Download - Congregational Endowment Guide
Congregational Endowment
Guide
Today’s Endowment Discussion
Committing to the future
What is an endowment?
Mechanics of an endowment
Marketing the endowment
Giving to the endowment
Endowment resources
Questions about giving
Committing to the Future
Every heart has a voice …listen to its song.
Committing to the Future
The creation of an endowment is a commitment to the future of the congregation’s mission and vision.
A clear understanding of the congregation’s mission is essential to supporting an endowment.
Committing to the Future
The endowment is to be understood in the context of the congregation’s overall stewardship for the financial support of its mission. This overall plan includes:
Annual giving Capital giving Designated giving Endowment giving
What Is an Endowment?
The differencebetween “justgetting by”and bringingthe missionto life.
What Is an Endowment?
Mutual stewardship
Local control
Donor choice
Tax advantages
Long-term benefits
What Is an Endowment?
Mutual stewardship
Local control
Donor choice
Tax advantages
Long-term benefits
What Is an Endowment?
Mutual stewardship
Local control
Donor choice
Tax advantages
Long-term benefits
What Is an Endowment?
Mutual stewardship
Local control
Donor choice
Tax advantages
Long-term benefits
What Is an Endowment?
Mutual stewardship
Local control
Donor choice
Tax advantages
Long-term benefits
The Value of an Endowment Fund$25,000 Endowment Fund -- 5.5% Distribution -- 7% Investment Return
0
500
1000
1500
2000
2500
3000
Year10
Year20
Year30
Year40
Year50
$ of
Ann
ual D
istr
ibut
ion
Total distributions from endowment fund after 50 years: $82,950
Value of endowment fund after 50 years: $34,166
Assumes 1% annual administrative fee
This is a hypothetical investment for illustrative purposes only. It does not represent any specific investment. Actual performance may be more or less favorable.
Mechanics of the Endowment
Congregationendowments,when planned and nurtured, help expand ministries and outreach.
Mechanics of an Endowment
Five steps to an endowment:
1) Identify your needs
2) Learn what an endowment is and does
3) Identify how an endowment will support your goals
4) Establish your endowment fund
5) Create a business plan
Identifying theNeed for anEndowment
Mechanics of an Endowment
Five steps to an endowment:
1) Identify your needs
2) Learn what an endowment is and does
3) Identify how an endowment will support your goals
4) Establish your endowment fund
5) Create a business plan
Five steps to an endowment:
Mechanics of an Endowment
1) Identify your needs
2) Learn what an endowment is and does
3) Identify how an endowment will support your goals
4) Establish your endowment fund
5) Create a business plan
Mechanics of an Endowment
Five steps to an endowment:
1) Identify your needs
2) Learn what an endowment is and does
3) Identify how an endowment will support your goals
4) Establish your endowment fund
5) Create a business plan
Mechanics of an Endowment
Five steps to an endowment:
1) Identify your needs
2) Learn what an endowment is and does
3) Identify how an endowment will support your goals
4) Establish your endowment fund
5) Create a business plan
Making an Endowment Come Alive
Marketing the Endowment Fund
Keep in mind, endowment funds grow more quickly with additional gifts than by
investment return.
Marketing the Endowment Fund
Creating a marketing plan
Define goals
Write key messages
Identify key audiences
Consider perspectives on giving
Deliver the messages
Delivering the Message
Choosing communication tools:
Church bulletins
Sermons
Newsletters
Workshops
Ministry visits
Recognition events
Personal letters
Marketing an
Endowment
Marketing Timeline
Months 1-3:
Select Endowment Fund Committee members.
Create short articles for church bulletin.
Initial tasks include: Mission statement for the fund.
Decide who will manage the assets.
Decide who will focus on promoting gifts to the fund.
Marketing Timeline
Months 4-6:
Short articles (continued). Hold an informal forum to inform members of
the fund and generate ideas and enthusiasm. Make announcements about gift ideas in
church services. Endowment Committee tasks:
Develop a planned-giving brochure.
Organize a workshop for financial professionals within the congregation.
Plan a workshop for church members/potential institutional donors.
Marketing TimelineMonths 7-9:
Short articles (continued). Continued announcements. Hold a separate workshop on other financial
issues to continue stewardship theme.
Workshops (quarterly). Announcements. Brochures/flyers. One-on-one meetings with prospective donors. Educate on how the fund is supporting the
mission of the congregation/institution. Plan a recognition event, such as a dinner,
to celebrate the endowment’s growth.
Ongoing:
Proclaim the mission and vision of your congregation.
Explain how the endowment fund furthers your mission and vision.
• “Proclaimer” of the Biblical message, not the “fund-raiser.”
Your pastor can fulfill his or her communications role in several ways, including:
• Sermons• Letters• A message in the endowment brochure/annual
report.
Roles and Responsibilities
Role of the pastor
Roles and Responsibilities
Role of the endowment committee
Cover everything the pastor doesn’t do. Create and administer the endowment
fund. Promote the fund in various ways:
• Write articles for church bulletin/newsletter.
• Organize workshops for the congregation on various topics related to the endowment.
• Create and distribute endowment fund annual report.
• Work with the pastoral staff to find appropriate ways for the pastor to promote the endowment.
Giving to the Endowment Fund
Hear the song from the heart of the giver instead of asking them to sing the music put in front of them.
