Endowment: Master or Servant?

June 3rd, 2011

Last week while on a break during one of my seminars, a minister came up to me to talk about endowments. He had heard me say that our churches are not nearly as involved in planned giving as they should be and he disagreed. “I think endowments are a curse upon the church,” he started out. “My last church had a substantial endowment and it was the reason I could never develop a sense of stewardship in my people. They did not want to give when they could just use the funds off of someone else’s previous gift. It hurt us spiritually in a very significant way. I hate endowments.”

This was a message I had heard on numerous other occasions and I did not doubt for one minute the sincerity of the messenger. He had experienced the horror of a church enslaved by planned gifts. On the other hand I told him I have a lot of stories where churches have been set free by those same gifts. Endowments can be your master or they can be your servant. It has everything to do with your endowment policy. Too many churches accept gifts and endow them without a policy and this leaves the endowment at the mercy of each year’s new crop of leaders. Never begin to promote your desire for planned gifts until you have a comprehensive endowment policy in place.

This policy will state a number of things, not the least of which is that funds from the endowment cannot be used for normal operations of the church. These funds should never replace the annual giving of a congregation but should be used to expand giving. Done right, this policy can actually help you grow giving in your members. Done wrong and just the opposite will occur. My preference on endowment policies is that they restrict undesignated funds initially to maintenance and capital improvements. Churches notoriously let their buildings go until the last minute. Roofs leak for too long. Walls go forever without being painted, and HVAC units live on way past their prime. When these items are dealt with from endowment interest then persons feel good about their church and often want to give even more for programs that aren’t getting rained on or being held in hot rooms. Once these maintenance funds reach a certain percentage of the budget then the next monies can go for NEW ministries as seed money. These monies are used for a maximum of two years at which time the ministry must be placed within the operating budget.

The policy should also state that ONLY interest income can be used. The principle can only be used in cases bordering up the very survival of the church itself and then only with 90% of the leadership body in favor. In other words it should be locked up pretty darn tight. Anything otherwise will severely hurt your ability to receive future gifts. At no time should you make the mistake of borrowing from the endowment or “borrowing from ourselves” as I hear expressed. This breaks a trust that you may never get back.

Endowment policies are your key to making endowments your servant rather than your master. Get yours in place right now and then begin to market for those planned gifts this year.

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