Annual Report 2012

BUILDING COMMUNITIESOF GENEROSITY

A new online giving system to help churches better serve their members. An online toolbox chock full of fundraising resources for congregations and ministries. A new partnership with a world-class investment advisor to give endowment and gift funds managed by the Foundation their best chance to perform well, while freeing our staff to focus on bringing people and mission together. These are just a few of the Foundation’s exciting accomplishments in 2012.

As a pastor with a heart for mission, I love helping Presbyterian congregations, mid councils, mission co-workers, and related ministries like our seminaries raise and steward the funds they need for the mission God calls them to do. That has been the mission of the Presbyterian Foundation for its entire 214 years. It is an honor and a pleasure to carry this mission forward in truly new and innovative ways, while still preserving the legacies of confidence and faithfulness in giving that so many faithful Christians who’ve gone before us have relied upon and practiced.

The trustees and staff of the Foundation, as well as our subsidiary, the New Covenant Trust Company, share this passion and dedication. We are committed to partnering with pastors, the congregations and ministries they serve, and the faithful men and women who fund them, in order to sustain and grow vibrant, transformative ministries.

You’ll read in this report about the many ways that commitment is bearing fruit. And by all indications, our best years are yet to come. Even as we refine and further develop the tools created in 2012, we’re also working this year on additional ways to help our congregations and other constituents grow their ministries. Among these are more local and regional trainings, and a new collection of easily-accessible internet technology resources related to annual stewardship and generosity efforts.

Of course, we are always open to your ideas and suggestions. Our responsiveness to your needs has been the impetus for some of our strongest current successes that are supporting your unique ministries and missions. So please, continue to let us know how we can serve.

The Lord bless you in your ministry, and thanks for your faithfulness.

Rev. Tom Taylor, J.D., Ph.D.President and CEO

How can the Foundation be of better service to congregations? That’s the question we’ve put to hundreds of pastors over the last few years. Their answers have led to a renewed focus on service to the church, an overhaul of our investment management structure, the development of new tools and services – and to a renewed sense of partnership between the Foundation and congregational leaders.

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President’s Message

There’s no shortage of advice on ways churches can improve their finances. The array of possibilities can sometimes seem dizzying. Should we revamp our annual stewardship campaign? Work on paying down debt? Tend to our endowment? Some pastors may not be sure where the trouble spots are to start with.

The Foundation has created a Financial Health Assessment tool (assessment.presbyterian foundation.org) to offer pastors and their congregations an organized look at their financial health, and a way to prioritize where to start.

The Assessment starts with a short survey – just 13 questions – about the church’s stewardship practices. The tool then considers responses to these questions, along with the church’s last five years of statistical reports, in comparison to best practices, peer, and national trends. Within a minute or so, a detailed report is generated and emailed to the pastor or other church leader completing the survey.

The report offers something of a road map to financial health, starting on the first page with a checklist of best practice areas and alerts to any areas where the congregation appears to be struggling. ‘What do we need to do first?’ Look for the areas marked for immediate attention.

The pages that follow offer assessments, best practices tips, and resources for followup in areas including stewardship participation, leadership, planning, preaching and communication, deficits and debt, endowments, major gifts, capital campaigns, and planned giving.

Charts and graphs offer visual cues and comparisons. How does your congregation’s giving compare to regional peers, or to the national average? How’s your ratio of investment income to other sources of funds? How does your mission giving compare? What about operating deficits? Are you conducting lots of funerals but not seeing many bequests? All of these and more are covered in the report.

Each section contains links to online resources in the Foundation’s ministry toolbox which can help address areas of need or concern. In addition, steps for follow-up and contact information for your area’s Ministry Relations Officer are also included.

An Objective Look at the Financial Health of your Church

It helped me clarify areas

that need attention. Now

I have it in black and white

and can start more focused conversations

with the leadership of the church.”

- Rev. Christina Berry

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For St. Andrew Presbyterian Church in Purcellville, Virginia what began as a discussion quickly became a decision – a hearty ‘yes’ to implementing a system of online giving through the Presbyterian Foundation.

