Creating Endowments for Congregations: Pros and Cons (2022)

Creating Endowments for Congregations: Pros and Cons

Robert W. Bohl, Pastor
Village Presbyterian Church
6641 Mission Road
Prairie Village, Kansas 66208
(913) 262-4200

These thoughts have developed over the last thirty-five years of my ministry in thinking about and developing an endowment in the congregation where I have served as a pastor. The oldest and most widely used reason for not creating an endowment is that endowments stifle creative stewardship and ultimately kill the endowed institution. So we are still watching for Harvard University to die! Let me list the other reasons why churches have failed to build and endowment.


1. Endowments are for large congregations. Since most congregations are small to medium size they have no members who have the financial capacity to help create an endowment, so church leaders think. The assumption is that only large churches can have endowments because they alone have people who can give bequests.

The stewardship studies of congregations reveal that in every congregation with forty giving units, one in that forty has the capacity to give as much as the other thirty-nine combined. Secondly, since death is still universal, and since we all die with something tangible we leave to others, the church supported in our life time could be supported in our last Will and Testament.

2. Endowments diminish the annual stewardship giving of members. Many pastors and church leaders live with a financial survival mentality and refuse to ask for special gifts (items not budgeted) or for bequests because they are convinced this will discourage the annual giving from members.

Video: What is an Endowment?

When people believe enough to endow the future of a church's mission and ministry, it is most unlikely that they will refuse to support it during their lifetime. The reality is the more a person gives annually, the more likely they are to respond to a request for a bequest.

3. Endowments are difficult to manage and cause conflict in congregations. The most prevalent notion in most congregations is they have no one to manage to financial resources of an endowment (probably not true). Endowments create conflicts among members who disagree upon the issue of the income from the investments.

The Presbyterian Foundation (U.S.A.) Began in 1799 and now manages 1.6 billion dollars. The most creative endowments are those in which the donor designates where the income is to go, thus alleviating the decision at the local church.

4. Endowments discourage the emphasis upon mission. The leadership in most congregations seem to believe their first priority is to preserve the institution (charity begins at home and belongs there). Therefore, to invite people to give to an endowment will find most of them designating their bequest to some mission outside the local church or the local community.

The experience of hundreds and hundreds of congregations with endowments reveal that the vast majority of them favor the local church with investment income giving to maintenance, internal church programs and local mission projects.

5. Endowments make it possible for some people to believe their annual financial gifts to the church are unimportant. Church leaders believe that people only give when they are aware that the church is in a financial crisis, thus endowments create the attitude that the church does not need everyone to give annually.

There is no such thing as a proxy stewardship. What an individual gives or does not give to the mission and ministry of the church has nothing to do with what the endowment supports. What an individual gives is the way that person expresses gratitude to God and no one can do that for another person.

Video: The Endowment Model

6. Endowments confuse the annual budget process. Churches are inclined to use the endowment income to balance the budget, to lessen the annual asking of increased pledge giving and to make the church's giving look better than it is. So the annual question is how much can we expect from the endowment and since we never know, it is impossible to develop an accurate budget.

Endowment income should all be designated and never made a part of the annual budget. Items designated mean they do not need to be included in the annual budget which is always ultimately a mistake as people grow to rely upon the endowment to support the church.


1. Endowments make it possible for people to give beyond their lifetime. Endowments are based on trust. Donors trust the church to honor a person's bequest, to manage the principal wisely and to disperse the income on an agreed upon formula. When a person has given all throughout that person's life and the church does not make a provision for that person to continue to give after death, it is an insult to that person. It says to that person we don't care what you have or what you have given, or what your faith is and your interests are, we simply don't want to help you.

In most bequests, if they have been properly encouraged, the bequest can be larger than a person's giving throughout that person's lifetime. Example: Presbyterians on average give about $575 annually. If a person gives for 50 years that amounts to $28,750. Most bequests will exceed that if the church leadership makes know the designated giving opportunities and encourages a person to leave a tithe of that person's estate.

2. Endowments are not primarily a financial issue, they are a theological issue. When a person creates an endowment gift to the church it makes it possible for that person to perpetuate that person's faith and trust in God. Giving beyond a person's death declares to the generations to come that person's faith in God. Endowment gifts are theological statements which prove a person's belief that we are never ultimately proprietors, owners, we are always only stewards, lifetime guardians entrusted by God to use wisely what God has placed in our hands to use. For this reason, a person's bequests to the church is the final expression of the magnitude of that person's faith.

