<<Speaker: Introduce yourself, including your role with Thrivent Financial. Tailor the comments below to meet the organization’s needs, if known.>> Whether your organization wants to establish an endowment fund or to re-energize an existing fund, this Organizational Endowment Guide can help. <<hold up guide>> It provides basic information on endowments, how they work and information for deciding if an endowment might be appropriate for your situation. It also includes marketing plan formats and fundraising ideas to help organizations grow their endowment funds.

Committing to the future What is an endowment? Agenda Committing to the future What is an endowment? Mechanics of an endowment Marketing the endowment fund Giving to the endowment fund Endowment fund resources Questions about giving Stewardship is something that we are all called to live out—it’s an opportunity to give back out of a sense of gratitude for the blessings God has bestowed on us. Stewardship is also a way to support the mission and future of an organization. We give back to our organizations through volunteering, leadership and financial support. It is through our sharing of these gifts that organizations are able to fulfill their missions. Today, we’re going to explore how an endowment fund can help your organization be a good steward of the gifts entrusted to it, and thus ensure its vitality for years to come.

Committing to the future Every heart has a voice— listen to its song. An endowment fund goes beyond the mechanics of the instrument. It’s a relationship between an organization and its donors. It can bring to life the mission and collective voice of an organization.

Committing to the future The creation of an endowment is a commitment to the future of the organization’s mission and vision. A clear understanding of the organization’s mission is essential to supporting an endowment. An endowment fund is a commitment to the future. What is the mission of your organization? What is the mission of your endowment fund? Are they compatible and do they support each other? These are key questions for you to consider.

Committing to the future The endowment is to be understood in the context of the organization’s overall stewardship for the financial support of its mission. This overall plan includes: Annual giving Capital giving Designated giving Endowment giving In reviewing the need for a organizational endowment fund, consider the similarities between your organization’s finances and your family’s finances. In our personal finances, we need to plan for short-term expenditures and for major purchases, such as a home, car or education. We also need to address our future income needs, specifically during retirement. We want to make sure we’re financially prepared for today as well as the future. The same is true for the finances of the organization.

What is an endowment? The difference between “just getting by” and bringing the mission to life. Webster's Dictionary defines an “endowment” as “funds or property donated to an institution, individual, or group to produce income.” For your organization, this income can mean the difference between “just getting by” and the security of bringing your organization’s mission to life for generations to come.

What is an endowment? Mutual stewardship Local control Donor choice Tax advantages Long-term benefits Endowment funds are partnerships between donors and organizations. By supporting an endowment fund for your organization, you and your fellow donors act as mutual stewards to (and for) the organization. Through the ongoing support generated by the endowment fund to fulfill its mission, your organization again acts as a steward to and for its supporters.

What is an endowment? Mutual stewardship Local control Donor choice Tax advantages Long-term benefits An endowment fund is a single pool of resources set up by your organization to receive gifts. The organization maintains local control and establishes a policy that determines how much of the endowment will be spent (in other words, “distributed”) each year. There are two primary choices: Income only: This is when distributions are made only from the income the endowment fund produces; the principal (or initial investment) remains intact. Percent of value: This is when distributions are based on a percent of the fund value, usually between 4% and 6%, meaning that in years when investment return in the fund exceeds that percent, the fund grows. This growth permits distributions in other years when market performance is poor.

What is an endowment? Mutual stewardship Local control Donor choice Tax advantages Long-term benefits Gifts to endowment funds are easy to facilitate during the donor’s life and after death, and can provide significant tax advantages to donors whether they give cash, stock, real estate or other assets. Donors may wish to designate a gift for a specific purpose, or leave it open to staff and the endowment committee. If a donor wishes to specify a purpose for his/her gift, make sure that the purpose named by the donor is meaningful and compatible with the endowment fund’s mission. For example, a gift designated to benefit the organization’s music program provides more flexibility than a gift designated for piano maintenance.

What is an endowment? Mutual stewardship Local control Donor choice Tax advantages Long-term benefits There are many ways to give to the endowment, and each offers it own tax benefits to the donor. We will talk about this more when we discuss gift options.

