growing future support - thrivent charitable impact
TRANSCRIPT
GROWING FUTURE SUPPORT Spreading Joy. Changing Lives.®
Endowments for Organizations
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HOW ENDOWMENT FUNDS WORKYour organization can create an endowment fund for general purpose or for a special purpose, such as outreach
efforts, building maintenance or education ministries. The minimum to establish an endowment fund is $25,000.
You can also create sub-funds to address multiple purposes, provided each sub-fund meets the $25,000 minimum.
YOUR ENDOWMENT FUNDOnce your organization’s fund is established, it’s available for your supporters to make outright gifts and/or gifts upon
death. Gifts can be made through direct gifts of cash, securities or real estate, or through deferred gifts of charitable
life insurance, the remainder of a charitable trust or gift annuity, or a bequest. InFaith owns, invests and holds the fund
for the benefit of your organization, and the fund, in turn, offers ongoing support to the charitable purposes of your
organization. You can transfer future contributions of $1,000 or more to the fund at any time.
GRANT RECOMMENDATIONSTo receive grant distributions from your fund, a fund advisory committee designated by your organization, typically
the endowment committee, notifies InFaith through its chairperson. Grants can be recommended at any time, either
in writing or online through InFaith’s website, InFaithFound.org. The committee may choose to receive InFaith’s
standard distribution rate, o r a greater or smaller distribu tion, provided the fund maintains
a minimum balance of $25,000 .
HOW ENDOWMENT FUNDS WORK
Gifts ($) from
Supporters
Support ($) from
the Organization
Personal & Tax Benefits Grant Distributions
ENDOWMENTS FOR ORGANIZATIONSMany churches and faith-based nonprofits recognize the need for perpetual income to support their mission in the future. InFaith Community Foundation offers these organizations a flexible option to build an endowment for whatever purposes they choose.
Why consider InFaith Community Foundation for your organization’s endowment? Among the many advantages, InFaith offers a full range of charitable giving options and professional gift planners to help people give to your fund in ways that match their personal circumstances. In addition, your endowment’s assets are invested in a large, fully-diversified pool of low-cost institutional investments, with advisement by one of the nation’s leading investment advisors.
The following pages provide more information about endowments for organizations through InFaith:• How endowment funds work (page 3)• Benefits to your organization (pages 4-5)• Authorizing your endowment fund (page 6)• Endowment responsibilities (page 7)• Sample Fund Agreement (page 8)• Answers to your questions (page 9)• How to establish your endowment fund (page 10)
Your church or faith-based nonprofit can create a flexible fund to help grow an ongoing, permanent source of support for the future. InFaith staff is available to answer your questions about organizational funds and the process for establishing your endowment fund. For assistance, call InFaith Community Foundation at 800.365.4172.
InFaith Community Foundation
is a proven steward, earning
Charity Navigator’s top rating for
sound fiscal management, and
GuideStar’s top rating for transparency
and commitment to excellence.
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PRIVACYProtecting the privacy of your information is a
responsibility InFaith takes seriously, and physical,
electronic and procedural safeguards are in place
to protect all data.
InFaith respects your wishes for privacy and will
not share, sell or exchange your name or contact
information with any person or entity other than
those acting on behalf of InFaith. Disclosures
regarding your gift will be made only to relevant
parties specifically authorized by you. In order to
provide you with the best customer service possible,
InFaith also provides online view-only access to the
financial advisor(s) identified on page 6 of the Fund
Workbook. You have the option to authorize online
view-only access to others if you wish. This online
access includes your contact information, your gift(s)
and grants from your endowment fund.
If you wish to restrict online access to your
financial advisor and/or others, please call InFaith
at 800.365.4172. You may alter your disclosure
preferences at any time.
CUSTOM INVESTMENT ALLOCATIONYour endowment can be invested in one, two or all
three InFaith investment portfolios based on your
needs and interests.
Growth Portfolio — 85% equities/15% fixed income
for maximum sustained support far into the future.
