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    Endowment Fund Charter

    Prepared by: North Indiana United Methodist Foundation, Inc.

(Legal Name of church, full address), (hereafter referred to as “________________ UMC,”

    “The Church” or “Church”) hereby creates a permanent Endowment Fund to be known as

    the “(Name of church) Endowment Fund.” (hereafter referred to as “Endowment Fund” or

    “Fund’) This document, upon execution, is intended to amend and replace any and all

    previous documents establishing an endowment fund for The Church.

A. PURPOSE

The primary purpose of this Endowment Fund is to provide a means for members and

    friends of The Church to make gifts and bequests to provide a permanent endowment of

    financial support and living memorials. Gifts to the Endowment Fund will be held in

    perpetuity, if not otherwise designated by the donor, with income to be used to further

    Christian ministry and mission. Income from the Endowment Fund shall be used to assist

    The Church in fulfilling its purposes in Christian ministry and mission. This includes support

    of ministries of (Name of the Church, city, state), of the North Indiana Conference of the

    United Methodist Church, ministries of the United Methodist Church nationally or

    internationally and any other Christian ministry or mission deemed appropriate by the

    Endowment Committee.

This Endowment Fund and resulting income is intended for purposes that are not a part of

    The local Churches’ established programs, which are funded, or should be funded, through the annual operating budget of the church and the regular giving of those attending. It is

    NOT intended that Endowment Fund income provide for local Church general operating

    expenses. It IS intended that the Church annual budgetary process, together with annual giving, shall support normal and customary Church activities. Endowment Fund income

    should only be used to support ministries beyond normal local Church activities or to

    provide temporary assistance in starting new ministries in the local church.

The Fund may accept both cash and non-cash gifts and bequests. Non-cash gifts may

    include corporate stock, mutual funds, bonds, bank deposits, real estate, precious gems and

    metals, and other items deemed acceptable by the Endowment Committee.

B. ACCOUNTS

Within this Endowment Fund, the following accounts are hereby established to enable the

    Church to have an effective ministry:

    Endowment Fund Charter

General Accounts

    1. Undesignated: This account will receive gifts to the Fund, which are not designated

    for a particular purpose or restricted in any way. Income from this account will be

    used to fund the ministries or missions selected by the Endowment Committee.

    2. Missions: Income from this account shall fund missionary support, work camps,

    advance specials, and missionary projects locally and beyond.

3. Evangelism/Outreach: Income from this account shall fund efforts to reach

    additional persons for Christ.

4. Youth: Income from this account will provide funds to increase participation by youth

    in worship, education, fellowship; expand services provided by the church for youth;

    and support development of Christian youth in other ways.

    5. Education: Income from this account is to be used for special educational or

    evangelism programs, camperships, scholarships, leadership training of workers, and

    special workshops or seminars.

    6. Scholarships: Income from this account shall be used to provide scholarship grants

    to students seeking post-secondary education. First preference will be given to

    students who have been an active part of the life of the congregation of The Church.

    Scholarship grants may be made to persons who have recently graduated from high

    school, or to persons that decide to seek further education later in life.

7. Christian Life Development Account: Income from this account will be used to

    further spiritual development of individuals and corporate Christian life. Ministries

    may include, but are not limited to: Evangelism, Youth, Education, Discipleship and

    Fellowship. (Note this account could be used in place of other more specific account

    samples listed.)

8. Music, Worship and Arts: Income from this account will be used to enhance the

    worship experience and may provide funds for musical instrument replacement or

    major repair, other instruments, music leadership, choirs, special programs and drama.

    9. Building: Income from this account will provide for capital improvements, major

    repairs, equipment, furnishings or decorations for any properties owned by the

    church.

    (NOTE: The above accounts are shown as examples only. Each church should select the

    accounts they deem most meaningful for them. We suggest 3 to 8 initial accounts. All

    churches should have an Undesignated Account.)

    Page 2 of 15

    Endowment Fund Charter

Other accounts may be established by action of the Endowment Committee or a Charge

    Conference. Such accounts may be established for specific projects, ministries or missions to

    enhance the total ministry of the Church.

There will be no minimum contribution required for gifts to accounts established by action of

    this Committee or a Charge Conference.

Donor Designated Accounts:

Other designated accounts may be established by individual donors who place specific

    designations or restrictions on their gift. However, such new designated accounts may only

    be established if the following criteria are met:

    1. The Endowment Committee agrees to accept the gift with the designations or

    restrictions proposed by the donor, and

    2. The Endowment Committee agrees to establish a new designated account to hold this

    designated or restricted gift, and

    3. The initial gift to the new designated account will be no less than $_______ (We

    suggest a minimum of $5,000.00).