What is an endowment? Mutual stewardship Local control Donor choice Tax advantages Long-term benefits An endowment fund is a long-term commitment to the mission of the organization. Let’s look at an example of how an endowment fund can grow to provide significant future support. Consider a $25,000 endowment, 5% annual distributions and a 6.3% investment return. Over the course of 25 years, the fund will have distributed $32,401 and will still have a value of $26,863. (This assumes a 1% annual administrative fee.) Now imagine the results of additional gifts to the endowment fund.

Mechanics of an endowment Endowments, when planned and nurtured, help expand ministries and outreach. To give you the “big picture” of what is involved in setting up an endowment fund, let’s review the five steps of the endowment process …

Mechanics of an endowment Five steps to an endowment: Identify your needs. Learn what an endowment is and does. Identify how an endowment will support your goals. Establish your endowment fund. Create a business plan. Step 1: Identify your organization’s need for an endowment. Think about longer-term goals to support your mission. Introduce the concept of an endowment at a board or council meeting—at which point, you might want to review: Your organization’s mission statement. Ways it is currently being accomplished. Challenges to the mission. Financial strategies currently in place to help sustain this mission in the future. If your board or council finds that its current financial strategies are inadequate for sustaining the organization’s mission, an endowment fund should definitely be discussed. You may also wish to discuss ways you can further expand the mission.

Identifying the need for an endowment Mechanics of an endowment Identifying the need for an endowment

Mechanics of an endowment Five steps to an endowment: Identify your needs. Learn what an endowment is and does. Identify how an endowment will support your goals. Establish your endowment fund. Create a business plan. Step 2: Learn what an endowment is and does. An endowment is set up to generate support from multiple donors and is intended to be maintained on a long-term basis. Your organization can set up its endowment in one of four ways: It may establish, invest and manage its own fund. It may establish its own fund through an affiliated denominational foundation, or hire an independent fund manager. It may establish its own public foundation, separate from the organization itself. It may set up an endowment fund under the umbrella of a community foundation, such as InFaith Community Foundation. Your Thrivent Financial representative can help you decide which method is best for your organization.

Mechanics of an endowment Five steps to an endowment: Identify your needs. Learn what an endowment is and does. Identify how an endowment will support your goals. Establish your endowment fund. Create a business plan. Step 3: Identify how an endowment will support the goals of your organization. Examples include: Supporting the organization’s operating expenses. Enhancing their religious education programs. Supporting local, regional, national and international mission programs. Advancing youth programs in the community.

Mechanics of an endowment Five steps to an endowment: Identify your needs. Learn what an endowment is and does. Identify how an endowment will support your goals. Establish your endowment fund. Create a business plan. Step 4: Establish a fund, but before doing so your organization will want to select an endowment committee (one that represents the diversity of your organization) to oversee the fund and prepare a fund agreement. Pages 14-15 of your guide provides more information on how to go about doing this, and page 19 provides a sample amendment to bylaws for an organizational endowment fund.

Mechanics of an endowment Five steps to an endowment: Identify your needs. Learn what an endowment is and does. Identify how an endowment will support your goals. Establish your endowment fund. Create a business plan. One of the most important steps in the endowment fund process is Step 5: Creating a business plan. This includes both marketing and communication components. Some people may need to learn what an endowment fund is and how it will benefit them—personally and as a supporter of the organization. As you begin your business plan, consider the many different reasons people give to your organization. Some people are motivated by their values and convictions, some want to help their community and some view giving as an obligation. Appealing to all types of donors is important. While you may communicate differently to different audiences, always create clear and consistent messages about the organization’s mission, and the needs and goals of the endowment fund. A marketing plan will help you reach all audiences. You will want to tell potential donors about the ways they can give to the endowment fund and explain the advantages of each giving method.

Mechanics of an endowment Keep in mind, endowment funds grow more quickly with additional gifts than by investment return. The next component of the plan is to write overall key messages for the endowment program. Key messages are the two or three essential concepts that all audiences should know about your endowment fund. The overall key messages should serve as the cornerstone for all communication about the endowment. Your key messages should illustrate the connection between the endowment fund and its support of the organization’s mission and vision. It’s important to discuss these key messages with leaders before using them. An example message could be: “Supporting the endowment fund is one of the best ways you can ensure that the mission and vision of the organization will thrive for years to come.” Another step is to identify key audiences. First think about what the endowment fund can offer from several perspectives. Consider what would motivate key groups of people to give to and support your mission.

