Bequests and other large gifts from members and friends that are combined into an endowment offer a congregation many advantages:
The interest or other proceeds from larger endowments can provide a reliable source of additional income for the congregation’s mission.
Well-managed endowments encourage additional gifts.
It can be a resource for new ministry initiatives or to jump-start capital improvements, additions or updates.
An endowment enables donors to give a legacy gift to the congregation that keeps giving.
Endowments need special handling to ensure transparency, accountability and impact:
The management of endowment funds should be undertaken or overseen by a special committee appointed by the board or elected by the congregation. This committee would report quarterly to the board, annually to the congregation, and to individuals upon request about the types of investments being utilized and the success of the investment policy.
The endowment committee should meet quarterly to review the performance and allocation of assets. It should act at least semi-annually to re-balance the portfolio if market performance has caused a shift in the previously approved allocation, or if it is prudent to alter the allocation. The committee should not hesitate to seek investment advice from qualified professionals. Many congregations choose to invest in the UUA Common Endowment Fund to ensure that the investments reflect UU values.
The board should create written investment and disbursement policies and that all investments and disbursements be in accord with the policy.
The investment policy should cover the nature and amount of risk the committee is authorized to assume, the desired rate of return, how much of the endowment income is to be expended, and the extent to which investment decisions will be guided by considerations of social responsibility. It should also specify whether mutual funds or individual equities and debt instruments will be used.
Most charitable organizations immediately sell any individual equities at the time they are donated. This verifies the present market value of the gift for the benefit of the donor, although sharp donors will want to know the value on the date of the donation, not the value when it was sold. Efficient endowment management stimulates additional gifts; even the appearance of inefficient management will stifle them.
The Finance Committee should review the monthly statements and reports for the endowment fund at least annually.