What is an endowment program?
An endowment program establishes a fund that remains invested on behalf of a particular organization. The principal amount continues to grow through donations, and is never withdrawn or spent, only invested. The income earned through the investments, however, becomes an on-going source of revenue that increases as the principal in the fund grows.
Just as it is important for a family to save money for things like children’s education, emergencies and retirement, it is important for Catholic parishes, high schools, agencies and the Archdiocese itself to build reserves on which they can depend. Funds generated through an endowment program will always be there … a perpetual donation for generations to come.
The Archdiocese of St. Louis is fortunate to have already established an overall endowment fund into which all endowments are poured. This endowment program is held in the Restricted Fund (hereinafter called “The Fund”), a sub-account of the St. Louis Archdiocesan Fund. Financial professionals manage the Fund. It combines the endowments of individual parishes, agencies, high schools and the Archdiocese itself in order to maximize investment returns.
The Fund, established during 1996, is segregated from all other assets of the Archdiocese and is used only for the donors’ specific intentions. The substantial value of the individual accounts allows the Fund to be invested efficiently and economically.
The Archdiocese of St. Louis uses an Investment Guide for the St. Louis Fund, which houses all the endowments in the Archdiocese. The fund has a diversified portfolio that is conservative in nature. The fund is professionally managed by five different fund managers. These professional money managers report to the Investment Committee of the Archdiocesan Finance Council.
The Restricted Fund continues to grow as more parishes, schools and agencies establish endowments to secure their financial future. The results support the fact that the fund is conservative in nature, prudent in decision-making, flourishing in growth and cost-efficient with the larger buying power of pooled assets.
Each endowment requires its own operating policy managed by volunteers of the school, parish or agency. The Office of Stewardship and the Annual Catholic Appeal will assist each Archdiocesan entity on the planning for and implementation of an endowment program. For the free “Catholic Endowment Planned Giving Guide,” please call the office at 314.792.7691.
TYPES OF ENDOWMENTS
Parishes, schools and agencies continue to establish endowments for their institution’s financial future.
However, other endowments are established by individual donors, such as:
Scholarships: Individuals have established scholarships at grade school and high school levels for a variety of reasons:
- As a way to thank the schools which gave them a strong foundation for their future.
- To memorialize students whose lives have ended too early.
- To memorialize one’s parents, both living and dead.
- To bless children with the Catholic education.
- To provide for the children of families who otherwise could not afford a Catholic education.
Donor Advisory Funds: An individual, family or organization may establish a donor advisory fund endowment with a substantial gift. Although the Archbishop is responsible for the disbursement of earnings from such funds, throughout their lives donors may advise the Archbishop regarding the recipients of the annual earnings disbursements. This allows the donors to establish a special major charitable fund without incorporation of a foundation. An agreement is also made regarding distribution of earnings after the donor’s lifetime.
Some of the benefits of a Donor Advisory Fund include:
- Unlike a Foundation, this Fund offers privacy and confidentiality.
- Unlike a Foundation, there is no need for yearly tax calculations and determinations.
- A full charitable tax deduction can be made for the value of the gift.
- If the gift is funded with appreciated securities, capital gains taxes are avoided.
- The donor or advisor decides once a year to which charities distributions should be sent. (Over 50% of the earnings must benefit an Archdiocesan entity. All earnings must go to charities whose missions and philosophies follow the teachings of the Catholic Church.)
- Donors may decide if they would like to remain anonymous to the charity.
- A simple Letter of Intent establishes the Donor Advisory Fund, and needs to be approved by the Archbishop of St. Louis.
BENEFITS OF AN ENDOWMENT PROGRAM
Having an endowment program can be a win/win situation for the Donor and Archdiocesan entity.
A Winner for the Donor
- Provides an opportunity for a donor to make a tax-wise planned gift. See benefits of planned giving.
- Offers a new way for a donor to give.
- Gives the donor the satisfaction of knowing his or her gift will continue to be helpful – in perpetuity.
- Allows the donor to experience deep fulfillment, giving them a sense of “life value” and “eternal impact” that simply cannot be achieved by any other means.
- Insures that the donor’s wishes will be respected as established in the Endowment Operating Policy.
A Winner for the Archdiocesan Organization
- Provides a new source of revenue for the organization in two ways.
- The vast majority of gifts to an endowment represent revenue that is not normally received via standard fund-raising efforts or Sunday donations. Donors to endowment funds may make the gift of their lifetime through a planned, tax-wise donation via a Gift Annuity, Charitable Trust, Bequest, Appreciated Stock, or other planned gifts.
- The annual earnings from the Endowment will continue to be a source of revenue – in perpetuity.
ESTABLISHING AN ENDOWMENT
Several steps are necessary to establish an endowment within the Archdiocese of St. Louis. An Endowment Operating Policy must be established, forming the long-term contract between the institution, the donors and the Archdiocese of St. Louis. The minimum amount necessary to establish an endowment is $10,000. An endowment committee must also be in formed by the institution to oversee the fundraising and management of the endowment.
ALL PLANNED GIFTS AND ENDOWMENTS ARE RESTRICTED
All endowments and planned gifts are secured in the Restricted Fund of the St. Louis Archdiocesan Fund. Each endowment and planned gift has a written agreement that restricts the funds for a specific usage, and thereby cannot and will not be used for any other purpose. For information on how to customize documents, or assistance in establishing or donating to an endowment, please contact the Executive Director of the Office of Stewardship and the Annual Catholic Appeal.