Congregational Endowment Guide

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Congregational EndowmentGuide
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Todays 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

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Committing to the Future

• Every heart
• has a voice
• listen to its song.

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Committing to the Future
The creation of an endowment is a commitment to
the future of the congregations mission and
vision. A clear understanding of the
congregations mission is essential to supporting
an endowment.
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Committing to the Future
The endowment is to be understood in the context
of the congregations overall stewardship for the
financial support of its mission. This overall
plan includes

• Annual giving
• Capital giving
• Designated giving
• Endowment giving

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What Is an Endowment?

• The difference
• between just
• getting by
• and bringing
• the mission
• to life.

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What Is an Endowment?

• Mutual stewardship
• Local control
• Donor choice
• Tax advantages
• Long-term benefits

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What Is an Endowment?

• Mutual stewardship
• Local control
• Donor choice
• Tax advantages
• Long-term benefits

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What Is an Endowment?

• Mutual stewardship
• Local control
• Donor choice
• Tax advantages
• Long-term benefits

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What Is an Endowment?

• Mutual stewardship
• Local control
• Donor choice
• Tax advantages
• Long-term benefits

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What Is an Endowment?

• Mutual stewardship
• Local control
• Donor choice
• Tax advantages
• Long-term benefits

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The Value of an Endowment Fund25,000 Endowment
Fund -- 5.5 Distribution -- 7 Investment Return
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.
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Mechanics of the Endowment

• Congregation
• endowments,
• when planned
• and nurtured,
• help expand
• ministries and
• outreach.

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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
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Identifying theNeed for anEndowment
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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
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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
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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
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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
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Making an Endowment Come Alive
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Marketing the Endowment Fund
Keep in mind, endowment funds grow more quickly
with additional gifts than by investment
return.
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Marketing the Endowment Fund
Creating a marketing plan

• Define goals
• Write key messages
• Identify key audiences
• Consider perspectives on giving
• Deliver the messages

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Delivering the Message
Choosing communication tools

• Church bulletins
• Sermons
• Newsletters
• Workshops
• Ministry visits
• Recognition events
• Personal letters

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Marketing an Endowment
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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.

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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.

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Marketing Timeline

• Months 7-9

• Short articles (continued).
• Continued announcements.
• Hold a separate workshop on other financial
  issues to continue stewardship theme.

Ongoing

• 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 endowments growth.

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Roles and Responsibilities
Role of the pastor

• 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.

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Roles and Responsibilities
Role of the endowment committee

• Cover everything the pastor doesnt 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.

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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.

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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

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Giving to the Endowment Fund

• Direct gift
• Donor
• Wisconsin couple in their 50s.
• Charitable Goal
• Wanted to make an unrestricted gift in their
  deceased daughters name to the congregations
  endowment fund.
• Solution
• Made gift of 30,000 and additional memorial
  gifts to the Endowment Fund in the daughters
  name.
• Parents, family and friends donating to the fund
  receive charitable deductions.

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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.
• Donors estate received a charitable deduction.

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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.

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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 doesnt 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.

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Giving to the Endowment Fund

• Charitable gift annuity
• Donor
• North Carolina widow, age 70.
• Charitable Goal
• Wanted to increase her income and benefit
  congregations 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.

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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
  congregations 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.

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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
  congregations 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.

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Endowment Fund Resources

• Create an endowment that responds to the changing
  life and needs of the congregation.

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Thrivent Financial Endowment Fund Resources

• Thrivent Financial for Lutherans
• Thrivent Financial Bank Trust Investment
  Services
• Thrivent Financial Managed Investment Accounts
• Lutheran Community Foundation
• 625 Fourth Ave. South, Suite 200
• Minneapolis, 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.
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Additional Resources

• ELCA Foundation
• LCMS Foundation
• WELS Foundation

8765 West Higgins Road Chicago, IL 60631
1333 South Kirkwood Road St. Louis, MO 63122
2929 North Mayfair Road Milwaukee, WI 53222
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Endowment Dos and Donts

• Dos
• 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 fundwhat 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 effortspeople 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.

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Endowment Dos and Donts

• Donts
• Dont make permanent rules or permanent
  structures that may hinder future choicesmake a
  plan for the next five years, not the next
  50things change!
• Dont get caught up in the details too soon.
  Examples investment policy, grant timing, budget
  questions.
• Dont create dependenciesdont tie any program
  or effort exclusively to the endowment. Having a
  variety of funding sources enhances any program.
• Dont even think about abandoning your annual
  fund, which supports your core operating
  budgetthat would be a fatal mistake!

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Questions About Giving

• Each member
• can give
• according to
• his or her ability.

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Congregational Endowment GuideThe 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.
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