Marketing the endowment fund Creating a marketing plan: Define goals. Write key messages. Identify key audiences. Consider perspectives on giving. Deliver the messages. After defining your goals, writing key messages and identifying key audiences, it is important to explore different perspectives on giving. Examples of “giving perspectives” might involve the areas of: Stewardship: Appealing to the belief in “giving back” and its Biblical basis. Personal stories: Having a well-liked and respected individual in your organization share his or her stories about giving to the endowment and why it is gratifying. Impact stories: Publicizing the results of the endowment distributions and showing how the money was put to good use. Growing the Organization: Discussing the organization’s financial position and how it changes with and without an endowment. Mission and vision: Sharing the endowment fund’s mission statement (see samples within your guide). Financial benefits: Informing people about the tax benefits of giving to the fund. Creating a communication grid that lists all of your audiences, applicable messages, communications tools and dates is essential for a successful endowment program.

Marketing the endowment fund Creating a marketing plan in six steps A template for creating your own marketing plan is included in the guide. Your endowment committee will want to complete the worksheet and incorporate some or all of the many tools described in the guide to help you develop a communication grid, key messages, timelines and responsibilities.

Delivering the message Choosing communication tools: Bulletins Sermons Newsletters Workshops Ministry visits Recognition events Personal letters Within the communication grid of your marketing plan, make sure to list out the communication tools that you’ll use to promote your endowment fund. Some ideas include: Bulletins Sermons Newsletters Workshops Ministry visits Recognition events Personal letters from the organization’s leader, committee chairs, etc. There are many tools within your guide to help you develop a communication grid, key messages, timelines and responsibilities.

Marketing timeline 1–3 Months 4–6 Months 7–9 Months Staff · Form endowment committee · Bulletin articles · Short articles · Informal forum · Gift idea announcements · Gift idea announcements Endowment committee · Develop mission statement · Asset management · Gift promoters · Planned giving brochure · Workshop for financial professionals · Workshop for members/ donors · Workshop to continue wise financial management theme Ongoing activities: Workshops, announcements, brochures/flyers, meetings with prospective givers and recognition events. Here’s a sample schedule. You will want to consult your calendar and proceed with a schedule that makes the most sense. More detail on the timeline can be found on page 30 of the guide.

Roles and responsibilities Role of the leader Proclaim the mission and vision of your organization. Explain how the endowment fund furthers your mission and vision. Your leader can fulfill his or her communications role in several ways, including: Sermons or speeches. Letters. A message in the endowment brochure/annual report. One of the biggest challenges in marketing an organizational endowment is deciding who does what. A message about the Biblical context of stewardship may be most credible coming from a pastor or spiritual leader. The organization’s leader is the proclaimer of the stewardship message, not the fundraiser. Here are some of the ways your organization’s leader can support the endowment fund. Sermons or speeches Letters A message in the endowment brochure/annual report.

Role of the endowment committee Roles and responsibilities Role of the endowment committee Cover everything the organization’s staff doesn’t. Create and administer the endowment fund. Promote the fund in various ways: Write articles for the organization’s bulletin or newsletter. Organize workshops on various topics related to the endowment. Create and distribute the endowment fund annual report. Work with the staff to find appropriate ways for the organization’s leader to promote the endowment. In general, all communications regarding your endowment fund should come from one of two sources—your endowment committee and/or your organization’s leader. It is your endowment committee’s job to do everything the organization’s staff doesn’t do. In addition to creating and administering the endowment fund, this includes promoting the fund through a variety of communications means, including: Writing and placing articles in the organization’s bulletin or newsletter. Organizing workshops for the organization on various topics related to the endowment. Creating and distributing endowment fund annual report. Working with the organization’s staff to find appropriate ways for the organization’s leader to promote the endowment.

Giving to the endowment fund Hear the song from the heart of the givers instead of asking them to sing the music put in front of them. Throughout every step of your marketing plan, use messages that encourage organization supporters to reflect on their own personal hopes and dreams for the organization. Allow donors to take the mission and turn it into a personal thing. What do they feel called to do? You might want to ask past or current donors to share their “Why we give” stories with the rest of the organization.