Mission Portfolio — 85% equities/15% fixed income
for maximum sustained support through investments
that are aligned with mission and provide positive
outcomes for our shared community.
Income Portfolio — 100% fixed income for maximum
distributions within a five-year time horizon.
Factors to consider when making your portfolio
decision:
• Short-term vs. long-term grantmaking plans;
• Ability to tolerate short-term fluctuations in
investment values (and related investment risks) for
potentially greater fund growth and support over
the long term; and
• Commitment to investing for mission.
You can change your recommended portfolio mix
quarterly, with investment adjustments occurring at
quarter end. For more information regarding these
investment options, contact InFaith.
Investment Monitoring
InFaith investments, whether actively managed or
indexed, are measured by strategic benchmarks
and monitored quarterly. The overall investment
portfolio is measured against a composite
benchmark that reflects the target asset allocation.
InFaith’s investment policies, objectives and
guidelines are reviewed at least annually, and
investment performance is continually monitored
with the assistance of investment consultants.
Please contact InFaith for more complete
information about investment policies and historical
performance returns.
BENEFITS TO YOUR ORGANIZATIONAn endowment fund at InFaith Community Foundation offers a number of benefits to your church or
nonprofit organization:
ADMINISTRATIONThrough InFaith, your endowment gains professional
expertise at a low cost. You also have access to
investment portfolios typically not available to
smaller endowments. Your endowment committee is
relieved of investment and record-keeping burdens,
freeing you to concentrate on promoting and
building your endowment.
Each fund is assessed an annual 1% fee to cover
the cost of program and administrative expenses.
Assets in excess of $1,000,000 are assessed reduced
fees.* All investment fees and other direct costs
attributable to the fund, such as brokerage costs,
are passed directly to that fund. There are no fees
or costs billed to the organization.
As endowment fund assets are not tech nically
owned by your organization, they are not subject
to claims against your organization. InFaith is
independently audited every year and gifts are
monitored, reported and managed to ensure
perpetuity.
GIVING OPTIONS Through InFaith, you have access to giving options
such as charitable remainder trusts and charitable
gift annuities. Your fund can also accept assets
that require special expertise, such as real estate.
Committee members do not need a comprehensive
under standing of each type of gift as they can call
InFaith for assistance, toll-free. This toll-free service
is also available to those who wish to make planned
gifts to the endowment.
DISTRIBUTION FLEXIBILITYYour endowment committee determines how the
fund will be used, when distributions are made and the
criteria for distributions. Please note distributions can
only be made to IRS-qualified charitable organizations.
Most churches fall under the church body’s charitable
status. Grants cannot be made to individuals or used
for member ship, benefit, auction items or instances
where charity mixes with personal benefits or to fulfill
a fundraising commitment or pledge.
Your endowment committee has the option to skip
distributions in any given year.
FUNDRAISING EXPERTISEThink of InFaith staff as your backroom resource.
Contact InFaith for more information about:
• Bulletin inserts, suggested newsletter articles and
other fundraising materials;
• Consultations regarding gift design or work directly
with potential donors and their advisors; and
• Assistance in the design of a custom brochure and
web page promoting your endowment fund.
FUND UPDATESYour organization’s fund advisor receives quarterly
updates on the status of the endowment fund. In
addition, daily access to the fund’s status is available
through InFaithFound.org. InFaith encourages you to
call whenever you may have a question about any
aspect of your fund or InFaith policies in general.
ANONYMITY Your organization’s supporters can work directly with
InFaith to make a gift to the endowment fund. InFaith
will protect their identity, forever if that is their wish,
while providing the necessary written substantiation
for tax purposes.
* Fees are subject to change.
