Ask Alban: Setting Up An Endowment Fund

Q: My congregation is expecting its first bequest. We would like to use it to establish an endowment fund. A stockbroker in the congregation offered to manage it for us, but we’re wondering if this is wise. We’re also worried that the endowment will have a bad effect on member giving to the church. What should we do?

A: Give thanks that you have the opportunity to structure your endowment now, before it has any money in it! It is much easier to plan when you don’t have the worry of managing funds at the same time.

I would say, Thanks, but no thanks to the stockbroker. You want an arm’s-length, businesslike relationship with your fund manager. Also, a broker’s expertise can be expensive if he or she is earning commissions on investments. Many local congregations place their endowments in a joint denominational fund. Brokerage and mutual fund companies and the trust departments of banks also manage this type of fund.

Read more of Ask Alban: Setting Up An Endowment Fund.