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Three Tips For Building An Endowed Church Fund

09.06.2009 · Posted in Home and Garden Articles

Most churches rely upon tithes and contributions from their members to pay for their ministries. Most churches also pay for capital improvements and new building in the same way. Churches that rely only on contributions to build their church fund are missing out on a major opportunity. Most of these churches do not understand that they only need to know three tips that will help them build a church fund. nnAll 88 keys of the Phoenix Symphonys Steinway piano, for example, were endowed. The endowment was sold for $5,000 per key. At Penn State, there is an endowment for every position on the football team. nnIf your church is not creating an endowed church fund for major goals, maybe they should be. nnI’ve been attending a different church for the past few months. The church recently marked its 50th anniversary. It is a small church that ended 2008 with a $33,000 deficit. I was surprised to learn that after fifty years this church has nothing in earmarked or other church funds. There is no endowed church fund. nnBecause of the recent and current economic climate most churches saw reduced giving during the fourth quarter of 2008 and the first quarter of 2009. In an article released in December of 2008, the Barna Group predicted giving to churches to be about $3 billion to $5 billion lower than anticipated in the fourth quarter of 2008. For congregations that do have money in a church fund, the balance is likely to fall until the economy turns around. nnBut there are a number of churches that have done a very good job of building various church funds. I would point to “Financing American Religion” by Mark Chaves and Sharon L. Miller. Yet most churches could do much better in creating church funds for general or specific purposes. Here, in my opinion, are the three steps churches should take to build an endowed church fund. nn1. Focus on the big givers.nnThere is something called an 80/20 rule which is applied to most things. This says that 80% of the results are produced by 20% of the people or the effort. I suspect you have heard this rule applied to something in your lifetime. But when it comes to building church funds, it is more like 98/2 ” 98% of the funding comes from only 2% of the congregation. If you need to raise money for an endowed church fund, concentrate on the 2% of the congregation who are the big givers. nn2. Help donors solve a problem. nn2. Show potential donors how their church fund gift could solve their own financial problem. nnI am convinced that all giving to church funds is faith-based and motivated by altruism. But I also know that large gifts are often “sacrificial giving” for people. If you can show a potential donor how to solve their own financial needs or problems with a gift to the church, your fundraising efforts will be more successful. nnA very large number of problems that can be solved with a sizeable donation to a church fund are related to issues of taxation. For example, a church member might need to know how to sell a business without paying a capital gains tax. Another member might want to know how to pass wealth to the next generation without paying an inheritance tax of up to 50% of the inheritance. I know most people don’t make contributions to church funds for tax breaks. But consider that showing someone who is interested in the church’s ministry how to make a significant gift to the church and solve a financial problem at the same time could increase your success in getting the gift. It might even mean the church will get a larger gift. nn3. Provide case study information.nnI am convinced that many people who could be major donors to church funds simply don’t know about the planning approaches allowed by law that can encourage a major gift to the church fund. nnI have spoken with a surprising number of business owners over my 39 years in financial and estate planning who did not even know they had a problem. They had no idea how much of the business or of their wealth could be lost to taxes. Fundraisers also seem to have missed out on similar information. nnIf you will provide explanations of the laws and examples of how others have solved specific problems through church fund endowments, I am convinced that people will easily see how their financial and tax situation could also be improved. This is the first step in starting a conversation about the possibility of making a major contribution to a church fund that will pay for the churchs ministries with the interest on the investments.

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