Student Members at University Lutheran Church - College Station, Texas
Creating an Endowment
What is a Congregational or School Endowment?
A congregational or school endowment is a fund established to provide an annual income for special challenges or opportunities. The principal or corpus of the fund is invested and the income can be used for a variety of missions. Examples of types of missions include:
- To provide scholarship assistance to children of the congregation or others who will attend synodical schools or seminaries;
- To provide scholarship assistance to children attending Lutheran elementary or high schools;
- To assist youngsters from the congregation in attending national or state youth gatherings or Lutheran Camp;
- To expand the mission dollars of the congregation for a local charitable need or to fund a specific need in a distant mission;
- To support future growth of the congregation or debt retirement.
The uses of the endowment income are as broad as the imagination of the leadership of the congregation or school.
Advantages of Establishing an Endowment Fund
The first advantage is to individual congregation members themselves (the donors). Through an endowment we have the opportunity to continue giving to a ministry we love even after our lifetimes. An endowment offers an opportunity for everyone to "leave a legacy."
An endowment creates a financial base that provides funding to benefit ministries for which there are seldom any funds. In addition, ministries will change in the next generation and this special source of income will provide funding for those new and perhaps unique ministries.
An endowment provides an orderly, established, and convenient means to receive and administer special gifts that the congregation might receive.
An endowment reminds God's people that wills and estate planning are part of Christian stewardship and are God-given opportunities to put LOVE into action for our families, our church, and our Lord.
An endowment gives a long-term vision to a church's ministry. Donors know that the bequest will be put to an important special use rather than simply added to the operational budget.
FAQs about Endowment Funds
- After the endowment has been established, how does it grow?
- Donors to the congregation or school's endowment may make an immediate gift of any kind, including cash, real estate, and securities. Often endowments receive memorial gifts or celebration gifts. Future gifts (planned gifts) include bequests in wills, insurance gifts, gifts through trusts, and many others.
- What are the best uses of endowment income?
- Experience shows that using the endowment for special ministry needs rather than budget expenses results in increased giving by congregation members who feel a strong commitment to the particular ministries served by the endowment.
- The recommended endowment document prohibits using the congregational endowment fund for the operational budget, except under limited circumstances. God's people should be encouraged to support the current work of the Lord by their first-fruits proportionate giving during their lifetimes and also to support future work by their gifts and bequests to the congregational or school endowment.
- Who should administer the congregation or school endowment?
- Part of the ministry of the Lutheran Foundation of Texas is to administer the receipt of gifts, manage invested assets, and distribute funds produced by congregational endowments. This is done according to the terms of the specific endowment agreement. While many congregations have very capable endowment committees, over the years, the membership in these committees may change. The ongoing stability of the Foundation is very beneficial to congregational endowment funds.
- Depending on how the endowment agreement is set up, the congregation, acting on the recommendations of the endowment committee, can make the final decision on the distribution of the income in support of the identified missions.
- How should the principal of the endowment be invested?
- The congregation or school's leaders will select the investment style they desire for the endowment.
- Selecting a 5% of fair market value payout allows the endowment to be invested for total return or income, depending on the market. If the endowment grows, then the annual endowment payout increases over the years due to the increased principal balance.
- Selecting the net income payout requires that only the income defined by the Texas Trust Code be paid out annually. In effect, this means that all interest and dividend income will be paid out. Rent and royalty income would also be paid out if earned by the endowment. Realized capital gains may be paid out, but unrealized capital gains are treated as principal.
Getting Started in Creating an Endowment
1. Authorize a small group of interested congregational members to form an endowment committee and contact the Lutheran Foundation of Texas at 800-880-3733. Additional information and sample endowment documents will be provided by the Foundation upon request.
2. Schedule a representative from the Lutheran Foundation of Texas to meet with the committee to answer questions and provide the information necessary to begin the organization and development of your congregational endowment.
3. The committee will make a recommendation to the governing body of the congregation or school to create the endowment.
4. Once the creation of the endowment has been authorized by the governing body of the congregation or school, the committee will sign and send the agreement to the Executive Director of the Lutheran Foundation of Texas along with the initial funds.
5. The endowment is then ready to begin building for the future. The Lutheran Foundation of Texas is available to help the congregation communicate, educate, and encourage gifts for the endowment.
How LFOT Can Assist Congregations and Schools in Endowment Fund Raising
By far the most important function of the Foundation is to encourage, educate, and facilitate gifts to endowments.
In fact, the key to building a successful endowment is the ability to gather additional gifts for that fund on a continuing basis. If only the income or growth from the money used to "seed" the endowment remains available, the endowment will only be able to fund so much no matter what type of investment return is generated.
It is in this area that the staff of the Lutheran Foundation of Texas is uniquely qualified to assist Congregations and schools in promoting the growth of their funds so that they can both fulfill and expand the purpose for which they were created.
For those congregations and schools who establish endowments with the Foundation, the staff can assist in promoting those funds in the following ways.
Customized Promotional Materials
For those churches who have endowments managed by the Foundation, our office can create custom or "tailor-made" materials about your fund(s) to help you promote your program. There is no cost for these items. Available materials include:
- Brochure (for display on your literature rack)
- Bulletin/newsletter announcements and inserts
- Newsletter articles
- Promotional letter to church members
- Poster (Note: some expense may be incurred)
- Recognition plaque on your endowment (for display)
- Memorial/tribute card and remittance envelope
Custom materials can be provided to you via e-mail, on disc or on hard copy as is appropriate.
LFOT Support Services
Additionally, the Foundation can provide counsel or personnel at no cost to assist in promoting your fund(s) in these ways:
- Sponsorship of an "Endowment Sunday" at your church, including Bible Class presentations, and seminars by Foundation staff members. In these programs, the Foundation will always customize its screen presentation and handouts so that they highlight your endowment. (For more information on presentations, see Wills, Estate and Gift Planning Seminars.)
- Help in organizing a special presentation to selected prospects who might have an interest in making a planned gift to the endowment.
- Visit "one-on-one" with prospects to discuss planned giving methods to support the fund. (See Estate and Gift Planning Consultation for Congregation Members.)
- Meet with attorneys, CPAs and other financial/estate advisors in your church to promote funds and other planned gifts to benefit the congregation. (See also For the Advisors.)
- Advise on promoting funds through your stewardship program, voters' meeting reports, and other venues.
- Provide guidance on developing a comprehensive plan to promote your fund(s) through a specially-designed Planned Giving Campaign/Planned Group Society.
Help in designing a comprehensive promotion program
Of all the services the Foundation can provide to those whose funds we manage, the best is assistance in designing a comprehensive program to help promote your fund(s). Typically, this can be mapped out for a 1-2 hour period and includes a combination of using printed promotional materials, presentations and personal visits in accordance with your goals and objectives. Everything is done to fit your circumstance and needs. Again, there is no cost for this service.
Back to top
Please contact us for more information.