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Congregational Endowment Guide

Congregational Endowment Guide

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Congregational Endowment Guide

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  1. Congregational EndowmentGuide

  2. 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

  3. Committing to the Future Every heart has a voice … listen to its song.

  4. 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.

  5. 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

  6. What Is an Endowment? The difference between “just getting by” and bringing the mission to life.

  7. What Is an Endowment? • Mutual stewardship • Local control • Donor choice • Tax advantages • Long-term benefits

  8. What Is an Endowment? • Mutual stewardship • Local control • Donor choice • Tax advantages • Long-term benefits

  9. What Is an Endowment? • Mutual stewardship • Local control • Donor choice • Tax advantages • Long-term benefits

  10. What Is an Endowment? • Mutual stewardship • Local control • Donor choice • Tax advantages • Long-term benefits

  11. What Is an Endowment? • Mutual stewardship • Local control • Donor choice • Tax advantages • Long-term benefits

  12. The Value of an Endowment Fund$25,000 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.

  13. Mechanics of the Endowment Congregation endowments, when planned and nurtured, help expand ministries and outreach.

  14. 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

  15. Identifying theNeed for anEndowment

  16. 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

  17. 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

  18. 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

  19. 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

  20. Making an Endowment Come Alive

  21. Marketing the Endowment Fund Keep in mind, endowment funds grow more quickly with additional gifts than by investment return.

  22. Marketing the Endowment Fund Creating a marketing plan • Define goals • Write key messages • Identify key audiences • Consider perspectives on giving • Deliver the messages

  23. Delivering the Message Choosing communication tools: • Church bulletins • Sermons • Newsletters • Workshops • Ministry visits • Recognition events • Personal letters

  24. Marketing an Endowment

  25. 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.

  26. 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.

  27. 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 endowment’s growth.

  28. 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.

  29. 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.

  30. 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.

  31. 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

  32. 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.

  33. 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.

  34. 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.

  35. 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.

  36. Giving to the Endowment Fund 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.

  37. 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.

  38. 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.

  39. Endowment Fund Resources Create an endowment that responds to the changing life and needs of the congregation.

  40. 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.

  41. 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

  42. Endowment Do’s and Don’ts Do’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.

  43. 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!

  44. Questions About Giving Each member can give according to his or her ability.

  45. 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. 200600200