There will be no minimum contribution required for additional gifts to accounts previously

    established by a donor.

Donors wishing to establish designated accounts of less than $_____________ (we suggest

    $5,000.00) will be encouraged to make their gift to one or more of the other existing accounts.

    Alternatively, it may be recommended that such gifts be placed in the Memorials Fund of the

    Church rather than in the Endowment Fund.

Principal and income of accounts created by action of individual donors will be used in

    accordance with the written directives provided by the donor at the time of making the gift.

    Such directives may not be changed at a later date by the donors or their family members.

All provisions of the Endowment Fund as to investment of funds, administration of funds, and

    limitation on use of distributions shall be applicable to both General Accounts and Donor

    Designated Accounts. All gifts made to the Fund shall be accepted subject to the terms and

    limitations set forth in this document.

Sub Accounts:

Funds cannot be designated to establish a sub-account within a previously established account,

    regardless of the amount of the proposed gift.

    Page 3 of 15

    Endowment Fund Charter

C. MANAGEMENT OF THE FUND

Responsibility for the management of the Endowment Fund shall be vested in the Endowment

    Committee, subject to the direction of the Charge Conference as prescribed in the Book of

    Discipline of the United Methodist Church.

D. ENDOWMENT FUND COMMITTEE

The Endowment Committee shall be composed of ______ members: ______ at-large and

    _______ ex-officio members.

    (NOTE: We recommend a committee of 6 to 12 persons. No more than one-half the committee should be ex-officio members. Having an even number of committee members, and

    the pastor not having a vote leaves an odd number of voting members, which is desirable.)

At-Large Members: The at-large members will be nominated by the Church Nominations

    Committee and elected by the Charge Conference. The Nominations Committee shall seek

    at-large members among those members of the Church who have a strong interest in

    endowments, or expertise in legal, financial, public relations, or other services valuable to the

    committee. Ideally, members serving on the committee are strong financial supporters of the

    Church. Committee members should also have an understanding of the Church Vision and

    Mission.

    (NOTE: persons who have, or may appear to have, a conflict of interest should not serve on the committee. Committee members should not use their position on the Endowment

    Committee as a means to promote a product or service that is normally sold in the course of

    their livelihood (or of their spouse or other family member). If members of the congregation

    observe or perceive such conflict of interest, they will likely avoid contacting the committee

    or making a gift.)

Each ad-large member will be elected for a five-year term. There will be ___ members

    selected for each five-year term. Initially, members will be elected to 1, 2, 3, 4 and 5-year

    terms to establish the five-year rotation. At-large members may succeed themselves to a

    maximum of ____ consecutive full five year terms. Filling a vacancy for a partial term is not

    included in this limit.

    (NOTE: most church committees rotate after three years. An Endowment Committee needs more consistency of membership than most church committees do. Therefore, we recommend

    five-year terms and that members are allowed to serve more than one consecutive term. Some

    turnover of membership on the committee is needed. However, if the turnover is too frequent

    it will severely damage the success of the committee and the ability to attract gifts. There is

    much to be learned in developing a successful endowment program. Too much committee

    turnover will result in constant loss of that knowledge.)

    Page 4 of 15

    Endowment Fund Charter

The chairperson of the Endowment Committee is nominated by the Nominations Committee

    and elected in the same manner as the other at-large Endowment Committee members. This

    should be a person who has a strong interest in helping the Endowment fund grow and

    succeed.

Nominations to fill vacancies will be made by the Nominations Committee for Election by the

    Administrative Board or Charge Conference.

Ex-officio Members: There will be ___ ex officio members with voting privileges and one

    without voting privileges. The ___ with voting privileges are the chairpersons (or their

    designate) of the following committees _____________________, __________________,

    ________________________, ______________________, and ___________________.

    (NOTE: you may wish to consider persons from Administrative Council, Board of Trustees, Finance Committee, Memorials Committee or others.) The Senior Pastor shall serve as an ex

    officio member without voting privileges.

Membership of the committee may be adjusted from time to time to maintain consistency with

    the rules of the Book of Discipline of the United Methodist Church. Such changes may be

    made as an action of the Charge Conference.

    Voting: Unless otherwise indicated in this document, any action taken by the Endowment Committee must be approved by a majority of the members attending a committee meeting so

    long as a quorum is present. A quorum shall be defined as more than 50% of the members

    eligible to vote.

    Officers: The Endowment Committee shall elect a Secretary, a Treasurer and such other officers, as it deems appropriate or necessary.

    Secretary: The Endowment Committee may invite an additional church member to serve as Secretary of the Endowment Committee without voting privileges.

