From "Rainy Day" to "Savings" to "Endowment"—We Need All Three

by Kirk Walden, Advancement SpecialistSavings

Making the case for an endowment begins with not only knowing what an endowment is, but also understanding what it is not.

For instance, an endowment is not our Rainy Day Fund. Every ministry needs to have some cash on hand for times when giving slows, so that the work goes on and staff is paid. Experts tell us that having 3-6 months of cash on hand—just in case—is a good number.

Also, our endowment is not our savings fund for a future project. If our board of directors is wanting to set aside funds for a new initiative, a building fund, or to invest in a new staff member, this would be separate from an endowment.

With an endowment, we build a principle amount and either withdraw interest earned (some or all—this can be a board decision made annually), or a specific amount (Ex.: "We will withdraw $5,000 per year for budget purposes, unless endowment gifts are under the withdrawal amount.") on a pre-determined basis.

We can be flexible with endowment withdrawals, based on need. Or, we can let the endowment grow for a period of time, with no withdrawals.

Overall, our goal with our endowment is to continue to grow its principle so that more and more of our basic ministry needs are met with these funds.

Endowments can be general (for the overall budget) or specific (an endowment for our medical arm, for instance). We can also have multiple endowments. As an example, should a donor family want clients to receive Bibles, an endowment can be created (a minimum amount for an endowment should be established by the ministry; perhaps $10,000 is a starting point).

With multiple endowments, a donor may ask, "How can I give toward your abstinence program?" and we would be able to respond, "We can direct a portion of your gift toward today's need, and set aside a percentage of your gift in our Abstinence Initiative Endowment." This allows us to be more creative in building our resources; but more important, allows donors to be more involved in where their gifts go and how they are used.

Every ministry needs its Rainy Day Fund, and when new ideas arise, Capital Funds can get us started toward funding these ideas. In addition however, Endowments make sense and as we will see elsewhere in this issue, help us raise more funding.

Click here for more of this month's Advancement Trends in the Life Community.