There is a new financial moment for nonprofit organizations, a moment where it is no longer enough for the institution to ask: how do we raise money? It is also insufficient to say: we have an endowment or reserves or successful seasonal campaigns; the more mature question today has become: how do I make money work for the mission without it becoming a burden on the mission itself?

In past years, many organizations have discovered that good intentions alone are not enough, that public empathy does not build sustainability, and that large donations may open a wide opportunity for work but then quickly close it if there isn't a financial system capable of managing the impact. Therefore, resource development is no longer just a communications activity or a year-end campaign, but has become part of the organization's structure and its way of thinking about the future.

This reading is based on recent material published by Wilmington Trust titled Endowments & Foundations Trends Update for 2026, which helps us look at endowments and endowment funds not as static balances, but as strategic tools that need investment management, expenditure policies, governance, liquidity planning, and a deep understanding of the nature of risks.

To clarify the context for the Arab reader, Wilmington Trust is an American financial institution specialized in wealth management, institutional investment, and credit services, and is part of the M&T Bank group. Endowments refer to funds maintained often at their principal, with expenditures drawn from their returns, while Foundations refer to granting or charitable institutions that manage financial resources to serve social, educational, health, or cultural purposes.

However, the value of this material lies not only in its source but in the perspective it opens before the third sector, prompting us to contemplate a very sensitive question: Are we treating nonprofit money as a transient resource for expenditure, or as an institutional capacity that should be built, protected, and taught to boards on how to manage?

The Endowment is No Longer a Quiet Fund at the Bottom of the Budget

In the traditional view, an endowment sometimes seems like an asset far removed from the organization's daily life, something mentioned in reports or major meetings or times of distress, but its modern image is entirely different; it is not a marginal item in the budget, nor a comforting balance to look at, but an institutional shield that can protect the mission when funding sources fluctuate and market conditions change.

However, this protection does not materialize automatically just by having an endowment, as an unmanaged financial asset can turn into a silent burden. Thus, the difference between an organization that possesses an endowment and one that thinks with an endowment mindset is fundamental; the former possesses an asset, while the latter possesses a policy, a vision for expenditure rates, an understanding of the relationship between endowment and reserves, and knows when to use the returns and when to protect the principal.

In the Saudi environment, the importance of this meaning is amplified as discussions about financial sustainability expand in associations, charitable institutions, and endowments. It is no longer enough for an organization to raise the banner of sustainability unless it translates that into clear decisions in investment, expenditure, reserves, transparency, and accountability of the board of directors, as sustainability is not just a soft word in the strategic plan; it is a daily test of how money is managed.

In this sense, the endowment does not stand outside charitable work in its modern form; rather, it is at its core. It is not opposed to spending on beneficiaries, nor is it a competitor to programs; rather, it is a tool that gives programs a longer lifespan and allows the organization to fulfill its promise when temporary resources dwindle or grants are delayed or operational costs rise.

After Years of High Returns, the Toughest Question Begins

After strong years in the U.S. stock markets, investment committees in many nonprofit institutions have begun to quietly revise their expectations, as rising markets give organizations a reassuring feeling. However, this reassurance can become misleading if the organization treats it as a permanent rule rather than a temporary exception. Therefore, the real question begins after years of prosperity, not during them: can the portfolio withstand when the economic cycle changes?

Here, the term Asset Allocation appears, referring to the allocation of assets, which means determining proportions between stocks, bonds, cash, alternative investments, and possibly real estate or private markets. However, this allocation is not a financial exercise separate from the organization's mission; rather, it is a decision that reflects the nature of its commitments, its need for liquidity, its ability to withstand volatility, and its investment horizon.

Thus, an organization that funds daily programs is not like a large endowed institution that can wait ten years, and an association that relies on monthly operating expenses cannot manage its portfolio in the same way that a major university handles a large endowment. Therefore, the concept of asset allocation appears closer to a financial translation of the nature of the institution rather than just a choice between investment tools.

The term Spending Rate reveals an even more sensitive question; it is the percentage that allows the organization to withdraw annually from the endowment or its returns to fund its activities. If this rate exceeds the endowment’s ability to grow meaningfully after inflation, the organization is not just funding its present through the returns but begins to quietly consume its future.

