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Frequently Asked Questions
What is an endowment fund?
An endowment fund is a fund that is separate and apart from the Church’s general operating funds. It is a vehicle designed to receive gifts and appreciated resources from members, their families and friends. It is a perpetual fund from which only a percentage is distributed each year to the Church’s general operating funds. It is anticipated that the earnings of the fund will be enough to cover not only the annual distribution to the Church, but also provide for growth net of inflation.
How does HVUUC benefit from an endowment fund?
The fund provides a way to receive large gifts that will not overwhelm the congregation or discourage on-going stewardship and annual giving. It can provide a source of funding to support large projects as well as monies for future ministries. It provides an alternative to receive major gifts without restrictions which can create conflict if the church struggles over how to spend or save it. Having an endowment fund can dramatically reduce the pressure to “pick a project” when a major gift is received.
What are the typical circumstances when one would contribute to an endowment fund as opposed to the general operating funds?
Last will and testament: A donor can designate certain assets or a percentage of their estate to the endowment fund. In this way, the donor, in effect, continues to contribute to the church’s operations in perpetuity.
There are a number of other deferred gifts that may benefit the donor during his or her lifetime—e.g. charitable remainder and charitable life trusts which provide certain tax benefits to the donor.
Other circumstances would include: (1) a donation in memory of dear friends and family, (2) gifts resulting from an unexpected bequest or financial windfall, (3) donation of life insurance policies that once protected your family, but is no longer needed for that purpose.
How is the annual distribution from the endowment fund to the Church’s general operating funds spent?
If the donor to the fund has restricted its use to a particular purpose, the wishes of the donor will be honored. If the donation was unrestricted, the determination of how the distribution will be spent will be made as part of the Church’s annual budgeting process. Generally, use of monies from the fund will be used as “seed money” to fund items such as, but not limited to: enhancing the ministry of the Church, subsidizing new initiatives and capital and major repairs.
How is the fund administered?
The Board of Trustees appoints a five member committee consisting of the Church Treasurer, Stewardship Trustee and 3 other members who serve staggered 3-year terms. The endowment committee operates under the terms of the Endowment Fund By-laws which were adopted by the congregation.