Giving to the Endowment Fund
Types of charitable gifts:
Direct gifts Bequests Beneficiary designations Life insurance Charitable gift annuities Charitable remainder trusts Charitable life estates
Giving to the Endowment Fund
Direct gift:Donor:
Wisconsin couple in their 50s.
Charitable Goal:
Wanted to make an unrestricted gift in their deceased daughter’s name to the congregation’s endowment fund.
Solution:
Made gift of $30,000 and additional memorial gifts to the Endowment Fund in the daughter’s name.
Parents, family and friends donating to the fund receive charitable deductions.
Giving to the Endowment Fund
Bequest:Donor:
New Jersey woman, age 97.
Charitable Goal:
Wanted to provide permanent support for her congregation through her will.
Solution:
Made a bequest of $1 million to Endowment Fund for mission outreach.
Donor’s estate received a charitable deduction.
Giving to the Endowment Fund
Beneficiary designation:Donor: Colorado woman, age 65.
Charitable Goal: Before her death, she planned with her best friend that
part of her assets would set up a permanent charitable fund in her memory.
Solution: Beneficiary proceeds of $315,000 from her IRA were
contributed to the Endowment Fund. Her estate pays no state, federal or estate taxes on the
gift and the full amount is paid to the endowment.
Giving to the Endowment Fund
Life insurance:Donor: Ohio woman, age 71.Charitable Goal: Wants to support her congregation with a gift of $200,000 at
death. Needs to take required minimum distributions (RMD) from IRA,
but doesn’t need income.Solution: RMD given to pay premiums on life insurance contract owned
by the congregation, donor receives tax deduction. Congregation provides tax substantiation to donor for each
premium payment and Endowment Fund receives $200,000 death benefit from life insurance contract upon death of donor.
Charitable gift annuity:Donor: North Carolina widow, age 70.Charitable Goal: Wanted to increase her income and benefit congregation’s
endowment.Solution: Congregation creates endowment fund. Donor made a gift of highly appreciated securities worth
$106,000 to church-body foundation for a gift annuity. Securities sold tax free and donor received a deduction of
$43,655. Donor receives $6,890/year for life (6.5%). At death, the gift-annuity remainder benefits the
Endowment Fund.
Giving to the Endowment Fund
Charitable remainder trust:Donors: Washington couple.
Charitable Goal: Has appreciated stock that if, sold, would result in high capital
gains tax; wants to benefit congregation’s endowment and increase income.
Solution: Stock of $100,000 transferred to a charitable remainder unitrust
at the Lutheran Community Foundation, which sold it tax free. Donors received income tax deduction of $34,000 and lifetime
income based upon 6.5% of the annual value of the unitrust. Upon death, Endowment Fund receives trust remainder.
Giving to the Endowment Fund
Giving to the Endowment Fund
Charitable life estate:Donor: South Dakota farmers in their 80s. No children.
Charitable Goal: To live on the farm as long as possible and rent land, and at death
make a contribution to congregation’s endowment.
Solution: Title deeded to congregation, donors reserving life estates. They can rent out the land for their lifetimes. Property appraised at $200,000, creating an immediate charitable
deduction of $112,000. Upon their deaths, congregation will sell the property, with the
proceeds benefiting the Endowment Fund.
Endowment Fund Resources
Create an endowment that responds to the changing life and needs of the congregation.
Thrivent Financial Endowment Fund Resources Thrivent Financial for Lutherans
• Thrivent Financial Bank Trust & Investment Services
• Thrivent Financial Managed Investment Accounts
Lutheran Community Foundation625 Fourth Ave. South, Suite 200Minneapolis, MN 55415
The Lutheran Community Foundation is a public charity serving donors and the community through charitable funds. The Lutheran Community Foundation is independent of Thrivent Financial for Lutherans and its financial associates.
Additional Resources
ELCA Foundation
LCMS Foundation
WELS Foundation
1333 South Kirkwood Road
St. Louis, MO 63122
8765 West Higgins RoadChicago, IL 60631
2929 North Mayfair RoadMilwaukee, WI 53222
Endowment Do’s and Don’tsDo’s: Do dream big, dream broadly, dream widely, and then focus. Do involve as many consultants in the discussion as possible. Do create a vision for the fund—what can it do to enhance the life of
the congregation, its members, its communities? Do feel free to break down the fund into parts that are recognizable to
ordinary people. Do consider near-term projects with big impact and long-term efforts—
people need to see the fund working in their lives. Do leave a portion of the fund undesignated for future needs. Do communicate openly and completely with your constituencies about
the process and the conclusions. Do celebrate every gift into the fund and every grant out.
Endowment Do’s and Don’ts
Don’ts: Don’t make permanent rules or permanent structures
that may hinder future choices—make a plan for the next five years, not the next 50—things change!
Don’t get caught up in the details too soon. Examples: investment policy, grant timing, budget questions.
Don’t create dependencies—don’t tie any program or effort exclusively to the endowment. Having a variety of funding sources enhances any program.
Don’t even think about abandoning your annual fund, which supports your core operating budget—that would be a fatal mistake!
Questions About Giving
Each member can give according to his or her ability.
Congregational Endowment
Guide
The Lutheran Community Foundation is apublic charity that serves donors and the community through charitable funds. It is
independent of Thrivent Financial for Lutherans and its financial representatives.
Thrivent Financial for Lutherans and its respective associates and employees cannot provide legal,
accounting, or tax advice or services. Work with your Thrivent Financial representative in collaboration with
your attorney and/or tax professional for complete details. 200600200