Endowment

It usually comes up in the lean times, those times when the economy is in the tank or when church attendance is down a bit or when what is “in the plate” won’t seem to cover the funds going out the door for ministry purposes. It’s in those lean times that many ministry leaders think, and some might even say, “Why aren’t people giving like they should?” or they might say something like, “Wouldn’t it be great if we had an endowment.” 

The quick answers are: (1) People give to causes that reflect their values and passions, and (2) Yes, it would, but you’ll have to earn it. 

And you’ll have about five years to get it established before the next recession comes along (eleven recessions between 1945-2001).

TIP #1 – You Can’t Eat the Apples If You Don’t Plant a Tree

Picking up on a line from my last blog post (maybe it’s worth repeating), we have to be reminded from time to time that things don’t just happen, that many of the best things don’t happen without hard work and long-term investment. That’s the way it is with trees. You don’t get a large expanse of shade at your house unless a tree is planted (or is at least allowed to grow). It will do even better if it is tended and nurtured. And if you pick the right kind of tree to plant and nurture, you might even have fruit to share in the long run.

If you are thinking about supporting a ministry for the long haul, then you have to get started, and it would be great to start when the times are not so lean. Some folks think that you have to start with a big tree, i.e. big money. But I like what my garden center owning parishioner told me. He said, “Some folks like to buy a $100 eight-foot tree. I like to buy the smaller $20 tree and put $100 worth of ‘good stuff’ (root starter, good soil, etc.) in the hole. You come out much better that way.”

So if you want support for your ministry, put the good stuff in the hole – get clarity on your mission, know the impact that your ministry is having, and be prepared to invite others to gather around and nurture your tree. Click To Tweet

TIP #2 – Long-term Support Comes from Long-term Relationships

In the best case scenario, you are receiving support for your ministry – financial, voluntary, and advocacy – because people have found that their values and goals align with the values and goals of your ministry. Because they believe in the work and its impact, and because your ministry has done a good job of inviting people to come alongside your ministry as an expression of philanthropic endeavor.

I remember a seminary class discussion about marital counseling in which my professor remarked, “Money is one of the two things that couples most often fight about. But it is not the cause of conflict; it is a symptom.” In other words, arguments about money often become the expression or symptom of poor communication, struggles for control, and other problems in the marital relationship. I suppose that’s a pretty negative look.

But when a ministry can establish and maintain strong relationships over a long period of time with like-minded people, these people often become inclined to offer their support as an expression of their belief in a ministry or cause. It becomes paramount for that ministry to stay in touch and to share the ministry’s story, to do all of those things that we do to maintain friendships – to care for people, to seek to address their needs, and to help them see how they can change their world through a ministry of generosity.

TIP #3 – Starting an Endowment Is Often the Trailer That Gets Pulled By a Larger Vehicle

If an endowment is what you seek, a good way to get it established is by attaching it to a larger component. One example might be by “tithing” to an endowment the proceeds of a larger capital campaign. If you are planning to build a new $1 million building, why not raise $1.1 million and set aside 10% to establish an endowment for ministry or for capital maintenance. The building is the larger vehicle; the endowment is the trailer.

Or through action of the church’s governing board, you might start an endowment as a portion of ongoing fund-raising efforts, perhaps 5-10% of every dollar raised over a certain period of time.

Either larger vehicle could help to establish an endowment, and then a well-conceived, intentional program of philanthropic donor development could perpetuate it.

TIP #4 – There Are Some Good Questions to Be Asked About Endowments That Can Make People Nervous

The answer to either of these questions could be ‘yes,’ but it doesn’t have to be.

Will endowments drain from critical ongoing operational funding? Studies show that offering more avenues for giving increases the total given to all causes within an organization. What is vitally important is the proper structuring of a financial plan that takes into account short-, medium-, and long-term avenues of funding.

Will the church lose interest in a ministry funded by an endowment? This will not be true in an organization with a healthy system of donor care. In fact, it should be the telling of the ministry story that enlivens interest in the ministry.

Remember, fund development is an expression of relationships – the values that people share, the impact of ministry upon their lives, and the opportunity to extend their reach together.

TIP #5 – Endowment Purposes and Processes Must Be Clear

1. The first lesson to learn in establishing an endowment is the importance of legal advice. There are legal requirements which may vary from state to state. An attorney will be able to guide you through what can be a fairly simple process and assist you in drafting proper documents, if necessary, depending upon the restrictive nature of the fund.
2. Endowment (or trust) documents must be clear in identifying the purposes for which long-term funds may be used. These will thus establish the values by which the fund operates and by which potential donors will make their decisions about giving.
3. Fund documents should identify what portion of funds are available and when. Most endowments or trusts disburse their funds in such a way as to be self-perpetuating.
4. Fund documents will identify who is in charge of decisions regarding the fund. Most funds are usually governed by persons skilled or interested in either ministry or financial management or both.
5. For the worst-case scenario, most fund documents would determine what would happen to the funds if the church were to be dissolved.

Conclusion – If Employed Well, An Endowment Can Be the Springboard to Even More Effective Ministry

Establishing an endowment can cause a ministry to take a good hard look at itself and at how it treats the people with whom it is in relationship. Click To Tweet

As part of a fully structured giving plan, an endowment can be the foundation piece that turns loose other funding for other purposes.

If you want to explore more about funding your ministry through a multi-layered approach, email me at [email protected]. I’d love to spend some time talking with you about planting trees and reaping the fruit!