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ELEMENTS OF A BYLAW Bylaws typically describe the endowment fund, its
purposes and governing structure. Bylaws might
include the following elements:
• Establishing your endowment fund at InFaith;
• Transfering ownership of organizational assets to
the fund;
• Establishing a fund advisory committee to
communicate with InFaith;
• Establishing a policy for use of distributions from
the fund;
• Authorizing certain officers to execute the fund
documentation;
• Authorizing the endowment committee to approve
future transfers of gifts to the fund; and
• Adopting bylaws for the governance of the
endowment committee with regard to committee
size, qualifications for serving on a committee,
voting procedure, frequency of meetings, election
of a chairperson and any other desired officers, term
of service for members, promotion of the fund,
process for reporting to the church or board of
directors, etc.
BYLAW LANGUAGE FOR DISTRIBUTIONSEndowment bylaws typically dictate how much is
distributed from a fund each year, with distribution
amounts often calculated using one of two methods:
Income only. This method refers to distributions
made only from the fund’s investment income and
frequently prohibits the distribution of principal.
There may also be instances when supporters of the
endowment fund restrict expenditure of their gifts’
principal.
Designated percentage. This more current method
specifies a designated percentage of the fund’s
assets for distribution each year, disregarding
traditional notions of income and principal as they
relate to assets held in the endowment fund. The
distribution percentage is typically 4-6%, with actual
distribution amounts varying year-to-year based on
the fluctuating value of the endowment.
ALIGNING YOUR INVESTMENT MIXWhen building investment portfolios for endowment
funds, it makes sense that investments should be
aligned to support the distribution policy. While
an income-only endowment strategy may sound
simple, the following factors must be considered:
• Investment theory has changed its focus to total
return, rather than strictly income production;
• Growth investments typically produce little or no
income; and
• Investing strictly to produce income doesn’t
incorporate diversification or encourage growth
of endowment assets.
With the designated percentage method, the
distribution percentage is purposefully set lower
than the fund’s anticipated growth. This allows
your fund to grow in prosperous times, building
for future years. In down years, this method allows
for continuing distributions when they’re needed
most, ultimately meeting the endowment’s mission
regardless of your fund’s investment performance.
InFaith can distribute either specific dollar amounts
or a percentage of your endowment fund’s value.
Given the structure of InFaith investments, it is
unable to calculate and provide “income only”
amounts as may be dictated by some endowment
fund bylaws.
ENDOWMENT COMMITTEE RESPONSIBILITIES• Define the committee’s relationship to the
governing structure of the church/organization.
• Define the purpose(s) of the endowment fund;
communicate those purposes to the organization’s
donors and members.
• Plan and carry out activities that create visibility
for the fund.
• Accumulate small cash gifts and send them
collectively to InFaith.
• Consider and make decisions about special
purpose gifts.
• Plan for making distributions from the
endowment fund.
• Plan and carry out fundraising activities for
memorial gifts, bequests and major lifetime gifts.
INFAITH RESPONSIBILITIES• Accept gifts to the fund.
• Prepare transfer papers for gifts of securities and
provide instructions to donors.
• Provide consultations to donors and their advisors
about charitable gift annuities, charitable
remainder trusts and other more complex gifts.
• Evaluate gifts of real estate above a certain value
threshold, consult with local advisors, assist with
transfer documentation, list property for sale,
evaluate buyers and close sale.
• Invest gifts according to InFaith’s investment policy.
• Make quarterly reports to the fund advisor on the
value of the fund.
• Offer assistance to the endowment committee
through strategic planning and design of an
informational brochure, personalized web page and
bulletin inserts. InFaith can also provide resource
referrals, telephone consultations with committee
members, fundraising ideas and information on
other charitable organizations and causes.
InFaith is not an investment manager and does not provide financial advisory services.
AUTHORIZING YOUR ENDOWMENT FUNDAn endowment fund at InFaith Community Foundation is typically established by action of the voting
members of the church’s or nonprofit’s board of directors. The specific form of action should be consistent
with the requirements of the governing documents of the organization, such as bylaws.
