Endowment Planning, Policy & Management

Here are some common questions and answers about endowment policies. The Massachusetts Conference, UCC would be pleased to further explore questions of endowment policy, planning and management with your church. Please contact Andy Gustafson at 508-875-5233, ext. 231

Does our church need an endowment policy?

Yes! Regardless of whether your church's endowment is $1,000,000 or $75,000, indeed even if your church doesn't have an endowment but would like to start one, a written policy is critical.

What should be included in our endowment policy?

Policies should be tailored to fit the needs of a congregation. However, all good policies will spell out investment guide lines, clearly identify which parties in the church are responsible for management of the endowment, policies for spending principle and earnings, formulae for calculating your church's draw from its endowment and gift acceptance policies.

Who should decide upon our church's endowment policy?

A committee of informed individuals can develop your policy. However, adoption of an endowment policy should be ratified by your church's governing body or the entire congregation.

Should we include a socially responsible investment requirement in our endowment policy?

Socially responsible investing, or SRI, is one investment approach your church might consider. SRI avoids putting money in particular sectors of the stock market. For example, most SRI funds will not invest in tobacco stocks. A number of investment managers, including the UCC's United Church Foundation, offer SRI investment options with rates of return comparable to wider market indexes.

What is a draw and should this be addressed in our policy?

A draw is the amount your church will take from income each year. A prudent draw is 4%; this will allow for growth in your congregation's endowment while providing income for ongoing ministries and other activities at your church.   Your church should consider adopting a trailing average in computing its draw.   A trailing average takes the average size of your endowment from the previous 12-15 quarters, thus avoiding sudden swings in the amount of income your church will take from its investments.

Why do we need a gift acceptance policy?

Though every church should be grateful for all expressions of support, not all gifts are appropriate for a church. Your church will need to decide if it wants to deal with the disposal of complicated assets. Also, people may wish to support ministries at your church that are not feasible or in line with the church's sense of mission.