By Rev. Rick Young, TPF’s President & CEO
A paradox for sure, yet it is a question I am often asked to address by both congregations and non-profit organizations. Should you establish an Endowment Fund or Reserve Fund? The answer is yes…and no. Phrases like “the Lord will provide” and “people don’t give to have their money put in a bank” mix with “we want our mission to flourish” and “you need to save for a rainy day” to drive this healthy and important debate. Unfortunately, there is not one easy answer to this complicated question.
In our world, it’s no secret that horror stories of endowments being harmful to an organization or congregation circulate regularly. I frequently see a few key fears as I work to support TPF partners. First, nobody wants to encourage a decrease in individual giving due to donor or congregation perception that the need has diminished. Additionally, I know donors often fear the endowment they support will outlive the life of the church or organization.
Let’s not forget, there is a marked upside to having an endowment. Yes, I’m referring to security, freedom, and growth. For example, I know a church whose endowment allowed the congregation to complete a mandated city code change without having to take out a loan to provide for the replacement of an HVAC system that otherwise would have required a capital campaign.
So, should your church or non-profit organization have an endowment? And if so, what size or scope should that be? The answers to these questions are varied and change depending on each individual need. Below are three key questions to consider:
I know these are all complicated questions, but they are important for all of us to explore. To help you with this, TPF and our Relationship Managers have tools and recommendations that can help you begin and refine the discussion. We look forward to talking with you soon!