Endowment Gifts: Questions & Answers
In an effort to enhance understanding of the endowment funds of Ingomar Church, a member of our Endowment Committee interviewed Chub Dietz, Director of Administration. Following is the first segment of that interview.
Q: When people make an endowment gift to the Church, what happens to the contribution?
A: A long term endowment gift is intended to produce income year after year. The gift is invested for the long term with the United Methodist Foundation of Western PA, which was organized by the United Methodist Western Pennsylvania Conference to manage funds for churches, agencies and the Conference. The Foundation combines our money with funds from other churches, so that all the money can be invested professionally and under the Social Principles of the Denomination. The gift itself (i.e. the “principal”) is generally not accessible to the church without proper approval, usually a Charge Conference decision of the congregation. Only the earnings on the gift are distributed to Ingomar Church to be used.
Q: Does that mean that the gift has left Ingomar Church?
A: The gift, when received by the Foundation, is invested for us. The gift stays on balance sheet of Ingomar Church as “permanently restricted funds” and the Foundation provides quarterly statements to Ingomar Church reflecting its current value. From these statements, our account balances are updated to match what the Foundation has indicated is the current value in our invested funds.
Q: Then how does the Church get the benefit of those funds?
A: The United Methodist Foundation maintains separate accounts for our funds, as directed by Ingomar Church. Then, every quarter (or at the end of the year, depending on the size of the fund) we receive checks for the earnings from those accounts. The checks come with a statement showing the Ingomar account, which generated the interest. When checks arrive, they are deposited into our checking account at First National Bank and I record the amounts as “investment income” which is used to help cover expenses for the earmarked purposes.
Q: How much does Ingomar get each year?
A: The Foundation has a formula for determining the amount to be distributed to each depositor, including Ingomar Church This formula is very similar to ones used by universities and other non-profits to extract some growth and current income for the desired purposes. The distribution received in 2014 was around 4.4% of the principal amount of each account, or fund for Ingomar Church.
Q: What do you mean by “each fund”?
A: Right now, there are 3 Ingomar funds at the Foundation:
- An Ingomar building endowment – holding gifts that the donors dedicated to keeping up our physical plant.
- An Ingomar operations endowment – combining all gifts given to assist the Church’s general operations and ministry.
- A mission endowment – holding all gifts to assist our mission outreach programs.
There also is a library endowment that is not at the Foundation. These funds are held and invested by Lincoln Financial Advisors, but the same process applies: the principal is not accessed without Charge Conference approval and earnings from the principal are used to cover expenses incurred for our library in the Worship and Education Center.
Q: What would you say is the advantage of placing permanently restricted assets with the United Methodist Foundation?
A: Endowment funds invested with the United Methodist Foundation, give individuals and families the opportunity to continue to make a difference in the lives of children, adults and those in need, long after their time here on earth is complete. The ministry of Ingomar Church has been thriving for over 175 years and it is my hope and prayer that it will continue for another couple of centuries (or longer). I and everyone reading this will probably not be here that long to see the lives that are changed through the work of the pastors, ministry leaders, volunteers, missionaries, and others who will continue to carry on the work of Christ…but we can help to give them the financial resources that will enable them to continue to make a difference.