Stewardship chair Scott Ziegler explained the rationale behind the decision. His first exposure to the idea of online giving, or e-giving, was at a stewardship conference he attended which, for Ziegler, raised some important questions. This inspired Ziegler to take the issue to the entire Stewardship Committee and then the Finance Committee to get approvals to proceed.

“An article I read from the conference talked about how old fashioned churches were when it came to taking money,” Ziegler recalled. In today’s economic climate it is almost unheard of to be restricted to cash or check. Plus, Ziegler noted, many of a younger generation do not even own a checkbook and are already accustomed to and proficient at paying their regular bills online.

Ziegler hopes the new system will provide more consistency in giving – with the ‘recurring’ option allowing for weekly, monthly, or quarterly gifts whether the giver is actually at worship on a given Sunday morning or not.

St. Andrew has been using online giving – via a ‘give now’ button on their website’s homepage. Since December, when the online feature was added, through April, online donations have steadily increased with more than $6,000 given online. Five individuals or couples are now giving a total of $1,960 on a monthly recurring basis. By March close to 10 percent of the congregation’s total giving was via e-giving. Ziegler hopes this percentage will continue to increase.

Making it Convenient to Give

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An article I read from the conference talked about how old fashioned churches were when it came to taking money,” Ziegler recalled. In today’s economic climate it is almost unheard of to be restricted to cash or check.

The pastor’s life can be one of great joy and reward, but it also usually comes at great cost. Caring for the sick and dying, counseling those in pain and struggle, preparing a sermon each week to inspire and equip God’s people with a faithful and insightful proclamation of the word – these are weighty matters. Add to them all of the other responsibilities of a modern day pastor – committee meetings, building maintenance, fundraising, budgets, mediating conflicts among members, just to name a few – and it’s easy to see why so many pastors leave the ministry within a few years of finishing seminary; and why so many of those who stay struggle in their roles.

While excellence in financial management is central to the Foundation’s mission, we are aware that the faithful leadership of pastors is an essential component of the church’s faithful ministry and mission. We are committed to helping pastors in ways large and small to meet the challenges of ministry.

Reverend Dr. Joe Small is the editor of the Pastor’s Life, a twice-monthly communication designed not to talk about the Foundation’s ministry, but to provide brief resources that we hope will be helpful to pastors in their ministry. These range from reviews of books we think pastors will enjoy, to excerpts from contemporary novels which could make good sermon illustrations. Others include brief Bible studies to enrich the pastor’s own walk with Christ, and teachings from the Confessions or from early church writings with application to the world today.

We hope to contribute to the fidelity of pastors’ preaching, teaching, and leadership, as well as provide nourishment for their souls. Our greatest purpose is to serve the Church, and its pastors, in support of their vital ministries.

This is a great offering

from the Foundation and a real blessing

for me and my ministry. I

plan to use the latest issue as

our continuing education focus at

our next Session meeting.”

- a Pastor’s Life subscriber

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Committed to Helping Pastors

“There is nothing small in the service of God.” –St. Francis de Sales

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One year ago, the Presbyterian Foundation partnered with Cambridge Associates as Investment Advisor to the endowment funds we steward for PC (USA) churches and ministries. Cambridge was selected based on their history of managing endowments, access to world-class investment management resources and success with socially responsible investment mandates. The changes that have occurred this past year have been significant and very positive. We are happy to report these changes and the impact to the Fund.

Transition and Current Positioning

The year ending March 31, 2013, saw meaningful changes in the composition and investment strategy of the endowment fund portfolio (called the Balanced Growth Spending Formula Fund or BGSF). The Investment Committee of the Presbyterian Foundation defined a set of financial and investment objectives for the BGSF Fund.

• Financial Objective: to (1) provide a stream of relatively stable and constant earnings in support of annual spending; and (2) preserve and enhance the real (inflation-adjusted) purchasing power of the Fund.

• Investment Objective: To attain a real total annualized return of at least 5.5%1, net of investment expenses, on average, over a five to seven year period. Secondary objectives are to (1) outperform the Fund’s long-term investment policy benchmark; and (2) outperform the median return of a pool of endowment funds with broadly similar investment objectives and policies.

In order to provide the greatest likelihood of achieving these objectives, a long-term investment policy was established. The BGSF Fund was transitioned from a traditional stock/bond asset allocation toward a diversified asset allocation that is oriented around four key types of market exposure.

