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.
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
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.
Within this Endowment Fund, the following accounts are hereby established to enable the
Church to have an effective ministry:
Endowment Fund Charter
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
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
(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.)
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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.
Funds cannot be designated to establish a sub-account within a previously established account,
regardless of the amount of the proposed gift.
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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
(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.)
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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
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.
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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
9. To select the definition of “income” to be used by the Fund (trust law or corporate law
10. To determine an appropriate means of offsetting the effects of inflation on Fund
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
F. INVESTMENT OF FUNDS
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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
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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
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.
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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
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
Borrowing from the Endowment Fund is not permitted for any reason.
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.
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Endowment Fund Charter
J. PLEDGING FUND ASSETS
Endowment Fund assets shall not be pledged as collateral for any reason.
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.
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