ENDOWMENT RESPONSIBILITIESChurches and faith-based nonprofits manage their endowment funds in a variety of ways. While each
endowment fund is unique, the following guidelines outline the roles and responsibilities of the fund’s
endowment committee versus those of InFaith.
InFaith offers sample bylaws for your review. For more information, contact InFaith.
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How much can we receive from the
endowment each year?
Organizations typically request a percentage of
their fund’s value as a distribution once each year.
Grants of $300 or more can be requested at any
time, providing a minimum balance of $25,000 is
maintained.
A rate of 5% is recommended for funds invested in
the Growth or Mission Portfolios. (This is consistent
with InFaith’s standard distribution policy for
individual funds.) Even when the fund’s investment
growth is expected to be greater than 5% in a given
year, InFaith advises part of the growth be kept in
the fund to provide a buffer against less favorable
years and inflation, and to ensure a distribution
can be made each year. As the fund grows, this
percentage will produce a larger distribution
each year. It’s important to note InFaith does not
guarantee investment returns for funds of InFaith.
How long will the endowment fund last?
The fund continues to offer support to the
organization on a permanent basis.
Can we use the endowment fund for
scholarships?
InFaith cannot distribute scholarship awards
through organizational endowment funds unless
the organization is an accredited educational
institution. This is due to an IRS requirement that
scholarships from a charitable fund must be awarded
on an objective and non discriminatory basis with
no “private benefit” conferred. Given the familiarity
endowment committees typically have with potential
scholarship candidates, objectivity is often an
issue. If you have questions or concerns regarding
scholarships, please contact InFaith.
Who promotes giving to the endowment fund?
Your endowment committee is responsible for
encouraging giving among the membership, and
InFaith is here to support your efforts in a variety
of ways:
• InFaith will help the committee design a
promotional brochure and giving options web
page tailored to the fund. There is no charge
for the design service and the organization is
responsible for printing expenses;
• InFaith offers charitable giving materials that can
be included in bulletins or other publications; and
• Staff is available to work directly with donors
and their legal and tax advisors as they design a
charitable gift consistent with their wishes.
How can individuals make gifts to the
endowment fund?
Cash gifts of $1,000 or more and gifts of non-cash
assets can be made directly to InFaith. Checks may
be made payable to InFaith Community Foundation
for the benefit of (insert name of your organization’s
fund) and sent to InFaith. Individuals who wish to
make an anonymous gift may contact InFaith directly.
Cash gifts of less than $1,000 should be directed
to your organization. You can then hold these gifts
and forward them to InFaith when the total reaches
$1,000 or more.
Because of state and federal tax laws, including the
Uniform Prudent Management of Institutional Funds
Act (UPMIFA), it is important that potential donors
be advised, prior to making a gift, that distributions
from the endowment fund may include principal as
well as earnings from time to time.
ANSWERS TO YOUR QUESTIONS
AGREEMENT ESTABLISHING
FIRST CHURCH ENDOWMENT FUND
THIS AGREEMENT is made by and between First Church (the Church), a religious organization located in Star City, Minnesota, and InFaith Community Foundation (Foundation), a Minnesota nonprofit corporation located in Minneapolis, Minnesota.
The Church hereby creates a charitable fund to be known as The First Church Endowment Fund (the Fund). Gifts conveyed by or on behalf of the Church are irrevocable contributions to the Foundation.
1. The Foundation shall hold and administer all gifts the Church or any other person or organization contributes to the Fund in accordance with the provisions of this agreement, the Foundation’s Articles of Incorporation, bylaws, and policies, as amended by the Foundation from time to time, all of which provisions and amendments are hereby incorporated by reference. The Articles of Incorporation and bylaws authorize the Foundation’s Board of Directors to modify any restriction or condition of this Agreement, if, in the sole judgment of the Board of Directors, such restriction or condition becomes unnecessary, incapable of fulfillment, or inconsistent with the charitable purposes of the Foundation.
