Episcopal Church Foundation Vestry Papers - for leading congregations

“Where there is no vision, the people perish.” Proverbs 29: 18

Would you give money to a cause not knowing how it would be spent? Most people give to causes that affirm their cherished values, but donors are more likely to give when they know an organization will use their gift wisely … and believe the gift will make a difference. Churches face increasing competition for the time, attention, and money of their parishioners. Donors who care will give when they are moved by your mission, understand your plans, and trust you.

Endowment giving requires a special kind of trust. A donor must know a church will be trustworthy well into the future, beyond the time when the donor is part of the congregation. To inspire endowment gifts, to motivate new gifts and earn recurring gifts, church leaders can carefully build, nurture, and sustain that trust.

To create a healthy endowment fund that inspires giving:

• develop a vision for your endowment;
• establish a clear purpose for each specific fund you might have;
• create effective oversight; and
• talk about what the endowment makes possible.

Let’s start with vision and purpose. In this blog post, we’ll discover the benefits of clarifying the purpose of your endowment and creating a vision that will guide the endowment’s investment decisions.

The Benefits of Creating a Vision and Purpose for your Endowment

Why is having a vision for your endowment fund important? Imagine two scenarios. In one situation,your church asks you to give to a new endowment. When you ask how the funds will be used, the answer is vague or non-existent. Perhaps you are told it will support the church forever. But how? Or the answer is practical, numerical, or based on the budget. And that does not prompt you to reflect on what the church has meant to you and could mean to others.

In a second scenario, when you are asked to give, you are presented with a clear and compelling vision that connects the funds to the mission of the church and succinctly states how the funds will be used. The vision may be grounded in current church life, or it may be future focused and aspirational. Either way, it attracts donors. If you had to choose, which scenario would inspire you to give?

What about purpose? This is the place for a specific statement of how funds may be used. In some cases, it may be set by a donor. In others, it is established by the church. Either way, this is how you build trust with future donors. They will know exactly how their gift to that fund will be used. An endowment is the bedrock of permanent support for your church’s ministries. The funds are meant to last in perpetuity so it’s important to be clear about the purpose of endowment funds, while preserving some flexibility for changing circumstances and future needs. A church with multiple funds may have a different purpose for each.

An endowment is not a rainy day fund. Some churches may occasionally use it to supplement their annual operating budget, but regular use to shore up budget shortfalls may be misperceived by potential donors and diminishes the purpose of having an endowment. To learn more about the importance of having an endowment, visit the first Endowment 101 blog post, “Why Every Church Needs an Endowment.”

Successful endowment programs, those that make an impact and intended to last in perpetuity, are created where there is consensus and congruence in implementing the short- and long-term goals for the endowment. How will you engage the congregation in developing the vision? When the vision and purpose of the endowment is well-communicated and understood not only by the endowment committee but also by the whole church community, it creates engagement.

Creating an endowment vision and purpose:

• makes it easier to clarify how you will use your funds and establishes the best way to grow your endowment through investment and stewardship
• encourages donations and advocacy by making church members aware and helps them understand the purpose and impact of the endowment
• motivates committee members to understand and fulfill their role in managing the endowment and advocating for the endowment

How to Create a Vision and Purpose for your Endowment

Start with the end in mind
What is the impact you want to have in your church, your local community, or in the world? What ministries, programs, or events could help you create that impact? Who will benefit from the distribution of the funds from your endowment? Define your vision. Successful endowment programs have clear and well-established long-term plans and goals for their endowment.

How will you use the fund?
Endowment documents should give clear guidance not only on the vision, but also on the purpose of the fund. Has the donor specified a specific purpose for their donation? Is the fund’s spending restricted or unrestricted in any way? Distributions from an endowment fund should be used in ways that are consistent with the organization’s mission and vision and with the funder’s original intent and purpose. The use/distribution of the funds can be outlined in your endowment’s spending policies.

How will you grow the fund?
Create a vision for how you will grow your fund. Will you invest the money? This vision will help you create your Investment Policy Statement (IPS), which is a document developed by the endowment committee and approved by the vestry that lays out the goals of the endowment as it relates to investment decisions. An IPS defines the investment philosophy that will guide the endowment committee’s investing decisions.

Will you also get new endowment gifts? Endowments can grow incrementally through investment and substantially through new gifts. How will you attract new gifts? Every church should have a plan and a strategy for growing its endowment. Will you create a Legacy Society to inspire donors? Will you designate unrestricted gifts for the endowment? Could a portion of the income come from thrift shops, leases, fairs, or other programs to be used for the endowment? How will you communicate the vision and the impact of the endowment to your parishioners? How will you inspire people to give?

Endowment Oversight Also Needs Vision
It is also good practice to have a vision for managing the endowment. Who will be responsible for overseeing the fund? Will it be your vestry, a finance committee, an endowment committee, or some other committee? How will any committee work together with the vestry? How will they understand their responsibilities? How will information be shared with the congregation? How will you develop church leaders of all ages? Ultimate responsibility of the endowment lies with the vestry, which can delegate various responsibilities as needed. Whoever oversees the endowment must understand fiduciary responsibilities, oversee investing and spending, and communicate effectively with other church leaders and with the whole church community. These members may be good advocates for new gifts. They also reveal what types of leaders the church needs.

Things to consider when creating an endowment committee:

• Who has the skills to oversee the endowment? This may depend on whether the church uses an outside investment manager.
• Who can communicate the purpose and impact of the endowment in ways that raise interest and build trust?
• Are there opportunities to engage new members or re-engage long-standing members of your church by inviting them to serve on the endowment committee?

Best Practices for a Successful Endowment

An endowment reflects a church’s missional priorities, values, and desired impact on its community. Everyone who supports the organization should understand that the goal of your endowment fund is to support the mission and vision of your church. Not every detail must be fleshed out, but a dynamic vision and compelling narrative can inspire action and giving.

Write it up
Studies show that you are more likely to accomplish a goal if you write it down. Writing down your vision will help you clarify your ideas and make sure there is a consensus about the vision of your endowment from members of your committee. Writing down the purpose of the endowment helps to ensure that you are abiding by the wishes of either the donors or the church’s intended purpose for the fund. This vision and purpose document will be the basis for your investment and spending policies. (We will cover creating a Spending Policy and an Investment Policy Statement in future blog posts).

Share it
Do your church’s committee members, parishioners, and potential donors understand the purpose of your endowment? Do they understand the vision your church has for the endowment? Vision and purpose statements are key pieces of collateral to create excitement about giving to the endowment. Having a clear vision and articulating the purpose for your endowment make it easier for potential donors to say “yes” to giving.

Share the vision with your members and potential donors in various ways: on your website, in email blasts, in testimonies, in newsletter articles, events, videos, social media, etc.

Revisit your Vision and Purpose
Periodically revisit your endowment’s vision and purpose to make sure that it is still relevant. Endowment funds may have had a specific purpose that no longer fits your church’s needs. A committee should revisit its vision annually to discuss how the endowment income can impact the current and future mission of your church. Revisiting your endowment’s purpose is also a good way to ensure that you are honoring the wishes of the donors who have given restricted gifts. An annual assessment of your endowment’s vision and purpose is also an opportunity to re-engage your church by communicating the purpose and importance of the endowment, which could encourage giving to the endowment.

Does your church have a vision for your endowment? Are you clear on the purpose of your endowment?

If you would like help to create a vision and clarify your endowment’s purpose, ECF’s Endowment Management program has a free checklist to guide your church. Contact us at endowment@ecf.org to receive the checklist and guidance from an Endowment Management staff member. We look forward to working with you!