Subcommittees: The Endowment Committee shall appoint subcommittees, as it deems

    appropriate or necessary.

E. POWERS AND DUTIES OF THE ENDOWMENT COMMITTEE

The Endowment Committee shall have the following powers and duties pertaining to the

    Endowment Fund, and such other powers and duties as may necessarily be required to carry

    out the terms and conditions of the Endowment Fund.

    1. To educate church members and other potential donors on planned giving and

    promote giving to the Fund.

    Page 5 of 15

    Endowment Fund Charter

2. To accept or reject any designated or restricted gift, bequest or devise. Any

    unrestricted gift of $__________ or more received by the Church from an inheritance,

    trust or estate that does not designate the Endowment Fund as the receipt will be

    presumed to have been intended for the Endowment Fund. (NOTE: coordinate

    amount in this paragraph with amount in section R.)

    If a gift is received by the Endowment Fund without designation or restriction, it

     will be placed in the Undesignated Account.

3. To determine the distribution of income from all General Accounts.

4. To determine the proper distribution of income from all Donor Designated Accounts

    in accordance with the written instructions of the donor and otherwise follow

    directions of the donor in the use of income or principal.

5. To manage and administer the Fund, which shall include:

    a. proper acknowledgment of gifts;

    b. keeping a record of donors and gifts;

    c. distributing income;

    d. incurring and paying ordinary and necessary expenses of managing the Fund;

    e. paying of local state and federal taxes and fees, where applicable;

    f. recording receipts and expenditures from the Fund;

    g. maintaining a record of assets of the Fund.

6. To invest all monies of the Fund. (See Section F)

7. To have the Fund audited annually by the Church auditor, and/or any other entity as

    determined necessary by the Endowment Committee and/or the Charge Conference.

8. To present an annual written report to the Charge Conference and Administrative

    Council. The congregation of the Church should also be informed of Endowment

    Fund activities through use of the newsletter or other mailing and presentation to the

    congregation.

9. To select the definition of “income” to be used by the Fund (trust law or corporate law

    definition.)

10. To determine an appropriate means of offsetting the effects of inflation on Fund

    assets.

11. To define “Spending Policies” to use in making distributions of income.

12. To develop other policies or by-laws to guide the day-to-day management of the

    Fund.

    F. INVESTMENT OF FUNDS

    Page 6 of 15

    Endowment Fund Charter

The Endowment Committee shall make a conscious effort to invest in institutions,

    corporations, companies, or funds whose operations are not detrimental to, or that make a

    positive contribution toward the realization of the goals of the Social Principles of the United

    Methodist Church, in accordance with the Book of Discipline as revised from time to time.

As a matter of good Christian and corporate stewardship, the principal of gifts, devises, and

    bequests received by the Endowment Fund shall be invested through the North Indiana United

    Methodist Foundation, Inc., or other financial institution, to be held in trust for management

    and investment purposes. The assets of the Endowment Fund shall only be invested through

    entities that allow continued ownership of the assets by the Endowment Fund.

Investment objectives of the Endowment Fund shall include:

    1. Conservation of principal for the effective maintenance of purchasing power.

    2. Growth of principal and income to offset cost of living increases.

    3. Investment of assets in institutions, companies, corporations, or funds which make a

    positive contribution toward the realization of the goals outlined in the Social

    Principles of the United Methodist Church.

Any transfer of the Endowment Fund assets for investment with another institution, other

    than North Indiana United Methodist Foundation, Inc., must be approved by a majority vote

    of the Charge Conference, at which a quorum is present, upon recommendation of the

    Committee and the Administrative Board of said church.

    (NOTE: THE BOOK OF DISCIPLINE - 2004, Paragraph 2533.1 states in part, ?Consideration shall be given to the placement of funds with the conference or area United

    Methodist foundation, or local church foundation, for administration and investment.” Special

    attention also needs to be given to Paragraph 2532.5, which states in part, ?The Board of

    Trustees [Permanent Endowment Fund Committee when this committee has been authorized]

    is encouraged to invest in institutions, companies, corporations, or funds that make a positive

    contribution toward the realization of the goals outlined in the Social Principles of our

    Church.The investment services of your Conference United Methodist Foundation can help

    assure professional management of the Fund’s assets. Your Conference United Methodist Foundation offers the possibility of minimizing investment expense and risk while maximizing

    investment return.)

