Understanding Endowments.

Mutual stewardship.

Endowment funds are partnerships between church members and the church itself—partnerships based on the idea of mutual stewardship. By supporting the endowment fund, church members act as stewards to and for their church. And by using the income generated by the endowment to fulfill its mission, your church acts as a steward to and for your members and the community.

Local control.

An endowment fund is a single pool of resources set up by a church/organization to receive gifts. Distributions from the fund are typically consistent with income only or percent of value.

INCOME ONLY – Where distributions are made only from the income the endowment fund produces; the principal remains intact.

PERCENT OF VALUE – Usually between 4% and 6%, which means that in years when the fund exceeds that percentage, the fund grows. This growth permits distributions in other years when market performance is poor.

Endowment ideas.

• Annually provide Bibles for new church members or Confirmation classes.
• Establish or support emergency food programs or world-wide hunger programs.
• Support emergency shelter and safe affordable housing for those in need.
• Sponsor a choir retreat, music program, robes, instruments, etc.
• Sponsor children to attend conferences, camps, or improvements for a camp facility.
• Seed money to launch or support a new community or global mission initiative.
• Sponsor continued education or retreat for pastor and/or staff.
• Support drug and alcohol abuse programs and mental health services.
• Scholarship support for Seminary students and to North Carolina Conference schools of higher education.
• New church development
• Maintenance and upgrade to church buildings, equipment, and grounds.
• Grants to church-related or community charities.
• Acquisitions and equipment for church library.
• Area of Greatest Need – to be determined by church endowment committee, Foundation Board, Bishop, Pastor, or Annual Grants for local, area or global ministries.
• Support special programs within the NC Conference.

Donor choice.

When making gifts to the endowment, donors can designate if the gift should be used for a particular purpose or whether the church should decide how to spend it. Donor designations may restrict the use of the gift to a purpose that is not consistent with the fund’s mission or that cannot be adequately funded. Undesignated gifts provide the flexibility to meet needs where they exist.

Gifts of cash, life insurance, and assets that can easily be converted into cash, such as publicly-traded securities, are appropriate to donate to an endowment fund. Other assets, such as certain types of unencumbered real estate, closely-held stock, livestock, or crops, also may be appropriate gifts. But they should be accepted only when consistent with a gift-acceptance policy that has been carefully considered and adopted by the endowment committee so that any risks or liabilities can be minimized or eliminated. Gifts to endowment funds are easy to facilitate during life and after death, and can provide significant tax advantages to donors whether they give cash, stock, real estate or other assets.

Tax advantages.

A gift to an endowment fund may qualify for both a current income tax charitable deduction and an estate tax deduction. Donors can also use the value of their tax deduction to purchase a life insurance policy that replaces the amount of the gift for family heirs—with the added benefit that life insurance proceeds may be estate tax-free. Donating appreciated assets like stocks can provide even greater savings by avoiding capital gains taxes.

Benefits to Donors

Giving to an endowment is a meaningful way to express faith and generosity. It allows donors to support the mission of the church or organization far into the future, creating a lasting legacy. Endowment giving reflects a deep commitment to stewardship and the desire to make a long-term impact that lives beyond a single lifetime.