This issue deserves stronger attendance in Saudi endowment discussions because an endowment does not become sustainable simply by being named, nor does it remain strong because its principal is large; it remains so when governed by sound spending policy, and when the board or the board of trustees understands the difference between returns and principal, urgent need and long-term commitment, and between spending that serves the mission and spending that consumes its future capacity.

Stress Testing Does Not Kill Optimism, But Protects It

In nonprofit investment, it is not sufficient for expectations to be rosy, nor for current figures to be comfortable, because the most important question is always: what if the opposite happens? What if the markets fall? What if we need sudden liquidity? What if costs rise? What if support is delayed? And what if returns diminish for two or three years?

This is the essence of Portfolio Stress Testing, which is not an exercise in pessimism but a method to protect optimism from naivety. An organization that does not test its capacity before a crisis will have to discover its fragility at the worst time, while an organization that builds preemptive scenarios can enter the difficult phase knowing where to push, where to ease, and where to protect the essence of its mission.

Practically, stress testing does not always require complex models; the organization can start with an optimistic scenario, a moderate one, and a stressful third, then link each scenario to its programs, employees, commitments, and capacity to serve beneficiaries. Here, figures shift from silent financial tables to administrative and ethical questions about the organization's ability to deliver.

In the Saudi context, this practice seems essential, especially for entities that possess endowments or reserves or long-term programs, as an operational plan alone is not enough if it is not supported by a financial awareness of scenarios, and the strategic plan is not complete if it does not answer the tough question: how will we remain effective if conditions become less favorable than we expected?

Private Markets Are Not Suitable for Every Organization

Private Markets entice many institutions seeking greater diversification or returns different from traditional markets. These markets include non-listed investments such as private equity, private credit, and some alternative funds. However, the attractiveness of the instrument does not necessarily mean it is suitable for every nonprofit entity.

On one hand, private markets may open opportunities to diversify the portfolio and reduce reliance on public stocks and bonds; on the other hand, they are less liquid, more complex, and require a higher capacity for scrutiny, understanding fees, risks, and lock-up periods. Therefore, entering them without sufficient knowledge could turn the desire for development into an incomprehensible risk.

The rule that can be drawn here is simple yet profound: in the nonprofit sector, an organization should not enter an investment tool just because it seems advanced or is used by major entities. Instead, prudent investment decision-making begins with the question of suitability, not the attraction of the term, and is measured by the board's ability to understand and hold accountable before being measured by the expected return.

For the third sector in the Kingdom, the growth of endowment investment should proceed with the growth of awareness, not with a race for appearances. What works for a world-class university endowment or a massive grant-making institution may not necessarily be suitable for a medium association or a nascent endowment. Therefore, gradualness, governance, specialized consultation, and understanding liquidity become as crucial as the search for returns.

Liquidity Is Not the Size of Money but the Timing of Access

When interest rates change, so does the way organizations view cash, bonds, borrowing, and credit facilities, highlighting the role of the Federal Reserve, the central bank in the United States. However, the broader lesson does not concern the U.S. market alone but is about understanding the meaning of liquidity in any nonprofit organization.

The term Liquidity refers to the organization's ability to access cash at the time it needs it without being forced to sell a critical asset at a poor time, disrupt a program, or postpone a commitment. Thus, an organization may have substantial assets yet face daily stress if those assets are not convertible to cash when needed.

From here, differentiating between operational funds, reserves, and endowments becomes crucial, as operational funds serve near-term expenses, reserves protect the organization from shocks, while the endowment serves long-term sustainability. When the organization mixes these levels, it begins to address current problems with future funds.

In the Saudi context, this distinction can make a significant difference in how associations and endowments manage their funds because some entities may possess significant real estate or endowed assets but face cash pressure in operations. This does not necessarily indicate a financial size weakness, but a lack of liquidity engineering and linking assets to temporal liabilities.

Governance Begins When Money Becomes a Question of Trust

True governance begins when money is no longer just a number in the account but a trust that needs understanding, accountability, and documentation. Here, the importance of Governance and Fiduciary Responsibility emerges, representing an ethical question before being institutional procedures: who has the right to decide on money allocated for the mission?

