Endowment Sample Policy

Intent

This policy statement is intended to set guidelines for the administration of the [ABC Ministry] Endowment, which has been established in accordance with the Corporate Bylaws. This document is not intended to conflict with the bylaws, which supersede this policy. Additionally, this policy is intended to oversee the treatment of endowments, without conflicting with a giver’s gift restrictions.

Governance

The Endowment Committee, established by the Corporate Bylaws and staff members shall administer the ongoing activities of the Endowment. The Committee shall meet at least quarterly, keep a record of proceedings, and present minutes to the Finance Committee and the Board at their next meeting.

Funding

Funds from many sources should be encouraged and solicited to meet the long-term needs of [ABC Ministry] through the Endowment. However, the Endowment Committee shall review all donations before acceptance, and can decline any gifts for whatever reason. Donations to the Endowment shall be considered unrestricted as to their end use, unless given with a purpose or time restriction by the givers. The Committee shall ensure proper records and controls are maintained to comply with givers’ specific conditions, and also that records are maintained of the “initial contribution” amount (defined as amounts contributed by givers directly to the Endowment, plus the "quasi endowment" originally designated by Board action).

Unrestricted gifts from estates and planned giving sources (such as charitable remainder trusts) will go into the Endowment, rather than to operating funds. Such monies, however, will not be added to the Endowment until a financial review near the end of each fiscal year determines that the new funds are not needed for operations.

Expenditures of Endowment Funds

The basic concept of endowments is to provide funding for long-term needs. The funds contributed by givers are not spent immediately, but are invested to provide a stream of earnings which can then be used (or compounded). In this light, the Endowment Committee and the Board are encouraged to spend as conservatively as possible for the first several years of the Endowment. With staff input on corporate financial needs, the Committee will recommend near the end of the year to the Board if an amount should be transferred from the Endowment for general corporate purposes in the forthcoming year. Generally, it will be calculated as a percent of the net assets of the fund at current values.

  • Expending any amount of more than X% of the net value of the Endowment, calculated as of January 1 of the current fiscal year, will require a Finance Committee recommendation. An affirmative vote of 75% of the entire Board of Trustees then serving is required.
  • Expending any portion of the “initial contribution” to the Endowment (as defined above) will require a Finance Committee recommendation and the affirmative vote of 75% of the entire Board of Trustees then serving.

The Committee also shall make decisions on spending from restricted gifts and funds, to the extent that givers’ restrictions allow leeway.

Investments

Investing the funds of the Endowment shall be done in accordance with the separate Investment Policy.
 

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This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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