2. The Foundation shall pay as much of the Fund’s net income or principal or both, as determined by the Distribution Policy adopted by the Foundation and amended from time to time, to such charitable organizations as the Foundation determines to be appropriate. All distributions will be made in such amounts and at such times as determined by the Foundation.
3. The Foundation may make distributions from principal, in addition to distributions pursuant to the Distribution Policy, as the Foundation determines to be appropriate.
4. The Church hereby appoints its Endowment Committee Chair to act as Advisor to the Fund. The Church may at any time in writing remove an Advisor without cause and name a successor Advisor.
5. The Advisor may from time to time recommend to the Foundation, preferably in writing, the charitable organizations to which distributions should be made from the Fund. The Advisor may also recommend, preferably in writing, that no distributions be made from the Fund in a given year, either from income or from principal.
6. The Advisor may recommend in writing that distributions be made from the Fund’s net income or principal or both, as defined in the Foundation’s Distribution Policy.
7. The Advisor’s recommendations are not binding on the Foundation.
8. The Church’s purpose in establishing the Fund is to encourage its members and supporters to make legacy gifts to the Church and to create a stable and growing source of revenue for the Church’s mission and ministries.
9. The duration of the Fund is perpetual. If at any time the Church or its successor ceases to qualify as an IRS-qualified charitable organization, the Fund shall continue for the benefit of the InFaith Community Fund.
10. The Foundation shall be paid an administrative fee from the Fund in accordance with the policies adopted by the Foundation Board of Directors, as amended from time to time.
11. The Foundation may commingle the assets of the Fund with the assets of any other fund or funds which the Foundation holds and administers, provided the separate identity of the Fund is at all times maintained.
This agreement consists of one (1) typewritten page, dated: ________________________.
First Church
By: _________________________________________
Its: _________________________________________
InFaith Community Foundation
By: _________________________________________
Its: _________________________________________
Sample Fund Agreement
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YOUR NEXT STEPAt InFaith Community Foundation, you’re at the center of the process as we work together to achieve
effective, positive and lasting change throughout our community. We look forward to working with you
to create an endowment solution that meets your specific needs and interests. To discuss your charitable
interests and learn more, contact:
InFaithFound.org 625 FOURTH AVENUE SOUTH, SUITE 1500, MINNEAPOLIS, MN 55415
p 800.365.4172 f 612.844.4109
HOW TO ESTABLISH YOUR ENDOWMENT FUND
1. Complete the Fund Workbook for Organizations and send or fax to InFaith Community Foundation.
2. InFaith drafts a Fund Agreement and returns it for your review.
3. The appropriate person signs the Fund Agreement on behalf of the organization and returns it. InFaith,
in turn, signs the agreement and returns a copy to the organization for your files.
4. Initial gifts to your endowment fund can be sent with the signed Fund Agreement or sent later.
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InFaith COMMUNITY FOUNDATION®
VISIONThroughout our community and by God’s grace, we will achieve
effective, positive and lasting change.
MISSIONTo serve our donors with integrity as together we change lives
and spread joy by sharing our blessings with the world.
VALUESAs a Christian organization, our work reflects our service,
stewardship, collaboration, possibilities and results.
InFaith Community Foundation is committed to environmental stewardship, printing on paper made from 100% post-consumer fiber using Green-e Certified renewable energy and meeting Forest Stewardship Council standards.
WE OFFER· Donor advised funds, collaborative
funds and organizational endowments
· Breadth of giving options, including
cash, stock, real estate, bequests,
beneficiary proceeds, life insurance,
charitable gift annuities and charitable
remainder trusts
· Flexibility to give to any charity and
make changes if you wish
· Maximum tax benefits based on when
and how you give
· Donor-centered and online services
© 2015 InFaith Community Foundation 4000-0515
Spreading Joy. Changing Lives.
InFaithFound.org 625 FOURTH AVENUE SOUTH, SUITE 1500, MINNEAPOLIS, MINNESOTA 55415 p 800.365.4172 f 612.844.4109