What is an endowment program?
An endowment is a permanent fund that can be invested to establish a long-term source of income to support programs and ministries. In most churches, the dividend and interest income from the investment, or a set percentage of the value of the fund, is available to spend on an annual basis. A healthy endowment can provide a source of funds – beyond the annual budget – for opportunities in operations, outreach, and a hedge against challenging economic times.
How do we start an endowment program?
The first step is to create an Ad Hoc Committee to draw up a policy to be presented to a Charge Conference establishing a Permanent Endowment Fund Committee and Permanent Endowment Fund. Once the Permanent Endowment Fund Committee is in place, it determines how the fund will be administered and invested. The committee’s duties include:
- determining what types of funds will be included in the endowment program, usually based on the church’s needs, goals or long-term vision
- determining what types of gifts will be accepted and acting as the authority for receiving planned gifts on behalf of the church
- determining how income will be distributed, and
- general oversight of the endowment program and its invested funds.
The step-by-step process for establishing a Permanent Endowment Fund Committee and fund is outlined in the Foundation’s Planned Giving Handbook. Want to receive your copy? Contact our Director of Development, Lynn Kilbourne, at
Is it necessary to establish an incorporated foundation?
It is not necessary to incorporate a separate foundation. Your Methodist Foundation for Arkansas in an incorporated 501(c)(3) organization which is fully licensed in accordance with local, state and federal regulations to serve as trustee of charitable gifts to United Methodist churches and other agencies of the Annual Conference. Trustee services include:
- professional management of assets
- record keeping and reporting
- accounting and payment of income to a donor or beneficiaries.
The Foundation also is licensed to provide charitable gift annuities to donors who wish to set up an annuity that will benefit a church or church-related institution.
What types of people should be on the committee?
The Permanent Endowment Fund Committee’s primary objective is to encourage church members to support the church’s endowment program with their charitable gifts. While representatives from the local church Board of Trustees and Finance Committee would be helpful, the most important people to recruit to the committee are those who are held in high esteem and well known within the congregation. Think of persons who are the natural leaders of the congregation, who can make a powerful witness to the entire congregation through their support of the endowment program. A few professional advisors might be helpful, e.g. attorneys, trust officers, accountants, but it is probably not essential that they be committee members. It might be more strategic to your success to not appear to favor some professional advisors over others.
How do the trustees and endowment fund committee work together?
In most churches the Permanent Endowment Fund Committee and Trustees work closely together to ensure the financial security of the church. The endowment fund committee should keep the trustees informed through annual or quarterly reports on the state of the endowment funds and how those funds are impacting the mission and ministry of the church.
How do we decide what to endow?
Most importantly, you should remember that this is a decision to be made by your donors, not your committee. Talk to the congregation about the benefits of gifts to the church’s General Endowment Fund, used at the church’s discretion, that allow the church to pursue opportunities or address problems we can’t even imagine today. The church might want to suggest supporting other specific-purpose endowments created by the church, for example, an endowment for building maintenance or local missions. But be open to new endowments that donors want to support through their gifts. The best answer to the question “What should I endow?” is most often “Whatever part of the church is closest to your heart.”
How long will it take for the endowment to grow?
It depends on how committed the church and endowment committee are to building a substantial fund and how well the endowment program is communicated and celebrated by the committee and church at large. Guidance on how to promote an endowment program is available in the Foundation’s Planned Giving Handbook. Want to receive your copy? Contact our Director of Development, Lynn Kilbourne, at
Who decides how the income is spent?
The Permanent Endowment Fund Committee, with approval of the Charge Conference, is responsible for administering income distributions. From that point, the committee or agency of the church that is responsible for the ministry or function that is receiving income decides, in consultation with the Church Council and the Finance Committee, how to spend income distributed to it by the Permanent Endowment Fund Committee.
If a donor designates an endowment gift for a particular purpose, the committee is bound by those instructions. If not, the provisions of the church’s endowment policy apply.
Will endowment giving reduce other types of giving?
Typically, the addition of an endowment program creates a new stream of income for a church. In most churches, 99.5% of the operating budget is funded by gifts of income (cash, coins and checks) from its members. Likewise, most capital campaign pledges are funded by gifts of income, while planned gifts to the church endowment are given almost 100% from assets. Without a well-publicized endowment program, church members may designate planned gifts, such as bequests, trusts or charitable gift annuities to other charitable organizations that promote planned giving.
Does the leadership need to give?
Absolutely. Members of the Permanent Endowment Fund Committee and other lay leaders should be prepared to “lead by example” when it comes to establishing a church endowment. It is a good practice to recognize and “thank” donors on a regular basis in a special recognition event or service or by printing a listing of gifts and givers in one or more church publications.
How does the endowment program relate to the mission and ministry of the church?
The most successful endowment programs are those that are tied to a well thought-out and well-communicated vision for ministry. Donors will give if they believe in the mission of the church and if they believe the church, or ministry, is changing people’s lives.
