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?
The church I just started to attend just celebrated its 50th anniversary. It's not a big church " about 350 members. It finished 2008 $33,000 in the red. In fifty years, they have a church fund balance of zero.
This is not unusual. Because of the current economic climate, many churches took a big hit the fourth quarter of 2008. In a December 1, 2008 article, The Barna Group predicted that churches would receive $3 billion to $5 billion less than expected the last quarter of 2008. If a church has any amount in a church fund, the balance is likely to decrease, not build, until the economy turns around.
Some churches, however, have a history of drawing on interest earned by a church fund to finance ministries during tough times.
Some churches have done a good job building their church fund. I would refer you to "Financing American Religion" by Mark Chaves and Sharon L. Miller. However, every church can do more. Here are several of my opinions about some of the steps needed to build a church's endowment fund.
There is something called an 80/20 rule which is applied to most things. This says that 80% of the results are produced by 20% of the people or the effort. I suspect you have heard this rule applied to something in your lifetime. But when it comes to building church funds, it is more like 98/2 " 98% of the funding comes from only 2% of the congregation. If you need to raise money for an endowed church fund, concentrate on the 2% of the congregation who are the big givers.
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. Show potential donors how their church fund gift could solve their own financial problem.
Most of the problems that can be solved with a large donation to a church fund are related to tax savings. One such typical example would be knowing how to sell a business without paying a capital gains tax or how to pass wealth to the next generation without first paying half of the estate to the government in inheritance tax.
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. Provide 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.
If you provide examples of what others have done to solve specific problems, people can easily see if the solution might work for them. This is the first step in opening up a dialogue about the possibility of a major gift and building a church fund that will ultimately pay for the church's ministries from the interest on investments. - 29970
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?
The church I just started to attend just celebrated its 50th anniversary. It's not a big church " about 350 members. It finished 2008 $33,000 in the red. In fifty years, they have a church fund balance of zero.
This is not unusual. Because of the current economic climate, many churches took a big hit the fourth quarter of 2008. In a December 1, 2008 article, The Barna Group predicted that churches would receive $3 billion to $5 billion less than expected the last quarter of 2008. If a church has any amount in a church fund, the balance is likely to decrease, not build, until the economy turns around.
Some churches, however, have a history of drawing on interest earned by a church fund to finance ministries during tough times.
Some churches have done a good job building their church fund. I would refer you to "Financing American Religion" by Mark Chaves and Sharon L. Miller. However, every church can do more. Here are several of my opinions about some of the steps needed to build a church's endowment fund.
There is something called an 80/20 rule which is applied to most things. This says that 80% of the results are produced by 20% of the people or the effort. I suspect you have heard this rule applied to something in your lifetime. But when it comes to building church funds, it is more like 98/2 " 98% of the funding comes from only 2% of the congregation. If you need to raise money for an endowed church fund, concentrate on the 2% of the congregation who are the big givers.
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. Show potential donors how their church fund gift could solve their own financial problem.
Most of the problems that can be solved with a large donation to a church fund are related to tax savings. One such typical example would be knowing how to sell a business without paying a capital gains tax or how to pass wealth to the next generation without first paying half of the estate to the government in inheritance tax.
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. Provide 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.
If you provide examples of what others have done to solve specific problems, people can easily see if the solution might work for them. This is the first step in opening up a dialogue about the possibility of a major gift and building a church fund that will ultimately pay for the church's ministries from the interest on investments. - 29970
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 teaches 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.
