Slaying the dragon

Since we’re all hearing a lot about money and anxiety these days, I thought I’d keep on the subject and talk about church endowments. (You know, it’s interesting how individual money anxieties can be played out on in our congregations. But that’s another post for another day….)

Our church has an endowment. And often I hear, “Of course your church can feed the homeless, build a clinic in Ethiopia, run on wind power, (fill in the blank). You have an endowment.”

Well, that’s true… in a sense…. The endowment does help, but we were feeding the homeless before we had a chunk of change in the bank. And I’ve seen many, many congregations wither and die, while sitting on a huge pile of money.

So, I’m wondering, what’s the healthiest way for church leadership to handle an endowment? If you asked me five years ago, I probably would have said, “Completely and utterly ignore it. An endowment is not worth the fight. It keeps the church from reaching out, it keeps them from needing people, and it makes their mission all about protecting investments.”

I probably would have told you that an endowment is more likely to kill a church than to revitalize it. I would have compared most churches with an endowment to a greedy dragon who breathed fire on anyone who tried to touch its gold.

As you can see… I’ve had bad experiences….

But, now I’m happy that we have one. I don’t really live under that anxiety, that feeling that I’m going to lose my job every time someone moves away or dies (which was a very real feeling as I pastored a small church). And we keep the money working, even in times of economic crisis. I could go through a laundry list of what we’ve done with it, but I’ll just sum it up by saying that in the last fifteen years, we have done a whole lot of mission work and planted two churches (one succeeded, one didn’t).

Here’s what we do. We have a draw, a set percentage of money that we take from the endowment each year, based on the endowment’s worth from the last 3 years. A conservative draw is 4-6%. We draw a bit more than that.

With a set percentage, you can plan your church budget, with a realistic number. And, you can keep the endowment working during lean years and fat years.

Another thing we do is talk about it. Have you ever seen one of those churches where no one knows about the endowment? All the statements are hiding under some treasurer’s mattress somewhere. And the church leadership says thing like, “If they knew we had money, they would stop giving.”

We talk about it. We tell people about it during new member classes, and have detailed slide shows during annual meetings. I think the endowment’s even on our website history. Everyone knows it’s there, and that it’s being used.

We even fight about it sometimes. There’s always a healthy discussion gong on about stewardship, long-term goals, and mission. When people have serious concerns about the endowment (whether our draw is too high, whether it should grow with inflation, whether we should invest some of it into pastor housing, etc.), then the person is invited to present their concerns to the church board.

An interesting things to note: whether a church has $50,000 or 5,000,000, the fights are still the same. Especially when it come to whether or not to spend the principal. I have to say… Presbyterians have the tendency to hold on to that principal no matter what. Which is sad, because when we have a load of dying churches filled with dying members, the principal is going to keep growing. And yet, we act like we’re holding on to the last quarter on earth.

The vitality of a congregation, and a denomination, depends much more on generous people who are willing to give of their whole lives than what happens to that number on the bottom line.

So what have you learned about church and money?

Photo’s by inkyfingerz


9 thoughts on “Slaying the dragon

  1. We use our endowment as a means of obtaining a line of credit at the bank. That way, when we hit the summer slump, the bank will help us pay salaries. Funny thing though, this year we haven’t had to use it at all…

  2. I watched a huge downtown church with a huge endowment die. The old timers wanted the money to stay, the church needed repair, no-one was coming and over $1M went to the conference. I like your idea on what to do with it. Mission is not about sending money but doing the work of the kingdom.

  3. Thanks for sharing your thoughts! As a new pastor at a large church, I’m just starting to think through these issues. I forwarded your link to the Foundation Board and Stewardship committee as we think about transparency.

  4. I agree with 90% of what you say, but the impression left at the end of the article can be misleading. I belong to a small congregation with a small endowment. I do not know what you mean by a 4-6% draw. We take 100% of the income each year for special ministries. So the capital does not grow unless someone contributes to it. The impression you leave at the end harks back to your statement about your former opinion that people will not give when there is an endowment. Our present pastor is of this opinion and is lobbying hard to spend the endowment capital — so that we can live with his “champagne” budget on our “beer” budget income. If he read your article he would say, “We cannot hold onto the endowment when we are dying and have dying members — spend it!” Two problems: 1. We are not dying at present. 2. Spending our endowment will carry us for three years only. After that our “champagne” tastes will kill us and close our doors for sure. Your ending needs some nuance.

  5. Good article. I’d like to read more and hear what others are doing. Our church as a roughly $20mil endowment. We take 5% of the 20 quarter rolling average into the operating budget each year. Some on the Investment Committee think 5% may be a little high over the long run. Other think it’s fine at 5%. Our pledges just about match the $1mil that is kicked off from the endowment each year. The size of the endowment and the income from it do not seem to negatively effect our pledge income. We use the endowment income for general operating expenses, but we are able to give about $250k in grants to non-profit agencies that need our help. I think when you can identify specific needs that are being met with the income from an endowment, you reduce the likelihood that people will stop giving to the operating budget.

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