Board members or trustees do not handle nonprofit money the same way they deal with their personal funds; they manage money laden with the trust of donors, the needs of beneficiaries, the intentions of endowers, and the institution's reputation. Therefore, good intentions alone are not enough; understanding policies, reviewing risks, requesting reports, holding advisors accountable, and documenting decisions is essential.

One of the critical policies here is the Gift Acceptance Policy, which defines what the organization will accept and what it will refuse, as some gifts may come with conditions that burden the institution or are associated with assets that are difficult to manage, or carry legal or reputational risks. Hence, governance manifests itself not in its ability to attract money but in its ability to say no when acceptance is costly.

There is also the Windfall Policy, which deals with sudden large donations. An organization may receive a large contribution or asset unexpectedly, and without a clear policy, this beautiful event can turn into confusion in expenditures and decisions. However, when there is a pre-existing policy, this gift can be transformed into an endowment, reserve, or long-term program instead of melting into scattered expenses.

In our local environment, this point seems critically important because large donations are often welcomed as celebratory occasions before being viewed as governance responsibilities, while institutional maturity requires asking: how much do we spend? How much do we endow? How much do we place in reserves? What are the accompanying conditions? And how do we protect the independence of the mission from sudden money pressure?

Resource Development Is No Longer a Beautiful Campaign

Resource development is no longer merely an impactful message, a beautiful image, and an urgent call at the year-end; donors have become more informed, the environment more competitive, costs higher, and reliance on a single income source more risky. Therefore, an organization that wants to survive needs real diversification, not just a new campaign.

Consequently, the endowment should not be treated as a substitute for resource development but as part of it because it does not build itself nor grow just by announcing an endowment fund; it requires a compelling story, accumulated trust, a clear site, impact reports, easy donation options, and a team that understands how to transform the donor's relationship from a payment moment to a long journey with the mission.

Connected to this is the concept of Planned Giving, which refers to gifts arranged by the donor within their financial, family, or future planning, such as wills, deferred gifts, and asset arrangements. In the Western experience, this concept connects charitable work with wealth planning across generations rather than confining it to momentary emotion or seasonal donation.

In Saudi Arabia, we have a deeper foundation for this idea through endowments, wills, ongoing charity, family benevolence, and extended giving. However, the challenge is not the absence of meaning but the conversion of meaning into easy, understandable, and trustworthy tools. A donor does not always need a new emotional appeal; they might need a clear path showing how their donation can become part of their personal and family legacy.

Donor Advised Funds Reveal a Shift in Giving Behavior

Donor Advised Funds, abbreviated as DAFs, open an important window on the shift in giving behavior in some Western experiments. These are tools in which donors place money or assets with a sponsoring organization and then later recommend directing grants from them to specific charitable organizations, thus transforming giving from a solitary transaction into a planned and distributable charitable portfolio.

We may not find an exact equivalent for this tool in every environment, but its intellectual value is significant as it reveals that proactive donors want not only to give but also to organize their impact, choose the timing of grants, involve their families, build a lasting charitable memory, and deal with giving in the same way they deal with long-term financial planning.

This presents an important opportunity for the third sector in the Kingdom; instead of addressing donors always in the language of urgent need, more flexible and professional giving products can be developed that speak to families, entrepreneurs, moderate wealth holders, and major endowers simultaneously and provide them the ability to move from spontaneous giving to organized philanthropy.

In this sense, the future of resource development will not lie solely in increasing the number of messages sent to donors but in designing an experience that makes giving clearer, easier, deeper, and more connected to the personal and family identity of the donor. When a person sees their organized impact, they return not as a transient donor but as a partner in building a continuous story.

The Board That Does Not Learn Becomes a Danger to Money

The risk associated with endowment money increases when its understanding is confined to one or two people within the board, as many organizations may have a board member who understands investment or a good financial advisor, while the rest of the board is merely listening or giving general approval. This situation may seem comfortable on the surface but carries a significant risk to the quality of decision-making.

Endowment money cannot simply be managed by a good advisor or a professional financial manager; ultimate responsibility always remains with the board or the board of trustees. Therefore, members need a minimum level of understanding that enables them to ask the right questions: What is the spending rate? What is the level of risk? Why were these assets chosen? Is liquidity sufficient? What is the management cost? And is the investment policy updated?

