Endowment Update

St. Paul’s Episcopal Church has an Endowment Fund, so what is it and other answers . . .

“An endowment is a donation of money or property to a nonprofit organization, such as a church, which uses the resulting investment income for a specific purpose . . .” Investopedia.com

Endowment Funds can be funded with one large gift and/or many smaller gifts which accumulate to create income.  The income comes from the interest, dividends, capital gains, and changes in value from investments made by the fund’s management.  The management of the St. Paul’s Endowment fund is overseen by the Endowment Board, church members appointed by the Vestry for 3-year terms.  Currently, they are Laura Padgett, Chair, Ann O’Dell, Tom Brunton, Karen Day, and Virginia Chiarello.  The church treasurer, Judy Wilson, and the rector serve ex-officio.  The Endowment Board has made the decision to hire Wells Fargo Advisors to actually manage the investments according to the policies of the church and using what is called a “prudent person philosophy”.  In other words, the fund must be managed carefully, actually more carefully than one might manage one’s own money;  and with an objective to preserve its value while taking advantage of growth in the stock and bond markets.  David Brownlow is our advisor for Wells Fargo Advisors.

The total value of St. Paul’s Endowment is about $1.1 million and has three parts: 
(1) the restricted part, which is restricted by the donors and is about $400,000.  There are various specific uses for this money.
 (2) the unrestricted part, which is about $600,000.  Since the restricted funds are already “spoken for” or designated, the unrestricted funds need to reach at least $1 million for the income to dependably be around $40,000 to $50,000 a year to the church.
 (3) the Disbursement account, which is currently about $110,000.  The Disbursement account is used as a “holding tank” for funds that have been approved by the Endowment Fund Board for payment of specific expenses, so that those funds are not subject to changes in the markets.  The church does not receive regular income from the Endowment fund.  Withdrawals of funds are made as specifically requested by the Vestry and approved by the Endowment Board.

The Policies and Procedures of the Endowment Fund allow four uses of the money: “(i) capital needs of St. Paul’s (ii) outreach ministries and grants (iii) seed money for new ministries and special one-time projects and (iv) such other purposes as are specifically designated by donors” to the fund.  It is not intended for regular operating expenses or as a reserves fund.

The Endowment Fund should be seen as a rock that is under the church for stability.  If St. Paul’s is to enhance its future, its Endowment needs to be enhanced, with a goal to have a large enough unrestricted Endowment to provide regular support to St. Paul’s as needed.             

Annual and ongoing stewardship in the church is vital to the church’s day-to-day well-being and is a separate source of support for St. Paul’s, not part of the Endowment.  Most Endowments raise donations from larger, one-time gifts of various sorts.  St. Paul’s does not currently have a Planned Giving Program, but such a program would help to raise funds for the Endowment.

What is a Planned Giving Program . . . or what is a Planned Gift?  Such gifts can be made both as part of an estate plan, life insurance planning, bequests or any gift at death.  They can also be made while living, in ways that may be tax-advantaged such as various remainder trusts, regular direct gifts from IRA’s, etc.  The Endowment Board hopes to begin to create a Planned Giving Program that will bring knowledge to the church and support for members wanting to help St. Paul’s through planned gifts.  It is easy to name St. Paul’s as a beneficiary or partial beneficiary on a life insurance policy, but in general, significant gifts to the Endowment should be made with the counsel of an attorney or accountant.