GROWING FUTURE SUPPORT Spreading Joy. Changing Lives.®

Endowments for Organizations

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HOW ENDOWMENT FUNDS WORKYour organization can create an endowment fund for general purpose or for a special purpose, such as outreach

efforts, building maintenance or education ministries. The minimum to establish an endowment fund is $25,000.

You can also create sub-funds to address multiple purposes, provided each sub-fund meets the $25,000 minimum.

YOUR ENDOWMENT FUNDOnce your organization’s fund is established, it’s available for your supporters to make outright gifts and/or gifts upon

death. Gifts can be made through direct gifts of cash, securities or real estate, or through deferred gifts of charitable

life insurance, the remainder of a charitable trust or gift annuity, or a bequest. InFaith owns, invests and holds the fund

for the benefit of your organization, and the fund, in turn, offers ongoing support to the charitable purposes of your

organization. You can transfer future contributions of $1,000 or more to the fund at any time.

GRANT RECOMMENDATIONSTo receive grant distributions from your fund, a fund advisory committee designated by your organization, typically

the endowment committee, notifies InFaith through its chairperson. Grants can be recommended at any time, either

in writing or online through InFaith’s website, InFaithFound.org. The committee may choose to receive InFaith’s

standard distribution rate, o r a greater or smaller distribu tion, provided the fund maintains

a minimum balance of $25,000 .

HOW ENDOWMENT FUNDS WORK

Gifts ($) from

Supporters

Support ($) from

the Organization

Personal & Tax Benefits Grant Distributions

ENDOWMENTS FOR ORGANIZATIONSMany churches and faith-based nonprofits recognize the need for perpetual income to support their mission in the future. InFaith Community Foundation offers these organizations a flexible option to build an endowment for whatever purposes they choose.

Why consider InFaith Community Foundation for your organization’s endowment? Among the many advantages, InFaith offers a full range of charitable giving options and professional gift planners to help people give to your fund in ways that match their personal circumstances. In addition, your endowment’s assets are invested in a large, fully-diversified pool of low-cost institutional investments, with advisement by one of the nation’s leading investment advisors.

The following pages provide more information about endowments for organizations through InFaith:• How endowment funds work (page 3)• Benefits to your organization (pages 4-5)• Authorizing your endowment fund (page 6)• Endowment responsibilities (page 7)• Sample Fund Agreement (page 8)• Answers to your questions (page 9)• How to establish your endowment fund (page 10)

Your church or faith-based nonprofit can create a flexible fund to help grow an ongoing, permanent source of support for the future. InFaith staff is available to answer your questions about organizational funds and the process for establishing your endowment fund. For assistance, call InFaith Community Foundation at 800.365.4172.

InFaith Community Foundation

is a proven steward, earning

Charity Navigator’s top rating for

sound fiscal management, and

GuideStar’s top rating for transparency

and commitment to excellence.

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PRIVACYProtecting the privacy of your information is a

responsibility InFaith takes seriously, and physical,

electronic and procedural safeguards are in place

to protect all data.

InFaith respects your wishes for privacy and will

not share, sell or exchange your name or contact

information with any person or entity other than

those acting on behalf of InFaith. Disclosures

regarding your gift will be made only to relevant

parties specifically authorized by you. In order to

provide you with the best customer service possible,

InFaith also provides online view-only access to the

financial advisor(s) identified on page 6 of the Fund

Workbook. You have the option to authorize online

view-only access to others if you wish. This online

access includes your contact information, your gift(s)

and grants from your endowment fund.

If you wish to restrict online access to your

financial advisor and/or others, please call InFaith

at 800.365.4172. You may alter your disclosure

preferences at any time.

CUSTOM INVESTMENT ALLOCATIONYour endowment can be invested in one, two or all

three InFaith investment portfolios based on your

needs and interests.

Growth Portfolio — 85% equities/15% fixed income

for maximum sustained support far into the future.

Mission Portfolio — 85% equities/15% fixed income

for maximum sustained support through investments

that are aligned with mission and provide positive

outcomes for our shared community.

Income Portfolio — 100% fixed income for maximum

distributions within a five-year time horizon.

