Transcript No Slide Title

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:


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Annual giving
Capital giving
Designated giving
Endowment giving
What Is an Endowment?
The difference
between “just
getting by”
and bringing
the mission
to 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
$ of Annual Distribution
3000
2500
2000
1500
1000
500
0
Year Year Year Year Year
10 20 30 40 50
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
Congregation
endowments,
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 the
Need for an
Endowment
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
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.
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Create short articles for church bulletin.
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Initial tasks include:

Mission statement for the fund.
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Decide who will manage the assets.
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Decide who will focus on promoting gifts to the fund.
Marketing Timeline
Months 4-6:
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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 Timeline
Months 7-9:
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Short articles (continued).
Continued announcements.
Hold a separate workshop on other financial
issues to continue stewardship theme.
Ongoing:
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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.
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.
Roles and Responsibilities
Role of the endowment committee

Cover everything the pastor doesn’t do.
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Create and administer the endowment fund.
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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:
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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:
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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:
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New Jersey woman, age 97.
Charitable Goal:
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Wanted to provide permanent support for her congregation
through her will.
Solution:
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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:
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Colorado woman, age 65.
Charitable Goal:
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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:
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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:
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Ohio woman, age 71.
Charitable Goal:
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Wants to support her congregation with a gift of $200,000 at
death.
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Needs to take required minimum distributions (RMD) from
IRA, but doesn’t need income.
Solution:
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RMD given to pay premiums on life insurance contract owned
by the congregation, donor receives tax deduction.
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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.
Giving to the Endowment Fund
Charitable gift annuity:
Donor:
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North Carolina widow, age 70.
Charitable Goal:

Wanted to increase her income and benefit congregation’s
endowment.
Solution:

Congregation creates endowment fund.
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Donor made a gift of highly appreciated securities worth
$106,000 to church-body foundation for a gift annuity.
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Securities sold tax free and donor received a deduction of
$43,655.
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Donor receives $6,890/year for life (6.5%).
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At death, the gift-annuity remainder benefits the
Endowment Fund.
Giving to the Endowment Fund
Charitable remainder trust:
Donors:
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Washington couple.
Charitable Goal:
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Has appreciated stock that if, sold, would result in high capital
gains tax; wants to benefit congregation’s endowment and
increase income.
Solution:
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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
Charitable life estate:
Donor:
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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:
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Title deeded to congregation, donors reserving life estates.

They can rent out the land for their lifetimes.
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Property appraised at $200,000, creating an immediate
charitable deduction of $112,000.
Upon their deaths, congregation will sell the property, with
proceeds benefiting the Endowment Fund.
the
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 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.
Additional Resources

ELCA Foundation
8765 West Higgins Road
Chicago, IL 60631

LCMS Foundation
1333 South Kirkwood Road
St. Louis, MO 63122

WELS Foundation
2929 North Mayfair Road
Milwaukee, WI 53222
Endowment Do’s and Don’ts
Do’s:
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Do dream big, dream broadly, dream widely, and then focus.
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Do involve as many consultants in the discussion as possible.
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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:
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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 a
public 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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