During the Dreamcatching phase of the Capital Campaign Study, there will be much discussion on church finances and potential endowments created through a campaign. We spoke with Matt Swendiman, who provided us with some insight on finances and endowments from his perspective as Chair of the Financial Resources Commission.
Q: What is an endowment exactly?
Matt: An endowment is a donation of money or property to a non-profit organization, which uses the resulting investment income for a specific purpose. "Endowment" can also refer to the total of a non-profit institution's investable assets, also known as the "principal" or "corpus," which is meant to be used for operations or programs that are consistent with the wishes of the donor and the needs of the organization. Most endowments are designed to keep the principal amount intact while using the investment income for charitable efforts.
An important note: the Book of Remembrance at Trinity is not an endowment, but rather a trust. A “trust” is a three-party agreement where one party (the trustor) gives a second party (the trustee) the ability to hold assets or property for a third party (the beneficiary). The Book of Remembrance trustees maintain the assets according to the trust agreement for the benefit of Trinity.
Q: How do endowments support the work and mission of Trinity?
Matt: Endowment funds are an excellent way for churches to act as good stewards, because they help ensure that the gifts received will continue to benefit the church for years to come. Just as being a good steward requires careful planning and attention to detail, so does creating and growing an endowment fund. Many churches have multiple endowments to support the church's operations and programs.
Five steps to successfully creating an endowment fund include:
- Identify the need for an endowment;
- Learn what an endowment is and what it can do;
- Identify the needs and causes that will be supported by the endowment;
- Establish the endowment fund; and
- Create a clear and consistent message about the needs and goals of the endowment fund.
The Dreamcatcher Committee is working with various Trinity stakeholders to capture the many goals our parish may have for the proposed Capital Campaign, as well as a new endowment.
Q: As we consider a capital campaign, how do our finances at Trinity look right now?
Matt: We ended 2018 with a $83K shortfall, $16K better than expected in the budget for the year. We spent $777K vs. our $784K budget and income was $693K vs. a budgeted number of $684K. We continue to borrow to help fund the deficit; our total indebtedness to the US Bank line of credit to $150K. The deficit and the borrowed funds are an intentional part of the growth strategy for Trinity as we continue to welcome and engage new parishioners at our church, and adequately support that growth with leadership staff. As we continue to grow, we will work to reduce our debt. A potential capital campaign could address this debt, depending on the results of the Dreamcatching phase.
The Vestry has approved a 2019 budget with a shortfall of approximately $92K. Expenses are budgeted at $815K and income is budgeted to be $723K. Budgeted expenses are up $39k over 2018.
Q: How does a capital campaign impact annual stewardship?
Matt: The word “stewardship” conveys both theological and Biblical meanings. In his book, Financial Meltdown in the Mainline, Loren Mead writes, “We are given the things of this world in trust from God and therefore are called upon to return a share to God.” In this discussion of stewardship, Mead cites a study that traces the use of this word among church leaders. Some 100 years ago, church leaders “latched onto the word ‘stewardship,’ trying to get church members to become steady, regular supporters of mission endeavors. Their intent was so they could make commitments and plans for the future.”
Endowment funds and planned giving programs are ways for a church to make commitments and plans for its future. They are to be understood in the context of a church’s overall stewardshipfor the financial support of its mission. This overall plan has several components, including:
- Annual budget campaign
- Periodic capital campaign
- Designated giving
- Endowment and ongoing planned giving program