Several philosophical tenets for constructing the BGSF portfolio and adding value above the long-term investment policy has been employed. The goal was to position the Fund portfolio to provide a stream of relatively stable and constant earnings in support of annual spending, and to preserve and enhance the real (inflation-adjusted) purchasing power of the portfolio. These strategies include capital appreciation, diversification, inflation and deflation sensitive strategies.

Performance for Year Ending March 31, 2013

BGSF participated in the global market rally. For the trailing 1 year ending March 31, 2013, BGSF returned +7.4%. This is in-line with the Policy Benchmark return of +7.4%. Quarterly performance is available online at www.PresbyterianFoundation.org.

Looking forward, we have a high level of conviction in BGSF’s long-term asset allocation and the portfolio’s underlying investment managers. We continue to rigorously monitor the portfolio and will make adjustments where necessary.

The performance data shown is past performance. Past performance is no guarantee of future results. The investment return and prinicpal value of an investment will fluctuate and current market performance may be lower or higher than the performance quoted.1 The calculation of real total return includes all realized and unrealized capital changes plus all interest, rent, dividend, and other income earned by the

portfolio, adjusted for inflation, during a year.

The Policy Benchmark reflects the return that would have been earned if invested in-line with the long-term policy targets of BGSF.

Investment Management

Change to Investment Strategy Marks First Year

120

Dec2011

Jan2012

Feb2012

Mar2012

Apr2012

May2012

Jun2012

Jul2012

Aug2012

Sep2012

Oct2012

Nov2012

Dec2012

Jan2013

Feb2013

Mar2013

118

116

114

112

110

108

106

104

102

100

Balanced Growth Spending Formula Policy Benchmark

BGSF Performance

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It’s More Than Just Convenient The Foundation continues to listen to our donors and deliver new ways to make their giving easier and more convenient. To facilitate donors with Creative Gift Funds, the Foundation’s donor-advised fund, enhancements to the website are being implemented to make it easier to make grants online. A donor can also search from a database of charitable organizations to identify causes that are aligned with their particular field of interest. These changes may seem small, but are significant to a donor wishing to manage all their giving from one single fund.

We recognize that donor-advised funds are the leading gift vehicle among donors today and are positioned to offer the best service to our Presbyterian donors, as well as being the only service provider who will invest these funds with an eye on our faith-based values.

Hand-in-hand with the convenience offered to donor-advised fund donors, the convenience of accepting debit/credit card donations is available to all churches and ministries through the Presbyterian Mission Exchange. This service provides an easy solution to churches and ministries to offer online giving to their members or supporters and take advantage of the Foundation’s expertise in investing these funds and all back office administration for charitable gifts. While we deliberately introduced the Presbyterian Mission Exchange slowly to early adopters, the word is spreading and more ministry partners are taking advantage of this service.

Positive Investment in Palestine The efforts of numerous congregations to find a positive way to invest for peace in Israel and Palestine culminated in an action from the 220th General Assembly (2012) directing the Foundation to partner with the Presbyterian Mission Agency and others in bringing this to fruition.

These efforts have already led to encouraging relationships with business, education, and religious leaders in Bethlehem, Jericho, Ramallah, Jerusalem and Tel Aviv. They have also led to new partnerships with significant congregations throughout the denomination who are interested in joining the effort.

The first investments are on track to be made in the Summer of 2013, and a full program for investment should be available to Presbyterian congregations and ministries in time for the 2014 General Assembly.

Toolbox of Stewardship Resources

Recognizing a need to consolidate stewardship and generosity resources, the Foundation stepped up and accepted the challenge to facilitate a collaborative effort to provide these resources. Looking to collect and disseminate new ideas and best practices from around our Presbyterian community, the Stewardship Toolbox contains relevant and helpful resources to start or enhance a program. An e-newsletter is being planned as well as a forum to attract healthy conversations from those involved in planning a program as well as those seeking advice.

The Foundation continues to develop new services and improve existing ones to better serve the Church. We continue to talk to pastors and other church leaders, trying to understand their needs and hopes as best we can.

