death.

The first $1 million raised would be invested at 5% interest so that the principal would produce $50K in interest each year. The principal would remain untouched and the interest generated by the principal investment could be used, for example, for operating expenses. If a library’s current operating expenses were $130,000, the amount of $50K from accrued interest would provide the library with approximately 39% of its annual operating expenses.

After meeting that initial goal, the plan could be to continue raising funds in the same manner until $3 million in (invested) principle is reached, thereby meeting the library’s full operating expenses ($130,000) from the annual interest accrued.

What institution invests the funds?

In northern New Mexico, the Santa Fe Community Foundation may agree to invest, manage, and administer your library’s legacy endowment fund. Your library director and/or board representative should contact the Santa Fe Community Foundation or similar organization in their area to discuss their proposal and the organization’s investment protocol.

Rural Library Legacy Endowment Fund Toolkit for Library Directors and Board

Please note: Below, Library Director is referred to as LD and the Santa Fe Community Foundation as SFCF

PRELIMINARY WORK: Board of Directors in collaboration with the Library Director

  1. Set up a legacy endowment (agency) fund with SFCF or another trusted organization that can invest donations made to libraries.
  2. Identify your donors and make a list.
  3. Set rules for the Fund with your Board of Directors.
  4. Gift acceptance policy. Align this with your mission.
  5. Investment principal threshold. How much money do you want in the investment’s principal before you begin to distribute income to your library?
  6. Spending policy. Decide how much money your library can spend from the fund each year (SFCF recommends expenditures be no more than 5% of income generated each year).
  7. Conditions for withdrawal of funds from principal. Under what conditions will you allow withdrawal of money from the principal? (This is restricted by SFCF—see their guidelines)
  8. Restricted/unrestricted use of donations. Decide whether your library will have unrestricted use of the donations made or whether you will let donors restrict how their donation funds are used.
  9. Investment of donations. Investigate/decide how the donations are to be invested. (SFCF determines how funds are invested; they also include socially responsible investments in their portfolio).
  10. Length of Fund. Specify how long the fund is intended to last.
  11. Fund disbursement upon dissolution. Decide how the funds will be disbursed and to what entity in the event that your library dissolves (SFCF accepts recommendations but is the ultimate decider on this).
  12. Use of endowment fund income. Decide on the purpose(s) for which the income from the endowment fund can be used: operating, programming, and/or capital expenses.
  13. Legal issues. Consult with an accountant and attorney for your fund’s compliance with N.M. state requirements—(This is automatically aligned if you use SFCF as your investment organization but check with them on details).
  14. Consultation with the Santa Fe Community Foundation. Discuss the SFCF roadmap for setting up your legacy endowment fund with their organization and have SFCF answer the questions you have.
  15. Endowment fund education. Attend meetings SFCF hosts/sponsors such as Morgan Stanley’s investment strategy for nonprofits; the difference between an Agency fund (your endowment fund) and a Designated fund.
  16. Donor Selection. Select potential donors and determine current bequests

ADVOCACY: Board of Directors, Library Director and Staff

  1. The Case. Build a persuasive case for your legacy endowment fund and communicate this via annual donor request drives, special mailings etc.
  2. The Board. Persuade your board of directors for the need of a legacy endowment fund, their advocacy, and their participation in the plan.
  3. Board pledges. Get a pledge from each member of the board that s/he will make a contribution to the legacy endowment fund in their will. This is very important in demonstrating the library’s commitment and importance of the endowment to the community.
  4. Legacy endowment action group. Create a legacy endowment group who are committed to the legacy endowment vision and have pledged their support by including the library in their will, trust, etc. The founding members of that Group are your Board. Give that group of supporters a name and engage them in advocacy.
  5. Potential donors. Meet with potential donors individually first, especially friends and colleagues, and educate them about the endowment and its importance to your library. Ask them to spread the word to their friends and others that a legacy endowment fund has been created for your library and they can support it by including the library in their wills.
  6. Fundraising campaign development. Include:

Community Education

  1. Invite a local attorney who specializes in wills and trusts to speak at your library. Address issues such as why everyone should have a will; explanation of the types of planned giving, and so on. Have the attorney bring a list of estate attorney contacts.
  2. Invite a representative from SFCF to meet with potential donors in a public forum along with the library director and board. Discussion points might include:
  1. Record all potential donors’ questions to post with answers on your library’s website and/or question/answer handouts