Episcopal Church Foundation Vestry Papers - for leading congregations

A Church Too Small for an Endowment? Think Again!

Do leaders at your small church think an endowment is out of reach? Not so! At ECF, we know from our work with hundreds of Episcopal organizations that church size and endowment size are not necessarily related. Plenty of churches with small congregations can have a well-managed endowment to provide extra annual revenue and improve future financial stability. Yet some small churches see real and imagined impediments that limit their ambition to establish and sustain an endowment. Let’s look directly at some of these (mis)perceptions to inspire you to see beyond them.

1. We don’t have wealthy members.

Many small churches assume that endowments require large gifts from wealthy donors. Yet successful endowments are often built over time through modest contributions from many committed members. Some end-of-life gifts that reflect a lifetime of appreciation for a church community can be unexpectedly large when financial or family circumstances permit. Don’t underestimate the giving capacity of your entire community. Plan to engage all of them.

2. We’re too small to manage an endowment.

No church needs to manage an endowment on its own. Today, the best practice for churches of any size is to engage an outside endowment advisor, and organizations like the Episcopal Church Foundation serve as endowment manager for both large and small churches. A trusted advisor can explain investment concepts, help you make the right decisions, and manage an investment portfolio. You can successfully oversee an endowment with just a few church members who can commit to talking with an advisor about church goals, reviewing periodic investment reports, and updating the vestry and the congregation.

3. We need to use every gift just to operate now.

Many churches have tight budgets and struggle to gain pledges sufficient to cover annual costs. Yet endowments often start with legacy gifts – gifts from assets remaining at the end of a donor’s life that come unexpectedly to a church, outside of its anticipated revenue. Be mindful of your church’s long-term interests and set aside this type of surprise gift, which is often a bequest but could come in any form. Once invested as an endowment, it may grow over time to provide significant annual support.

4. We can’t risk limiting our flexibility to spend our resources as needed.

Endowment funds can be restricted in various ways. An experienced endowment advisor can help you establish a long-term fund that gives a church maximum flexibility so that you can promote that specific fund to your congregation as the best place for future gifts. With good drafting, you can give yourself the discretion to use a small percentage of funds each year to support your overall mission, aiming to preserve the fund for the long term while permitting some emergency or special expenditures if needed. Don’t wait until a donor offers you a heavily restricted gift. Instead, get out ahead and plan the fund you want.

5. We don’t know how to get started.

Policies, accounts, investments, reports, decisions…it can feel overwhelming. Fortunately, experienced advisors with easy-to-use resources can guide you from vision to implementation. A good first step is to read about endowments, think about your church and its goals, and find an endowment advisor to answer your first few questions. A tip – look for an advisor who knows churches and has sample documents you can use. Along the way, you will want to start talking with the congregation about your plans. An endowment that helps set up your church for future financial stability is not only a gift to the parishioners who come after you but can create excitement and momentum at your church today.

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For over 25 years, the Episcopal Church Foundation has offered endowment management services to Episcopal churches of all sizes across the country. For information about an endowment at your small church – or at any church – contact the Episcopal Church Foundation at [email protected]. We would be happy to answer questions, clarify goals, and provide practical guidance as you explore opportunities for an endowment to support the future of your church.