Looking ahead at 2013 and beyond, the Foundation will take the lead in providing resources related to stewardship and generosity for the Presbyterian community. Our donor-advised fund, the Creative Gift Fund, will experience several online enhancements to make grant making more convenient for our donors. The Foundation is also developing opportunities for congregations and other Church agencies to make positive investments for peace in Palestine, a desire which many have expressed in recent years, and which has been called for at recent General Assemblies. More about these initiatives are highlighted below.

Looking Ahead

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Rev. David A. Davis; Princeton, New Jersey; ChairMarilee K. Hopkins; Chicago, Illinois; Vice ChairHarry E. Bartel; Forth Worth, Texas Steven Bass; Seattle, Washington Robert G. Crist; Bellevue, Washington Elizabeth Dunning; Salt Lake City, Utah Enid D. Flores; Guaynabo, Puerto Rico Karen M. Gray; Elderton, Pennsylvania Victor L. Hymes; Alamo, California Stephen C. Kelly; Lexington, Kentucky Paul E. Lee; Barrington, Illinois

Rev. Eustacia Moffett Marshall; Winston-Salem, North CarolinaMichele Minter; Plainsboro, New Jersey Robert Olcott; McLean, Virginia Roscoe W. Overton, Sr.; Austin, Texas Rev. Gradye Parsons; Louisville Kentucky; Ex-officio TrusteeLinda Valentine; Louisville Kentucky; Ex-officio TrusteeRev. Jane L. Searjeant Watt; Pittsford, New York Rev. D. Scott Weimer; Atlanta, Georgia Rev. James Welch; Seminole, Florida Rev. Louise Westfall; Denver, Colorado

Rev. Tom Taylor; President & CEOGreg Rousos; Executive Vice President & COORob Bullock; Vice President, Marketing & CommunicationsTim Clark; Senior Vice President & COO,

New Covenant Trust CompanyAnita Clemons; Vice President,

Investment Relationship Officer

Angela Duffy; Senior Vice President, General CounselVanessa Elkin; Vice President, OperationsKevin Garvey; Chief Ministry Relations OfficerPaul Grier; Vice President, Project RegenerationDebbie Haag; Senior Vice President,

Director of Human ResourcesStephen Keizer; Vice President, Ministry Relations Officer

Lisa LongoCentral866-710-5094lisa.longo@ presbyterian foundation.org

Olanda CarrEast888-711-1318olanda.carr@ presbyterian foundation.org

Rev. Mary “Minner” SerovyNortheast855-514-3077mary.serovy@ presbyterian foundation.org

Rev. Eric ChavisNorthwest888-211-7030eric.chavis@ presbyterian foundation.org

John TurnerSouthwest866-860-3383john.turner@ presbyterian foundation.org

Robert HaySoutheast855-514-3152robert.hay@ presbyterian foundation.org

Trustees

Senior Management

Ministry Relations Officers

HealthEducation

Social Services& Senior Living

LeadershipDevelopment

Church Planting& Growth

Children, Youth& Young Adults

Global Mission Discipleship

$63,386,918Distributed to

Mission in 2012

MISSION & MINISTRY SUPPORTED BY

ENDOWMENT FUNDS

42%Local Congregations

42% General AssemblyEntities & Middle Governing Bodies

9% Education, includingTheological Education

4% Family Services,Senior-Care Facilities& Social Services

3%Other

ValidatedMissions

Gifts entrusted to the Foundation to steward are distributed to local and global missions and ministries as directed by the donors. These gifts represent the foresight of generous Presbyterians today and from generations past.

The chart on the right represents the types of mission and ministries that received income from endowment funds in 2012.

The info graphic on the bottom represents the amount distributed to mission and ministries in 2012 through various types of gifts, such as donor-advised funds, endowment funds, trusts, bequests, online giving, etc.

Stephen Keizer Mid America866-317-0751stephen.keizer@ presbyterian foundation.org

200 East Twelfth Street | Jeffersonville, IN 47130www.PresbyterianFoundation.org | 800-858-6127

FDN 03-13-01

The Presbyterian Foundation was established in 1799 to raise, steward, and distribute funds for mission. We work with congregations, councils, agencies and other entities to ensure that they have resources for

mission today, tomorrow, and two hundred years from now.