Three Tips For Building An Endowed Church Fund
September 6th, 2009 | by Robert D. Cavanaugh, CLU |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.
I've been attending a different church for the past few months. The church recently marked its 50th anniversary. It is a small church that ended 2008 with a $33,000 deficit. I was surprised to learn that after fifty years this church has nothing in earmarked or other church funds. There is no endowed church fund.
A financial shortfall is not surprising for any church during the last quarter of 2008 when the economy entered a recession. In December 2008, the Barna Group predicted that churches would experience giving that would be $3 billion to $5 billion less than anticipated for the last quarter of the year. They also predicted that churches that have church funds will likely see the balances fall until the recession ends.
Financing ministries from the interest on endowment funds goes a long way toward shielding the good a church can do from economic downturns.
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. Fish where the big fish swim.
Almost everyone has heard of the 80/20 rule, which states that 80% of the results or outcome will be the result of 20% of the contribution or effort expended. This rule applies to many things. But when it comes to creating and growing a church fund the rule is more like 98/2. Believe it or not, 98% of the money for a church fund comes from just 2% of the congregation. To raise money, focus on the 2% to grow your church fund.
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.
I'm very clear that tax breaks are not the primary reasons people give money to a church fund. In most cases, the tax issues never enter the mind of the giver. But if you can show someone who is interested in your ministry how to make a gift that satisfies the original goal and helps them solve a financial issue or tax problem at the same time, you dramatically increase both your chances of getting the gift and your chances of getting a larger gift for the church fund.
3. Provide case study information.
I believe that many potential major donors do not know about the planning techniques the law allows that lead to a major gift.
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 will provide explanations of the laws and examples of how others have solved specific problems through church fund endowments, I am convinced that people will easily see how their financial and tax situation could also be improved. This is the first step in starting a conversation about the possibility of making a major contribution to a church fund that will pay for the churchs ministries with the interest on the investments.
About the author: 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 program which advances strategies to increase income and reduce taxes while simultaneously helping churches and non-profits. More information about how to build a church fund can be found on his blog.
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Tags: charitable contributions, charitable donation, charitable gift, Charity, charity fund, christian fund, church building fund, church fund, church funding, Church Stewardship, Fundraising, nonprofit fund, planned giving, Religion, stewardship fund