How To Build An Endowed Church Fund
For all the good churches do, most of the funding for their ministries come from pledges. What if every church was endowed? Here are some suggestions you can employ in your church to build a bigger endowment church fund.
All 88 keys of the Phoenix Symphony’s Steinway piano are endowed. They went for $5,000 a key. Penn State has every position on its football team endowed.
Any church that is not building the church fund through endowments might do well to consider this option very carefully.
The church I just started to attend just celebrated its 50th anniversary. It’s not a big church ” about 350 members. It finished 2008 $33,000 in the red. In fifty years, they have a church fund balance of zero.
This is not unusual. Because of the current economic climate, many churches took a big hit the fourth quarter of 2008. In a December 1, 2008 article, The Barna Group predicted that churches would receive $3 billion to $5 billion less than expected the last quarter of 2008. If a church has any amount in a church fund, the balance is likely to decrease, not build, until the economy turns around.
Some churches, however, have a history of drawing on interest earned by a church fund to finance ministries during tough times.
Many churches have built substantial church funds through endowments. For other how-to information and examples, I would point to “Financing American Religion” by Mark Chaves and Sharon l. Miller. Because most churches could do a better job of creating church funds here are three tips for building an endowed church fund.
1. Focus on the people who give the most.
You probably have heard of the 80/20 rule, which holds that 80% of anything comes from 20% of the people involved in the activity. With respect to building a church fund, it’s more like 98/2. You need to concentrate on major gifts. 98% of the money will come from 2% of your congregation.
2. Show potential donors how their church fund gift could solve their own financial problem.
While it is true that many donors are 100% altruistic, you stand a better chance of getting a major gift if you can show a major donor how to solve a problem that simultaneously results in a gift to your church.
Most of these problems involve tax savings. For example, how to sell a business without paying a capital gains tax and how to pass on wealth to the next generation without first giving half of the person’s estate to the government are typical examples. Yes, I know, the tax aspect of major gifts is not the primary reason gifts are made. Most of the time, it’s not even on a person’s list. Nevertheless, if you can show someone who is interested in your cause how to make a gift that satisfies his or her interest and support of your mission and help them solve a problem at the same time, your chances of getting the gift (maybe even a larger one) and adding to the balance of your church fund is enhanced.
3. Support your appeal for church fund contributions with case study information.
I am convinced that many people who could be major donors to church funds simply don’t know about the planning approaches allowed by law that can encourage a major gift to the church fund.
During my 39 years in the financial and estate planning arena, I have spoken with numerous business owners who didn’t even know they had a problem. No one had ever pointed out to them how much of the fruits of their labors could be lost in taxes. I think church fundraisers also suffer from the same lack of information, as do church members.
If you provide examples of what others have done to solve specific problems, people can easily see if the solution might work for them. This is the first step in opening up a dialogue about the possibility of a major gift and building a church fund that will ultimately pay for the church’s ministries from the interest on investments.
Robert D. Cavanaugh, CLU is a 39-year veteran of the life insurance, financial and estate planning industry. He is the publisher of The Smart Giver, a planned giving educational series which advances techniques to increase income and reduce taxes while simultaneously helping churches and non-profits. Additional information about how to build a church fund can be found on his blog.
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