Endowment

Q. What are the proposed costs?

The church leaders want to increase the endowment by $2 million, from over $6million to $8.5 million.

Q. Why do we need to grow the endowment? What is the purpose of it?

Third Church's Endowment Fund is currently over $6 million. Each year, we withdraw "imputed income" (defined below) to augment our operating income. In 2007, the withdrawal was $380,204 or 26% of the annual budget. For many years, the withdrawal rate was 8%, and higher in the early 2000s to close budget shortages. In 2005, concerned that Third Church exceeded the accepted endowment withdrawals for churches and educational institutions of 5%, the Trustees began a 1/4% rate reduction with a target of 7% in 2008. Many think this is still too high.

Q. Can I earmark my gift for a certain part of this campaign?

Yes, you may designate where your gift should be applied. If you are excited about a certain part of this project—the organ, Habitat for Humanity, the endowment—you may specify that your gift be applied to that project. However, please be mindful of the fact that much of this project is necessary infrastructure renovation, i.e., necessary, yet routine, repairs and maintenance of the facilities.

Q. Will there be public recognition for gifts to the campaign?

All who contribute to the campaign, no matter the amount, will be recognized with a written acknowledgement from campaign leadership, as well as with a published list of contributors at the end of the campaign. Beyond this, those donors who have made a major gift will be recognized. See recognition opportunities on page 17 in Faith for the Future to see the range of possibilities.

Q. What if I can't donate much?

All gifts are important, no matter the amount. We hope everybody will participate in the campaign, giving what they can—with prayerful consideration of the opportunity.

A Primer on the Endowment and the General Budget

Q. What is an endowment?

From Webster: "Any bequest or gift that provides an income for an institution or person."

Q. Who is responsible for our endowment?

Session has delegated this responsibility to the Board of Trustees.

Q. When did Third Church's endowment start?

In the late 40s, William Hudnut led a major effort for members to include the church in their wills. By 1952, an endowment of $27,748 was invested in US Bonds.

Q. How do we add to the endowment?

In three ways: through bequests in wills, through gifts from those still living, and through investment earnings.

Q. Who manages our endowment?

Since 1981, Rusty Olson has been the endowment advisor, with the assistance of the Trustee Investment Committee. Until his retirement from Kodak, Rusty managed Kodak's Savings and Investment Plan (SIP). The custodian of the funds is HSBC Bank.

Q. How do we invest the endowment funds?

Funds are invested in publicly traded domestic and international equity and income mutual assets, and in private investment assets. Targets established by the Trustees guide all investment changes for each investment class.

Q. How current is the value of the endowment?

Every quarter, Rusty Olson reports to the Trustees, stating the total value of the endowment, the value of each individual fund, and the endowment return as compared to the S&P 500.

Q. How do we use the income from the endowment investments?

While most is reinvested, each calendar quarter we withdraw "imputed income" (defined below) to augment our operating budget income. In 2007, we withdrew $380,204, or 26% of our operating budget. Also, a small portion of the endowment, set up by early donors, is withdrawn quarterly to fund dedicated purposes.

Q. What is "imputed income"?

Through appreciation and conventional dividends, the endowment increases in value. To smooth out annual variations, a set percentage is withdrawn each year based on a five-year average of year-ending endowment values.

Q. What is the withdrawal percent now?

In 2008, it will be 7%. For many years, the percent was set at 8%. In the early 2000s, with Session's approval, we exceeded 8% to close budget shortages. In 2005, concerned that we were exceeding the 5% currently accepted endowment withdrawals for churches and educational institutions, the Trustees began a quarter percent annual reduction in withdrawal, finishing at 7% in 2008. The infusion of $2 million through the Capital campaign will reduce this to about 5%.

Q. Do you still have questions about the endowment?

Click here to email your questions to Jon Schumacher or Bill Coons.