Memorandum
To: Renee McKarge, Church Council; John Grenfell III, Senior Pastor
Plymouth First United Methodist Church,
From: Daniel Dalton,
Chair of the Board of Trustees
Re: Frequently Asked Questions regarding the proposed Endowment
Dated: January 24, 2014
______
Summary of Proposal
It is requested that the Church Council approve the Board of Trustees to create an Endowment as permitted by the Book of Discipline. The main principle that underlies the purpose of an endowment fund is that endowment resources empower ministry. Prior to the February 9, 2014 Church Conference meeting, I was asked to prepare a memo with frequently asked questions and answers conserving the proposed endowment.
Frequently asked questions
Why do we need an Endowment Fund? Just as individuals and families plan for the future through savings, our church also needs a strong long-range financial plan. We know that a healthy capital fund can increase our ability to serve during good times, and avoid financial difficulty during hard times. The Fund will enable our church to meet some of its needs and provide financial stability.
Who prepared the Endowment and what is its history with the Church? The Church Council unanimously voted in March 2013 to direct the Trustees to prepare an Endowment fund. Daniel Dalton, chair of the Board of Trustees, prepared the Endowment and had it reviewed by the Ann Arbor District Chancellor to determine if it was consistent with the Book of Discipline. The proposed Endowment was quickly approved by the Chancellor and brought to the Board of Trustees and Finance Committee for approval. Both bodies approved the Endowment. It was then brought back to the Church Council for approval. The Church Council unanimously approved the Endowment, attached to this memorandum, in the fall of 2013.
Is there scriptural support for an Endowment? Yes. Just as there are personal and business aspect reasons for saving money, the same is true with respect to scriptural support in the book of Genesis. Though we are quick to disparage Pharaoh, nonetheless it was none other than that particular Pharaoh who asked his advisors, “Can we find anyone else like this-one in whom is the Spirit of God?” when referring to Joseph. Pharaoh then said to Joseph, “Since God has shown you all this, there is no one so discerning and wise as you.” Pharaoh said “to all the Egyptians, “Go to Joseph; what he says to you, do.” (Genesis 41:55) Pharaoh’s wisdom was enlisting a godly man like Joseph in his administration and it was a Spirit-filled man like Joseph who “stored up” what some may refer to as “treasures on earth”, as he was exercising God-given wisdom on behalf of humans with needs. And it was this Spirit-filled man who determined who got what. For the very reason Dave Ramsay advocates for an “emergency fund,” we have unanimously affirmed the creation of an endowment fund, which in principle, accomplishes the same goal as Ramsay and Joseph have aimed at – being responsibly prepared as wisdom would guide. Employing the wisdom of Holy Scripture and the collective wisdom garnered over these past couple of centuries and now lodged in our Discipline, we celebrate the twice unanimous affirmations of our Church Council for us to better position ourselves for the enduring ministry of Plymouth: First United Methodist Church.
Who manages the Endowment? The Book of Discipline provides that the Trustees manage Endowments. We currently manage one Endowment. Given the Trustees responsibility to manage the property belonging to our charge, to receive and administer funds in conformity with the laws of the state and our Discipline’s requirements, and to provide for the security of such funds, we strive to be faithful to God utilizing the wisdom and knowledge He has blessed us with to fulfill our task.Quite a few hours and much conversation produced that which was given unanimous support to pursue at the beginning of this year, culminating with yet another unanimous decision to implement at our most recent meeting.
Who sets the Endowment investment and spending policy?The Trustees have set the investment and spending policy, which is identical to the Sweet Endowment, for the proposed Endowment. The attached Endowment includes the investment policy, the Spending policy is attached.
What is Endowment’s spending rate/policy? Spending allotments will begin with the flat amount allocated to each individual account for the prior fiscal year and new gift additions to the endowment paying out 5 percent of the gift amount. Each new fiscal year, a decision about whether there should be an inflation increase is made. A risk control mechanism will be employed to keep spending within a range of 4-6 percent of market value for the asset allocation policy to work, with a minimum target rate of return of 8 percent (5 percent average spending and 3 percent inflation)
How Flexible is the Endowment Fund? The laws governing the fund are detailed and restrictive to assure proper use and accounting of gifts, yet there is considerable flexibility in the manner of receipt and distribution of these gifts for specific purposes. The fund financial managers can help you and your advisors design a “gift plan” that will meet your specific objectives.
What is the Endowment Fund’s Tax Status? The fund would be an entity of Plymouth First United Methodist Church. Gifts to the Endowment fund are treated, for tax purposes, as if they were given to our Church. And contributions to the Fund are deductible for income and estate tax purposes. However, assets of the Fund are separate from the assets of our Church and not co-mingled with the operating funds of the Church.
Why are gifts important to Plymouth: First United Methodist Church? Consistent, annual giving is the financial lifeblood sustaining the Church's day-to-day mission of delivering a transformational education characterized by excellence, faith, leadership and service.Investments are long-term in nature and are subject to short-term market fluctuation. Donor support not only helps smooth out the impact of short-term market volatility on endowment payout, but it also increases the amount of money being invested, making larger investment returns possible.
How Can I Help the Endowment Fund? There are many opportunities and ways to provide Fund support. Specifically, donations of money, personal property, real estate, and securities are encouraged and requested. Bequests through wills, trusts, and life insurance, which name the Fund as beneficiary, are other forms of gifts to the Fund. Such gifts may be bestowed by individuals, families, businesses, and corporations. You may designate a specific use for your gift; however, Fund gifts are not to take the place of your yearly tithes and pledges, which sustain the Church annually
What is the minimum amount required to establish anEndowment?$1,000
Why does the value of an Endowment fund fluctuate? Gifts to the fund can increase the market value. Endowment distribution can decrease the market value. Investment earnings can increase or decrease the value, depending on market returns.
Who should I contact if I have a question about the Endowment? For information on how to make donations and gifts to, please contact Daniel Dalton, Chair of the Board of Trustees at 248.229.2329 or .