Starting an Endowment Fund For a Congregation's Future

Every year at the end of August the UU Society of Iowa City, IA (223 members), holds a church-wide "Endowment Party." There's lots of food and live music and everyone is invited to contribute to the society's endowment fund.

The individual amounts contributed are generally not large, ranging from $5 to several hundred dollars and the total is usually less than $5,000. But the actual money that is donated is only part of the reason for the party. The other reason is simply to make members comfortable with the act of giving to an endowment, says Jean Hood, a member and former chair of the Endowment Committee.

Iowa City members also recently formed the "Chalice Society" which plans to put on a big annual party for members who make deferred gifts which will come into the endowment fund after their deaths.

These two events are part of an intentional effort at Iowa City to make members aware of and familiar with giving to an endowment fund, says Hood. Overall, the congregation has about $149,000 in its main endowment fund as well as smaller amounts in endowed funds earmarked for music, church programs, and physical access projects.

Hood says, "By doing these events you highlight the endowment and make people aware of it. It's also our way of recognizing that our society has a future and that we're willing to invest in it."

There are several good reasons for creating endowment funds, says Marcy Bailey-Adams, director of the UUA Office of Planned Giving. The first is as a rainy-day fund to ensure the long-term financial stability of a congregation. Another is to extend the congregation's mission in the community by designating a portion for social outreach programs. Other reasons are to ensure continued maintenance of church property or to extend the congregation's operating budget.

But resist the temptation to use more than 10 percent of endowment funds annually to bolster the operating budget. Encourage members to support the annual programs and services through the annual canvass.

Dale Foreman and Frank Mills helped organize an endowment fund eight years ago at the Jefferson Unitarian Church, Golden, CO (411). The fund sat relatively dormant for several years, then Mills died and left $350,000 to it. Investing in mutual funds helped the endowment grow another $100,000 in recent years. None of it can be used for the operating budget, said Foreman. "Frank came from another church with a big endowment and he always said it just killed the church."

The Unitarian Church of Santa Fe, NM (271), makes members aware of its endowment fund by holding seminars on money issues. It also puts frequent reminders in the newsletter and Sunday orders of service and encourages members to donate to the endowment in the memory of friends or on their own anniversaries.

Bailey-Adams' recommendations for starting an endowment include:

• Before any big contributions come in, establish rules as to how an endowment will be spent or preserved. If a large contribution does come in and there are no guidelines, disagreements are likely to occur as to how to use the money.
• Include youth and young adults in the planning and management of an endowment as a way of expressing confidence in the future.
• Bailey-Adams recommends that endowment funds be governed by the congregation. If you choose to set up a separate trust or foundation, seek competent non-profit counsel to guide you in drafting governance documents.

For information on starting or building an endowment in your congregation, or to request a congregational kit, contact the UUA Office of Planned Giving. Or click on this link for Elements of a Successful Planned Giving Campaign. You may also write to the office at 25 Beacon Street, Boston, MA 02108. Phone Marcy Bailey-Adams at (617) 742-2100, ext. 511. Join the UU-MONEY e-mail list, sponsored by the UUA, where questions about endowments are frequently addressed.