Endowment Funds

Some charitable funds managed by The Mississippi United Methodist Foundation, Inc. are referred to as “endowments.” The term endowments refer to more than the fact a gift has been made which endows or enables the Church to do more. It is a legal term which defines how the gift will be administered in the future.

An endowment fund includes a very special instruction which states that only the income is to be used each year to further the work of the Church. The principal grows to provide future spending. The consequence of this provision is an endowment that provides income for the Church forever. The donor’s expression of love is in perpetuity.

Just imagine how much satisfaction can be derived from creating or planning an endowment fund to strengthen some part of our great Church. Many of The Foundation’s endowment funds were established by persons who want to provide annual income to the local church forever. Their love for their local church, which is a community of faith that has sustained and nourished them for a lifetime, will now be expressed even after their death. What a great idea!

Questions about Endowment Funds

The Foundation has no minimum gift policy, but given that an endowment fund requires perpetual administration, it seems wise to establish endowment funds with larger amounts of at least $5,000. For amounts less than $5,000, it is probably advisable to give the entire amount on an unrestricted basis to some immediate need or mission within the Church.

I think you will agree, when thinking about your own local church, in most instances it is better served by dependable annual income rather than a large one-time gift which is consumed immediately.

The Foundation provides a Spending Plan Guideline that is specifically designed to grow the endowment fund at a rate greater than inflation over time.

Two basic ways exist. First you can make an immediate gift to establish your endowment fund. The Foundation would be happy to draft a gift document for your approval. Putting your wishes and the terms of the gift in writing is very important. You can always add to your endowment fund in the future. Others may desire to contribute to the endowment.

The second method involves planning for this gift in your will. At your death after your final affairs are settled, a percentage of your estate, or a specific dollar amount, or specific pieces of property are given to establish the fund. This method usually allows the donor to be more generous, since lifetime concerns and responsibilities no longer have to be considered.

You can use both methods. A donor can establish an endowment fund now with an immediate gift and add to the fund through their will.

Yes. An endowment fund could be large enough that it decreases the need for other members to be faithful stewards. However, this has occurred only in a few of the thousands of local United Methodist Churches.

If this is your concern, The Foundation would suggest you specify in your gift agreement the annual income from your endowment fund not be used for routine church budget items of apportionments. Some donors have instructed that the annual income only be used for “outreach ministries beyond the local church budget.” Others have specified it is only to be used for capital projects or building maintenance.

Many of the endowment funds at The Foundation provide annual support to more than one part of the Church. You can instruct the annual income be distributed on a percentage basis to many different entities. Examples: Your local church, colleges, children’s home, scholarships, older adult ministries, or any ministry you desire. But you may wish to keep in mind the amount of funds available for distribution. You want your gift to matter.

This decision is up to you. Some donors prefer to leave all or part of this decision unresolved. They prefer The Foundation’s Board of Directors decide who receives the income annually. Thus, they know they are responding to the Church’s unforeseen needs of tomorrow.

Only you can answer this question. Your own financial situation, responsibilities, retirement security, and other giving commitments must be considered.

In terms of what sort of property to contribute, I would recommend careful consideration be given to appreciated, marketable securities and real property. Funding gifts with these assets can offer special tax advantages. Most endowment funds are created with wealth we have accumulated, rather than from current earnings.