Giving to the endowment fund Types of charitable gifts include: Direct gifts Bequests Beneficiary designations Life insurance Charitable gift annuities Charitable remainder trusts Charitable life estates Qualified charitable distributions from IRAs There are many different ways for a donor to contribute to an organizational endowment fund. Each type of charitable gift is unique in what it does, the tax advantages it offers and the most appropriate time to use it. Let’s explore some options.

Giving to the endowment fund Direct Gift Example Donors A Wisconsin couple in their 50s. Charitable Goal: Wanted to make an unrestricted gift in their deceased daughter’s name to the church’s endowment fund. Solution Made gift of $30,000 and additional memorial gifts to the endowment fund in the daughter’s name. Parents, family and friends donating to the fund receive charitable deductions. Hypothetical example for illustrative purposes only.

Giving to the endowment fund Bequest Example Donor A New Jersey woman, age 97. Charitable Goal: Wanted to provide support for her local Habitat for Humanity chapter through her will. Solution Made a bequest of $1 million to endowment fund for Habitat's endowment fund held at InFaith Community Foundation. Donor’s estate received a charitable deduction. Hypothetical example for illustrative purposes only.

Beneficiary Designation Example Giving to the endowment fund Beneficiary Designation Example Donor A Colorado woman, age 65. Charitable Goal: Before her death, she planned with her best friend that part of her assets would set up a permanent charitable fund in her memory. Solution Beneficiary proceeds of $315,000 from her IRA were contributed to a special named subfund under the endowment fund. Her estate pays no state, federal or estate taxes on the gift and the full amount is paid to the endowment. Hypothetical example for illustrative purposes only.

Life Insurance Example Giving to the endowment fund Life Insurance Example Donor An Ohio woman, age 71. Charitable Goal: Wants to support her church with a gift of $200,000 at death. Needs to take required minimum distributions (RMD) from IRA, but doesn’t need income. Solution RMD given to pay premiums on life insurance contract owned by the church, donor receives tax deduction. Church provides tax substantiation to donor for each premium payment, and endowment fund receives $200,000 death benefit from life insurance contract upon death of donor. Hypothetical example for illustrative purposes only.

Charitable Gift Annuity Example Giving to the endowment fund Charitable Gift Annuity Example Donor A North Carolina widow, age 70. Charitable Goal: Wanted to increase her income and benefit the church endowment. Solution Church created endowment fund. Donor made a gift of highly appreciated securities worth $106,000 for a gift annuity and received a deduction of $43,655. Donor received lifetime income based upon 5.1% of her gift. At death, the gift annuity remainder benefits the endowment fund. Hypothetical example for illustrative purposes only.

Charitable Remainder Trust Example Giving to the endowment fund Charitable Remainder Trust Example Donor A Washington couple. Charitable Goal: Had appreciated stock that, if sold, would result in high capital gains tax; wanted to benefit Christian School endowment fund and increase income. Solution Stock of $100,000 transferred to a charitable remainder unitrust, which sold it tax-free. Donors received income tax deduction of $34,000 and lifetime income based upon 6.5% of the annual value of the unitrust. Upon death, endowment fund receives trust remainder. Hypothetical example for illustrative purposes only.

Charitable Life Estate Example Giving to the endowment fund Charitable Life Estate Example Donor South Dakota farmers in their 80s, no children. Charitable Goal: To live on the farm as long as possible and rent land, and at death make a contribution to Christian Camp endowment. Solution Title deeded to camp, donors reserving life estates. They can live on or rent out the land for their lifetimes. Property appraised at $200,000, creating an immediate charitable deduction of $112,000. Upon their deaths, camp will sell the property, with the proceeds benefiting the endowment fund. Hypothetical example for illustrative purposes only.

Endowment fund resources Create an endowment that responds to the changing life and needs of the organization. There are a number of resources available to you—each offers unique opportunities and services.

