Article at a glance:

For nonprofits, time is money

US foundations and endowed nonprofit organizations have accumulated nearly $1 trillion in investment assets—a sum that is expected to double over the next 20 years. Such wealth reassures the social-service, environmental, and arts organizations that depend on these sources for funding. But by applying the financial concept of the "time value of money" to current disbursement patterns, the authors of this article conclude that it would be in society's best interest for the managers of foundations and endowments to put this money to work sooner rather than later. Donors can help by giving gifts that are not restricted to specified uses and by asking when, as well as how, their money will be used.

The take-away

If foundations and endowed nonprofit organizations are going to deliver social benefits equivalent to the value of the donations they receive, they will need to increase their payout rates and investment returns.