Reeb’s Next Stage of Growth is an Endowment Fund!
What is an Endowment Fund? An Endowment Fund (hereafter, “Fund”) is an account funded by donors who want to provide long-term financial stability. The Unitarian Universalist Association (UUA), our nationwide parent body, has stated that every successful congregation should have one.
Why should we have an Endowment Fund? The Fund provides donors a way to contribute indefinitely into the future, via investment income from the gift. Donating to this Fund is vaguely similar to providing savings for our future rather than for our daily expenses.
Donations can be of any amount, large or small. They might well arise from final legacies, when individuals want the resources accumulated over a lifetime to continue supporting their favorite causes into the future. Donors can create designated accounts within the Fund to be used only for a particular purpose. The donor’s wishes will be strictly respected.
Thus, having an Endowment Fund opens a means of allocating capital resources (not just income) in a sustaining and ethical way that was not available in the past. This is why the UUA feels so strongly that every congregation should have such a Fund.
How did Reeb establish an Endowment Fund? At the May 2016 congregational meeting, Members approved an Enabling Resolution that amends the congregational ByLaws to establish the Endowment Fund. This Resolution lists the Fund’s basic rules of operation. An additional Policies and Procedures document will list details for operating the Fund (such as who must sign checks, and others). These policies can be changed by future Boards.
What are the main features of the Endowment Fund? The Enabling Resolution will assure donors that their contributions will not be used to simply alleviate future pledge drive shortfalls. The main resolution is that “no disbursements may be made until the Fund holds an amount equal to 100% of the previous year’s operating budget. After the Fund’s reaching that threshold, the Board of Trustees may direct the Endowment Committee to withdraw up to one-half of the value of the investment income (dividends, interest, and capital gains) earned by the Endowment Fund, averaged over the past three years.” This ensures that the Fund will continue to grow. Some churches find that the interest on the endowment becomes very significant.
Donors with special interests can designate accounts within the Fund marked for specific causes. The Endowment Committee must approve any proposed restrictions on gifts, but otherwise serves only as the custodian of the Fund. The Resolution specifies that the Fund be invested in portfolios approved by the Board (currently, the UU Common Endowment Fund, overseen by the UUA, yielding about 8.5% annual returns over the past five years.) Any investment strategy must conform to UU ethical and social values.
What about dire financial emergencies? The ByLaws can always be amended by a two-thirds congregational vote, after suitable notices. Such a meeting could change anything.
What will take place after the congregational meeting? The Endowment Committee will continue to provide information and motivation for us to become involved with establishing a strong and sustaining Endowment Fund for the congregation. Stay tuned!