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.


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.


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

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

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.


Types of charitable gifts:

Direct gifts Bequests Beneficiary designations Life insurance Charitable gift annuities Charitable remainder trusts Charitable life estates


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.


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.


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.


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.


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.



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

congregational endowment guide

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