This does not mean that every board member should become a portfolio manager; rather, it means they should have enough knowledge to protect the trust. A member who does not understand anything about investment may leave all decision-making to the advisor, and a member who relinquishes all decision-making to the advisor without accountability is not fulfilling their entire role, even if they have good intentions and high social standing.

In the Saudi nonprofit sector, we need to integrate financial and endowment literacy into the training of boards of directors, not as a side course but as part of the essence of governance. The money that comes from endowers, donors, and the public is not solely protected by emotion; rather, it is protected by a board that knows how to ask before it agrees, and how to review before it reassures.

Technology Does Not Replace Trust, But Reveals Opportunities

Technology has entered resource development through wide doors; it is no longer just a means to facilitate electronic payment or send mass emails, but has become a tool for understanding donors, organizing data, analyzing behavior, developing messages, and managing relationships over a longer period. Nevertheless, technology alone does not make an organization trustworthy.

The term Artificial Intelligence can help organizations analyze donor data, anticipate giving opportunities, improve messaging, and organize communications. The concept of Virtual Engagement Officer highlights the use of digital systems to communicate with large segments of supporters in a more regular manner than the human team can achieve alone.

However, we should not confuse technology with trust. Artificial intelligence may suggest better text, organize a database, or remind the team of a donor who has missed communication, but it does not compensate for a poor experience, does not build sincerity out of thin air, and does not transform a disordered organization into a trusted entity merely by using a modern tool.

Thus, the most significant lesson for Saudi organizations is not to start with artificial intelligence but to begin organizing their data, understanding their donors, clearly stating their mission, and documenting their impact. Only then should they use technology to expand the good, not to beautify the weak, because technology becomes a strength when it comes after the system; however, when it comes before it, it may turn into a facade for deeper confusion.

The Website Has Become a Trust Test

The website is no longer merely an informational space or an archive of news and images; it has become a part of the trust structure within the organization. The entity that presents its annual reports, audited financial statements, investment policies, donation acceptance policies, and impacts of its programs tells the donor, partner, and organizing entity something important: we do not ask for trust through mere words.

A serious donor does not enter the website looking only for a beautiful image or an impactful phrase; rather, they want to know how the entity operates, where the money goes, what the program results are, whether it publishes its data, whether it explains its policies, and whether they can understand its relationship with the endowment, reserves, and investments. Thus, the website transforms into a silent test of trust before being a promotional façade.

In the Kingdom, with rising standards of governance, compliance, and transparency, the website will become part of the organization's moral capital because the entity that does not present its information clearly may seem less ready for partnership even if its intentions are good, while the entity that explains its impact, policies, and data gives the donor an additional reason to trust.

This point opens an important door for Saudi nonprofit organizations; instead of the website being an archive of news or a nameplate, it can transform into a trust center encompassing reports, impacts, policies, frequently asked questions, beneficiary stories, giving options, and endowment information. In this way, digital communication becomes part of sustainability, not just a seasonal dissemination.

From Funding Campaigns to Institutional Mindset

The future of nonprofit organizations will not belong solely to those who collect more, but to those who manage better. While fundraising is a necessary skill, it is not sufficient on its own; investment is an important tool, but it does not save the institution if governance is absent, and an endowment is a source of power but can erode if spending policy is lacking, and technology offers a broad opportunity but does not create trust from nothing.

From here, we can read the year 2026 not just as a new financial year but as a test of mindset within the nonprofit sector. Will the organization continue to transition from campaign to campaign, donor to donor, and crisis to crisis, or will it build financial capacity that makes its impact less fragile in the face of market fluctuations, changes in funding mood, and rising costs?

The organization that lives with a campaign mentality is always looking for the next influx of money, while the organization that builds an institutional mindset thinks about policies, reserves, endowments, transparency, board education, donor experience, protecting the principal, and sustaining impact. Therefore, the difference between them is not only a financial one but also a difference in maturity.

What awaits nonprofit sector investors in 2026 is precisely this question: do we want money that helps us continue temporarily, or do we want a financial system that makes the impact sustainable? Here lies the distinction between an organization that raises money to continue working and an organization that builds money for the impact to continue.

This material is an analytical translation, adapted from a report issued by Wilmington Trust titled Endowments & Foundations Trends Update for 2026, respecting the literary rights of the source, and does not constitute an exclusive or official translation of it.