Factors to consider when making your portfolio

decision:

• Short-term vs. long-term grantmaking plans;

• Ability to tolerate short-term fluctuations in

investment values (and related investment risks) for

potentially greater fund growth and support over

the long term; and

• Commitment to investing for mission.

You can change your recommended portfolio mix

quarterly, with investment adjustments occurring at

quarter end. For more information regarding these

investment options, contact InFaith.

Investment Monitoring

InFaith investments, whether actively managed or

indexed, are measured by strategic benchmarks

and monitored quarterly. The overall investment

portfolio is measured against a composite

benchmark that reflects the target asset allocation.

InFaith’s investment policies, objectives and

guidelines are reviewed at least annually, and

investment performance is continually monitored

with the assistance of investment consultants.

Please contact InFaith for more complete

information about investment policies and historical

performance returns.

BENEFITS TO YOUR ORGANIZATIONAn endowment fund at InFaith Community Foundation offers a number of benefits to your church or

nonprofit organization:

ADMINISTRATIONThrough InFaith, your endowment gains professional

expertise at a low cost. You also have access to

investment portfolios typically not available to

smaller endowments. Your endowment committee is

relieved of investment and record-keeping burdens,

freeing you to concentrate on promoting and

building your endowment.

Each fund is assessed an annual 1% fee to cover

the cost of program and administrative expenses.

Assets in excess of $1,000,000 are assessed reduced

fees.* All investment fees and other direct costs

attributable to the fund, such as brokerage costs,

are passed directly to that fund. There are no fees

or costs billed to the organization.

As endowment fund assets are not tech nically

owned by your organization, they are not subject

to claims against your organization. InFaith is

independently audited every year and gifts are

monitored, reported and managed to ensure

perpetuity.

GIVING OPTIONS Through InFaith, you have access to giving options

such as charitable remainder trusts and charitable

gift annuities. Your fund can also accept assets

that require special expertise, such as real estate.

Committee members do not need a comprehensive

under standing of each type of gift as they can call

InFaith for assistance, toll-free. This toll-free service

is also available to those who wish to make planned

gifts to the endowment.

DISTRIBUTION FLEXIBILITYYour endowment committee determines how the

fund will be used, when distributions are made and the

criteria for distributions. Please note distributions can

only be made to IRS-qualified charitable organizations.

Most churches fall under the church body’s charitable

status. Grants cannot be made to individuals or used

for member ship, benefit, auction items or instances

where charity mixes with personal benefits or to fulfill

a fundraising commitment or pledge.

Your endowment committee has the option to skip

distributions in any given year.

FUNDRAISING EXPERTISEThink of InFaith staff as your backroom resource.

Contact InFaith for more information about:

• Bulletin inserts, suggested newsletter articles and

other fundraising materials;

• Consultations regarding gift design or work directly

with potential donors and their advisors; and

• Assistance in the design of a custom brochure and

web page promoting your endowment fund.

FUND UPDATESYour organization’s fund advisor receives quarterly

updates on the status of the endowment fund. In

addition, daily access to the fund’s status is available

through InFaithFound.org. InFaith encourages you to

call whenever you may have a question about any

aspect of your fund or InFaith policies in general.

ANONYMITY Your organization’s supporters can work directly with

InFaith to make a gift to the endowment fund. InFaith

will protect their identity, forever if that is their wish,

while providing the necessary written substantiation

for tax purposes.

* Fees are subject to change.

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ELEMENTS OF A BYLAW Bylaws typically describe the endowment fund, its

purposes and governing structure. Bylaws might

include the following elements:

• Establishing your endowment fund at InFaith;

• Transfering ownership of organizational assets to

the fund;

• Establishing a fund advisory committee to

communicate with InFaith;

• Establishing a policy for use of distributions from

the fund;

• Authorizing certain officers to execute the fund

documentation;

• Authorizing the endowment committee to approve

future transfers of gifts to the fund; and

• Adopting bylaws for the governance of the

endowment committee with regard to committee

size, qualifications for serving on a committee,

voting procedure, frequency of meetings, election

of a chairperson and any other desired officers, term

of service for members, promotion of the fund,

process for reporting to the church or board of

directors, etc.

