What is an Organizational Endowment Fund?
How to Establish an Endowment Fund
- An endowment fund at InFaith is typically established by action of the voting members of a church or by action of the board of directors of the nonprofit. The specific form of the action should be consistent with the requirements of the governing documents of the organization. Often, a bylaw is drafted that describes the endowment fund, its purpose and its governing structure. The following steps can take be taken once the bylaw is in place.
- Complete and return the Fund Workbook for Organizations to InFaith.
- InFaith drafts a Fund Agreement and sends it to the designated representative from the organization for signing. The financial representative also receives a copy.
- Once the organization is satisfied with the Fund Agreement, it is signed by the designated representative on behalf of the organization and returned to InFaith.
- The initial contribution to establish the fund can be sent with the signed Fund Agreement, or sent later.
- Any faith-based nonprofit or church interested in creating and building an endowment for charitable purposes of their choosing;
- Organizations seeking a simple, flexible endowment option to relieve endowment committee members of substantial record-keeping burdens;
- Organizations seeking to offer supporters a full range of charitable gift and fund arrangements, including charitable gift annuities and charitable remainder trusts, along with professional expertise to aid supporters in making these gifts; and
- Organizations wishing to accommodate supporters who wish to make truly anonymous gifts.
Tax and Financial Benefits of an Organizational Fund
Benefits to Those Who Give
Benefits to the Organization
Benefiting charities. Grants can be requested to any IRS-qualified charity.
Grant distributions. In many instances, InFaith distributes only a portion of the endowment fund’s value each year, enabling it to continue to grow and provide a permanent source of support for the organization's mission. Endowment funds, however, have the added flexibility to request grants in any amount, as long as a $25,000 minimum is maintained.
Planned giving support. In addition to sharing resources such as bulletin inserts and newsletter articles, InFaith assists the organization in designing a brochure to promote the endowment fund. InFaith staff is also available for phone consultations on strategic planning and gift design for potential donors.
Fees. A 1% annual administrative fee is assessed to the endowment fund to cover program and administrative costs. Reduced fee for assets over $1 million.
Benefits to you, the Financial Professional
InFaith will support you with a full range of charitable products and services, and you'll be compensated for your efforts by Thrivent or American Funds.
Resources to Support Your Work
- Endowment Giving Options & Benefits
- Create Your Endowment Fund at InFaith Online or download Fund Workbook for Organizations
- Organizational Endowment Guide
- Request Materials
- FAQs about Endowment Funds
- Sample Bylaws for Endowments
- Distribution and Investment Practices: What's Right for your Endowment Fund?
- Creating Endowments for Future Gifts (Shell Funds)
- Phone consultations with you, your clients and your clients’ legal and tax advisors. Please call 800-365-4172.