Heritage Lottery Fund: Heritage Endowments

Overview

Heritage Endowments aims to help heritage organisations diversify their income and achieve a significant growth in endowments in the heritage sector, providing sustainable long-term funding. Through this initiative, HLF fund the creation, or development, of endowments. An endowment is money or property that is intended as a longterm investment, often invested as a capital fund to maintain its value and/or to provide an annual income. Such capital funds can take different legal forms and can be held so that:

• there is a distinction between the application of capital funds and of income
• capital is retained, either forever or until a particular event or time. Where this is part of the legal set up of the grant, this is called a “permanent endowment” or
• there is no distinction between spending capital or income, although by the nature of an endowment, it is invested in order to increase its value or produce income. There may, however, be plans to spend the capital at some stage in the future. This type of endowment is typically called an “expendable endowment”.

Under this programme HLF will only provide grants to match-fund money raised from private sources towards the building of an endowment, and some of the costs associated with a fundraising campaign.

What type of projects are funded?

• archaeological sites
• collections of objects, books or documents in museums, libraries or archives
• historic buildings
• natural and designed landscapes and gardens
• places and objects linked to our industrial, maritime and transport history
• natural heritage including habitats, species and geology

Who do they fund?

To be funded under this initiative, you must:

• be an organisation that HLF are currently funding or have funded in the past. (Current HLF grantees can apply for a Heritage Endowments grant to run alongside their current project)
• have a constitution or other governing document that enables the operation of an endowment fund that meets the requirements of this guidance
• demonstrate that your organisation has the necessary processes in place to provide strong financial management. This should include, where your organisation already holds investments, evidence of their management, whether direct or through investment managers or managed funds, backed by recent audited accounts.

In addition, you must be able to show that your organisation has:

• experience and success in fundraising from private donors, whether trusts, foundations, individuals or corporate givers;
• an ability to engage with donors and encourage new or additional giving from them;
• sensible plans for legacy giving as an important element of a sustainable endowment fundraising strategy
• the ability to run a match funding challenge (you do not have to have direct experience of having done so but should be able to demonstrate similar experience and the capacity of the team who will manage the campaign endowment).

Partnerships

In some circumstances a group of heritage organisations that individually would not have the capacity to fundraise for endowments might form a partnership to provide the capacity necessary to successfully deliver a Heritage Endowments campaign.

In this case you will need to show how this achieves economies of scale, enables sharing of learning between the partners, and that there will be a named lead partner that will complete the application and receive all the funds that accrue to the endowment (both from HLF and other givers). This organisation must have a governing instrument that empowers it to receive and distribute the endowment funds in the way the application proposes;

Note that:

• the lead partner must be a past or current grantee of HLF;
• this arrangement must be permitted by the governing documents of each participating organisation;
• there needs to be a formal consortium agreement (e.g. memorandum of understanding, heads of agreement, letters of intent etc.) that does not need to be a binding legal contract but should at least list the organisations in the partnership or consortium, explain their roles, responsibilities, accountabilities and the terms of the relationship between the organisations involved. It should also describe the outline process for how disputes will be resolved; and ther e should be a mutual commitment to continuing joint fundraising to grow the endowment beyond the four-year period of the programme.

HLF expect the lead applicant’s constitution to include the following (unless the lead applicant is a public organisation or Registered Charity):

• the name and aims of your organisation;
• a statement that prevents your organisation from distributing income or property to its members during its lifetime;
• a statement which confirms that, if your organisation is wound up or dissolves, the organisation’s assets will be distributed to another charitable or
• not-for-profit organisation and not to the organisation’s members.