Most churches rely upon tithes and contributions from their members to pay for their ministries. Most churches also pay for capital improvements and new building in the same way. Churches that rely only on contributions to build their church fund are missing out on a major opportunity. Most of these churches do not understand that they only need to know three tips that will help them build a church fund.
For example: The Phoenix Symphony paid for its Steinway piano by raising endowments of $5,000 for each of the piano's 88 keys. Each position on Penn State's football team has its expenses covered through an endowment.
Is your church endowed? If not, why not?
I've been attending a different church for the past few months. The church recently marked its 50th anniversary. It is a small church that ended 2008 with a $33,000 deficit. I was surprised to learn that after fifty years this church has nothing in earmarked or other church funds. There is no endowed church fund.
A financial shortfall is not surprising for any church during the last quarter of 2008 when the economy entered a recession. In December 2008, the Barna Group predicted that churches would experience giving that would be $3 billion to $5 billion less than anticipated for the last quarter of the year. They also predicted that churches that have church funds will likely see the balances fall until the recession ends.
Some churches, however, have a history of drawing on interest earned by a church fund to finance ministries during tough times.
Many churches have built substantial church funds through endowments. For other how-to information and examples, I would point to "Financing American Religion" by Mark Chaves and Sharon l. Miller. Because most churches could do a better job of creating church funds here are three tips for building an endowed church fund.
1. Fish where the big fish swim.
Almost everyone has heard of the 80/20 rule, which states that 80% of the results or outcome will be the result of 20% of the contribution or effort expended. This rule applies to many things. But when it comes to creating and growing a church fund the rule is more like 98/2. Believe it or not, 98% of the money for a church fund comes from just 2% of the congregation. To raise money, focus on the 2% to grow your church fund.
2. Solve a problem.
While it is true that many donors are 100% altruistic, you stand a better chance of getting a major gift if you can show a major donor how to solve a problem that simultaneously results in a gift to your church.
I'm very clear that tax breaks are not the primary reasons people give money to a church fund. In most cases, the tax issues never enter the mind of the giver. But if you can show someone who is interested in your ministry how to make a gift that satisfies the original goal and helps them solve a financial issue or tax problem at the same time, you dramatically increase both your chances of getting the gift and your chances of getting a larger gift for the church fund.
3. Support your appeal for church fund contributions with case study information.
I am convinced that many people who could be major donors to church funds simply don't know about the planning approaches allowed by law that can encourage a major gift to the church fund.
In my financial and estate planning practice of 39 years, I called on numerous business owners who had no idea they had a problem. No one had ever pointed the problem out to them. My view is that it's the same lack of communication of "whats possible" that limits the receipt of major gifts by a church.
By explaining the laws and offering case study examples of how other people have solved similar problems, I believe fundraisers can easily help people see how their tax problems can be eliminated by opening a conversation about making a sizeable contribution to a church fund that will pay interest and provide the principle of the gift to the church. - 29969
For example: The Phoenix Symphony paid for its Steinway piano by raising endowments of $5,000 for each of the piano's 88 keys. Each position on Penn State's football team has its expenses covered through an endowment.
Is your church endowed? If not, why not?
I've been attending a different church for the past few months. The church recently marked its 50th anniversary. It is a small church that ended 2008 with a $33,000 deficit. I was surprised to learn that after fifty years this church has nothing in earmarked or other church funds. There is no endowed church fund.
A financial shortfall is not surprising for any church during the last quarter of 2008 when the economy entered a recession. In December 2008, the Barna Group predicted that churches would experience giving that would be $3 billion to $5 billion less than anticipated for the last quarter of the year. They also predicted that churches that have church funds will likely see the balances fall until the recession ends.
Some churches, however, have a history of drawing on interest earned by a church fund to finance ministries during tough times.
Many churches have built substantial church funds through endowments. For other how-to information and examples, I would point to "Financing American Religion" by Mark Chaves and Sharon l. Miller. Because most churches could do a better job of creating church funds here are three tips for building an endowed church fund.
1. Fish where the big fish swim.
Almost everyone has heard of the 80/20 rule, which states that 80% of the results or outcome will be the result of 20% of the contribution or effort expended. This rule applies to many things. But when it comes to creating and growing a church fund the rule is more like 98/2. Believe it or not, 98% of the money for a church fund comes from just 2% of the congregation. To raise money, focus on the 2% to grow your church fund.
2. Solve a problem.
While it is true that many donors are 100% altruistic, you stand a better chance of getting a major gift if you can show a major donor how to solve a problem that simultaneously results in a gift to your church.
I'm very clear that tax breaks are not the primary reasons people give money to a church fund. In most cases, the tax issues never enter the mind of the giver. But if you can show someone who is interested in your ministry how to make a gift that satisfies the original goal and helps them solve a financial issue or tax problem at the same time, you dramatically increase both your chances of getting the gift and your chances of getting a larger gift for the church fund.
3. Support your appeal for church fund contributions with case study information.
I am convinced that many people who could be major donors to church funds simply don't know about the planning approaches allowed by law that can encourage a major gift to the church fund.
In my financial and estate planning practice of 39 years, I called on numerous business owners who had no idea they had a problem. No one had ever pointed the problem out to them. My view is that it's the same lack of communication of "whats possible" that limits the receipt of major gifts by a church.
By explaining the laws and offering case study examples of how other people have solved similar problems, I believe fundraisers can easily help people see how their tax problems can be eliminated by opening a conversation about making a sizeable contribution to a church fund that will pay interest and provide the principle of the gift to the church. - 29969
About the Author:
About the author: Robert D. Cavanaugh, CLU is a 39-year veteran of the life insurance, financial and estate planning industry. He is the publisher of The Smart Giver, a planned giving educational program which advances strategies to increase income and reduce taxes while simultaneously helping churches and non-profits. More information about how to build a church fund can be found on his blog.