Thrivent endowment fund resources Thrivent Financial InFaith Community Foundation InFaithFound.org 800-365-4172 Thrivent Trust Company Thrivent Investment Management, Inc. Managed Accounts Your denominational foundation InFaith Community Foundation is a public charity serving donors and the community through charitable funds. InFaith is independent of Thrivent Financial and its financial representatives. Thrivent Financial is committed to helping maintain and grow faith-based organizations across the country. We are here to help by bringing together organizations, products and services that are designed to help you create your endowment fund and invest its assets wisely. Partnering organizations include InFaith Community Foundation, Thrivent Trust Company, and Thrivent Investment Management, Inc. Managed Accounts. Each is described in more detail within your guide.

Endowment do’s Dream big, dream broadly, dream widely and then focus. Involve as many consultants in the discussion as possible. Create a vision for the fund—what can it do to enhance the life of the organization, its members, its communities. Feel free to break down the fund into parts that are recognizable to ordinary people. Consider near-term projects with big impact and longer-term efforts—people need to see the fund working in their lives. Leave a portion of the fund undesignated for future needs. Communicate openly and completely with your constituencies about the process and the conclusions. Celebrate every gift into the fund and every grant out. The Endowment Do’s and Don’ts list includes observations and insights from a number of organizations that have gone through the process of creating an endowment fund.

Endowment don’ts Make permanent rules or permanent structures that may hinder future choices—make a plan for the next five years, not the next 50. Get caught up (too early) in details like: Investment policy. Grant timing. Budget questions. Create dependencies—don’t tie any program or effort exclusively to the endowment. Having a variety of funding sources enhances any program. Don’t even think about abandoning your annual fund, which supports your core operating budget—that would be a serious mistake.

Questions about giving Each member can give according to his or her ability. In the guide, you will find answers to frequently asked questions about how to give to an endowment fund. This information can also be used for newsletter and bulletin inserts. Now is a good time to answer any additional questions you have about organizational endowment funds. Do you have any questions?

About Thrivent Financial We’re a financial services organization that helps Christians be wise with money and live generously, and we: Offer a broad range of products and services, including: Life insurance. Annuities. Mutual funds. Guidance from financial representatives, nationwide. Have helped our nearly 2.4 million member-owners make wise money choices that reflect their values—for more than a century. Provide opportunities for them to be even more generous where they live, work and worship. Let me tell you a little about Thrivent Financial for those of you who may not be familiar with our organization.   Thrivent Financial is a financial services organization that helps Christians be wise with money and live generously. We offer a broad range of products and services—including life insurance, annuities and mutual funds—along with guidance from financial representatives nationwide. For more than a century we’ve helped our nearly 2.4 million member-owners make wise money choices that reflect their values. And we provide opportunities for them to be even more generous where they live, work and worship. Being owned by our members means that Thrivent can create and support educational, social and volunteer programs for their benefit. Each year, on average 1,300 of our local chapters generate nearly 100,000 activities and raise more than $100 million to help their local communities. For more information, visit Thrivent.com.

The Endowment Guide InFaith Community Foundation is a public charity that serves donors and the community through charitable funds. It is independent of Thrivent Financial and its financial representatives. <<Speaker: Read the slide to provide information about InFaith Community Foundation. Then tailor the closing to the needs of the organization, if known.>>

InFaith Community Foundation is a public charity serving donors and the community through charitable funds. InFaith Community Foundation is independent of Thrivent Financial and its affiliates and financial associates. Thrivent Financial and its respective associates and employees cannot provide legal, accounting, or tax advice or services. Work with your Thrivent Financial representative, and as appropriate your attorney and/or tax professional for additional information. While Thrivent Financial is proud to support churches through its members and benevolent efforts, it and its affiliates are not a church or part of the church. Insurance products issued or offered by Thrivent Financial, the marketing name for Thrivent Financial for Lutherans, Appleton, WI. Not all products are available in all states. Securities and investment advisory services are offered through Thrivent Investment Management Inc., 625 Fourth Ave. S., Minneapolis, MN 55415, a FINRA and SIPC member and a wholly owned subsidiary of Thrivent. Thrivent Financial representatives are registered representatives of Thrivent Investment Management Inc. They are also licensed insurance agents/producers of Thrivent. Fee-based investment advisory services are available through qualified investment advisor representatives only. For additional important information, visit Thrivent.com/disclosures. [leave screen up while you answer questions]