Creating Endowment Fund Helps Secure the Future

Every congregation would like to have a substantial endowment fund. But many never get there. We hate to ask for the money. We’re afraid we won’t know how to manage it well. Or that there might be disagreements about how to use it.

There are good reasons to overcome those obstacles, says Marcy Bailey-Adams, charitable gift and estate planning director for the UUA. First is a “rainy-day” fund to ensure a congregation’s long-term stability. Further, an endowment fund may consist of several accounts, dedicated to distinct purposes. One account might be for physical plant maintenance, another for making small grants to community organizations, or for social justice, interfaith, and outreach programs.

The Jefferson Unitarian Church of Golden, Colo. (633), has succeeded in creating a significant endowment. When InterConnections did a 1998 article on endowments, Jefferson had a fund of $450,000, three-fourths of it a single gift. The fund has since grown to $606,000. About five percent is used each year to support programs not part of the operating fund, including scholarships to attend General Assembly and district meetings, production of a membership committee video, support for new UU congregations, building improvements, and a music intern’s salary.

“We try to fund programs or projects that can then grow to support themselves or that fill a one-time special need,” said Stan Hamilton, chair of the Endowment and Memorial Gift Trust.

The UU Society of Iowa City, Iowa (302), holds an annual church-wide “Endowment Party.” Contributions are generally small, ranging from $5 to several hundred dollars, and the annual total is generally less than $5,000. “Overall things are going well,” said Kenn Hubel, chair of the endowment committee. He said they review the fund annually, making any adjustments needed, but have not dipped into it for operating funds.

Bailey-Adams recommends these steps to create an endowment fund:

• Set guidelines before seeking contributions. When a charitable bequest is received, for example, is the policy to automatically add the gift to the endowment? How does your congregation want to use it? If there are no established guidelines, disagreements are likely.

• Include youth and young adults in the planning and management of an endowment as a way of expressing confidence in the future.

• A committee can manage endowments but the governing board should receive information quarterly plus an annual report. Ultimately, the use of the fund is under the control of the congregation, not the governing board or the Endowment Committee. Consider safeguards such as taking two congregational votes, a month apart, before significant actions take effect. Use of the endowment fund should be spelled out in congregational bylaws.

• Resist the temptation to take money from the endowment for the operating budget, even if the canvass falls short. Encourage members to support the congregation’s programs and services adequately through the annual canvass.

If you absolutely must use endowment income for operations, limit the amount to earnings and not principle. Withdraw no more than 10 percent of your operating budget in any given year, says Bailey-Adams.

For information on starting or building an endowment contact the UUA’s Charitable Gift and Estate Planning staff, e-mail: giftplans@uua.org. Ask for a Planned Giving Church Kit. Visit www.uua.org/giving. A guide to congregational endowments is available at www.uua.org/cde/ fundraising /EndowmentFundGuide.pdf. Write to UUA Stewardship and Development, 25 Beacon Street, Boston, MA 02108.

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