Faith in God is not only an earthly issue, it is also an eternal issue.

Video: What is an Endowment?

3. Endowments create new possibilities for mission and ministry. Most churches are limited in the annual budget as to their mission interest and the variety of their ministries. When bequests are received, which fund what was traditionally in the annual budget, it creates additional budget monies for new projects and programs. Churches that refuse to develop creative endowment opportunities should not have an endowment.

The development of a wish list for mission and program endowments is the first place to begin. Seldom do people give undesignated large bequests. The gifts church leaders give to potential donors is a menu of opportunities for designated giving.

4. Endowments are based on trust. Church leaders who wish to create an endowment and endowment giving opportunities need to have in place investment policies including the investment managers and to have determined the spending formula. The endowment policy should have in place a designated formula for bequests that are received which are not designated. An example might be 50% for mission programs and 50% for internal church programs such as music ministry, children, youth, adult ministries, maintenance endowment, insurance premium endowment, furniture replacement, organ and music instrument maintenance, etc.

People give more when their gift can be designated.

5. Endowments perpetuate essential ministries and make possible a larger understanding of the meaning of stewardship. Since annual giving has declined for the last sixty years (when you factor in inflation and the increase in annual salaries) the temptation is to retreat and withdraw support of worthy ministries. Endowments ask the ultimate question: What values and ministries do I hope will continue after my lifetime on earth? Most people need help when doing value clarification, so one place to begin is to encourage people to leave a bequest which will endow their annual pledge. Total stewardship includes the use of a person's annual income, but it also involves the ultimate designation of accumulated assets (those things we can't take with us when we die and therefore we have a stewardship obligation to direct the disposal of them according to our wishes. If we don't do that someone will do it for us.)

Everyone wants to be remembered for accomplishing something and endomwment bequests make it possible for what that person believes in to live on far beyond that person's span of life.

6. Endowments make it possible for everyone to give generously. The bequest a person gives to the church is never to be measured by the amount of the gift but the percentage of that person's potential to give. Far too many in the church today fail to realize just how wealthy they are in comparison to most in the rest of the world. All bequests should be cultivated out of a need to express gratitude and never from the perspective of creating guilt when a person gives a small bequest or no bequest.

Video: How Endowments Work

Jesus always measured a person's gratitude by how that person shared their possessions, i.e. the widow's mite.

7. Endowments require creative leadership. It is a major fallacy of most church leaders attempting to create an endowment to think only of bequests. Today there is more wealth in America than ever before in all of our history. In order to preserve wealth and to avoid huge estate taxes there are many giving instruments that can be used: charitable gift annuities, charitable lead trusts, charitable remainder trusts, charitable giving through life insurance, the giving of highly appreciated assets (stock and real estate), the donation of deferred tax programs: IRA's, 401K plans, cash value in life insurance policies.

Financial planners, Presbyterian Foundation Representatives, and tax attorneys can all be used to help with life gift planning of assets.


Most churches do not have endowments because of an appalling lack of leadership in the local church. It usually is because the concentration has been upon the negatives of creating an endowment. Because we live in a different climate than fifty years ago, because the offering plate passed at worship can no longer adequately support the mission and ministry of the church, because we have enormous wealth potentials, we do a disservice in congregations when we deny them the opportunity to give to an endowment in the church of which they are members.

The church today has an unprecedented financial opportunity, so for church leaders, the challenge is to be leadership stewards in helping people create a life legacy which will assure the future financial viability of the church.

Please note that these are all samples and should not be used without careful review.

Video: Make the Most of Your Money Using This Yale Endowment Strategy

This is not intended to be legal, financial or accounting guidance but as a guide for the church to write its own material according to your local needs and restrictions. Please refer to your own accountant or attorney for accounting and specific legal counsel.


(Michael Veltman)
2. How do Endowment Funds Work
(Planned Giving & Trust Services)
3. How do endowments work?
(Vancouver Foundation)
4. How an Endowment can Strengthen your Catholic Institution
(Catholic Investment Services )
5. Innovative Endowments: Unique Endowments for the Non Profits
(Innovative Endowments)

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