    Page 7 of 15

    Endowment Fund Charter

G. DISTRIBUTION OF INCOME

It is the intent to preserve principal amounts over the years while using the income generated

    over the years to provide funds for distribution. It is anticipated that over the years the total

    rate of return will exceed the expected long-term inflation rate and thus allow for the

    availability of income for distribution. In a separate policy document, the Endowment

    Committee will adopt a definition of income and spending policies to accomplish the above

    stated intentions.

Option A -

Income earned by the Fund shall be distributed as approved by the Endowment Committee.

    The following matters, terms and conditions, will apply or will serve as a guide for distribution

    of income: (Note: We recommend this option.)

Option B -

Income earned by the Fund shall be distributed as may be recommended by the Endowment

    Committee and approved by the Charge Conference. The following matters, terms and

    conditions, will apply or will serve as a guide for distribution of income:

    (End of Option B)

    1. If a gift is received without designation or restriction, it will be placed in the

    Undesignated Account. Income from the Undesignated Account will be distributed by

    action of the Endowment Committee.

    2. Income from all other General Accounts (established by this Charter, the Endowment

    Committee or a Charge Conference) will be distributed by action of the Endowment

    Committee in accordance with the guidelines for those accounts.

    3. If a gift is used to establish a Donor Designated Account, the income and/or principal

    will be distributed according to the written directions provided by the donor at the

    time of the gift.

    4. If income in a particular account remains unused at the end of the calendar year, such

    income may be held in that account for use in a subsequent year. However, it is not

    within the purposes of the Endowment Fund to accumulate income as a means of

    enhancing the size of the Fund other than to offset the effects of inflation on assets of

    the Fund. The Endowment Committee, at its discretion, may reclassify unspent

    income as additions to principal. Thereafter, such accumulated income is no longer

    available for distribution.

    Page 8 of 15

    Endowment Fund Charter

    5. It is not intended that Endowment Fund income provide for local Church general

    operating expenses. It is intended that the Church annual budgetary process, together

    with annual giving, shall support normal and customary Church activities. Endowment

    Fund income should only be used to support ministries beyond normal local Church

    activities or to provide temporary assistance in starting new ministries in the local

    church.

    6. Income shall not be used to subsidize the cost of a new program, ministry or staff

    position for more than three years.

H. LIMITATION ON USE OF PRINCIPAL

The objectives of the Endowment Fund are to conserve principal and make use of only the

    distributions determined by the Committee.

Undesignated Account principal may be withdrawn only in extreme and overwhelming

    circumstances, bordering on the survival of The Church. Any withdrawal of principal must be

    approved by a three fourths (3/4) vote of the Charge Conference of (Name of Church) at

    which a quorum is present. Principal shall not be withdrawn from any other account.

I. BORROWING FROM THE FUND

Option A-

Borrowing from the Endowment Fund is not permitted for any reason.

Option B-

Endowment Funds may not be borrowed by the Church except in unusual circumstances for

    major Church projects. However, such borrowing shall not to exceed 50% of the total

    Undesignated Account principal. In such an event, borrowing must be approved by a 3/4 vote

    of all members of the Endowment Committee and by a 3/4 vote of the Charge Conference

    members voting, subject to the rules of the Book of Discipline of the United Methodist

    Church. The terms and conditions of any such loan would be those as set by the Endowment

    Committee and would be generally comparable to terms and conditions available through

    commercial lending institutions.

    Page 9 of 15

    Endowment Fund Charter

J. PLEDGING FUND ASSETS

Option A-

Endowment Fund assets shall not be pledged as collateral for any reason.

Option B-

    Endowment Fund assets may not be pledged as collateral to secure Church obligation except in unusual circumstances for major church projects. However, by a 3/4 vote of all the members of the Endowment Committee and by a 3/4 vote of the Charge Conference members voting, Undesignated Account Principal may be pledged as collateral to secure Church obligations to finance said major projects under unusual circumstances. The terms and conditions of any such pledging of security would be those as set by the Endowment Committee and would be generally comparable to terms and conditions available through commercial lending institutions. In no event may the Endowment Committee or the Charge Conference, pledge more than 50% of the Undesignated Account assets as collateral for such Church obligations.

K. TOTAL ENCUMBERANCE

    If there is borrowing by the Church from the Fund, as authorized in Section I. hereof, the combined total of borrowing and pledging shall not exceed 50% of the Undesignated Account principal.

L. MERGER OR CONSOLIDATION OF THE CHURCH

    If at any time, The Church is lawfully merged or consolidated with any other church; all the provisions hereof in respect to the Endowment Fund shall be deemed to have been made in behalf of the merged or consolidated Church. Said Church shall be entitled to receive all the benefits of said Endowment Fund, and shall be obligated to administer the same in all respects and in accordance with the terms thereof.

    Page 10 of 15

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