BYLAW LANGUAGE FOR DISTRIBUTIONSEndowment bylaws typically dictate how much is

distributed from a fund each year, with distribution

amounts often calculated using one of two methods:

Income only. This method refers to distributions

made only from the fund’s investment income and

frequently prohibits the distribution of principal.

There may also be instances when supporters of the

endowment fund restrict expenditure of their gifts’

principal.

Designated percentage. This more current method

specifies a designated percentage of the fund’s

assets for distribution each year, disregarding

traditional notions of income and principal as they

relate to assets held in the endowment fund. The

distribution percentage is typically 4-6%, with actual

distribution amounts varying year-to-year based on

the fluctuating value of the endowment.

ALIGNING YOUR INVESTMENT MIXWhen building investment portfolios for endowment

funds, it makes sense that investments should be

aligned to support the distribution policy. While

an income-only endowment strategy may sound

simple, the following factors must be considered:

• Investment theory has changed its focus to total

return, rather than strictly income production;

• Growth investments typically produce little or no

income; and

• Investing strictly to produce income doesn’t

incorporate diversification or encourage growth

of endowment assets.

With the designated percentage method, the

distribution percentage is purposefully set lower

than the fund’s anticipated growth. This allows

your fund to grow in prosperous times, building

for future years. In down years, this method allows

for continuing distributions when they’re needed

most, ultimately meeting the endowment’s mission

regardless of your fund’s investment performance.

InFaith can distribute either specific dollar amounts

or a percentage of your endowment fund’s value.

Given the structure of InFaith investments, it is

unable to calculate and provide “income only”

amounts as may be dictated by some endowment

fund bylaws.

ENDOWMENT COMMITTEE RESPONSIBILITIES• Define the committee’s relationship to the

governing structure of the church/organization.

• Define the purpose(s) of the endowment fund;

communicate those purposes to the organization’s

donors and members.

• Plan and carry out activities that create visibility

for the fund.

• Accumulate small cash gifts and send them

collectively to InFaith.

• Consider and make decisions about special

purpose gifts.

• Plan for making distributions from the

endowment fund.

• Plan and carry out fundraising activities for

memorial gifts, bequests and major lifetime gifts.

INFAITH RESPONSIBILITIES• Accept gifts to the fund.

• Prepare transfer papers for gifts of securities and

provide instructions to donors.

• Provide consultations to donors and their advisors

about charitable gift annuities, charitable

remainder trusts and other more complex gifts.

• Evaluate gifts of real estate above a certain value

threshold, consult with local advisors, assist with

transfer documentation, list property for sale,

evaluate buyers and close sale.

• Invest gifts according to InFaith’s investment policy.

• Make quarterly reports to the fund advisor on the

value of the fund.

• Offer assistance to the endowment committee

through strategic planning and design of an

informational brochure, personalized web page and

bulletin inserts. InFaith can also provide resource

referrals, telephone consultations with committee

members, fundraising ideas and information on

other charitable organizations and causes.

InFaith is not an investment manager and does not provide financial advisory services.

AUTHORIZING YOUR ENDOWMENT FUNDAn endowment fund at InFaith Community Foundation is typically established by action of the voting

members of the church’s or nonprofit’s board of directors. The specific form of action should be consistent

with the requirements of the governing documents of the organization, such as bylaws.

ENDOWMENT RESPONSIBILITIESChurches and faith-based nonprofits manage their endowment funds in a variety of ways. While each

endowment fund is unique, the following guidelines outline the roles and responsibilities of the fund’s

endowment committee versus those of InFaith.

InFaith offers sample bylaws for your review. For more information, contact InFaith.

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How much can we receive from the

endowment each year?

Organizations typically request a percentage of

their fund’s value as a distribution once each year.

Grants of $300 or more can be requested at any

time, providing a minimum balance of $25,000 is

maintained.

A rate of 5% is recommended for funds invested in

the Growth or Mission Portfolios. (This is consistent

with InFaith’s standard distribution policy for

individual funds.) Even when the fund’s investment

growth is expected to be greater than 5% in a given

year, InFaith advises part of the growth be kept in

the fund to provide a buffer against less favorable

years and inflation, and to ensure a distribution

can be made each year. As the fund grows, this

percentage will produce a larger distribution

each year. It’s important to note InFaith does not

guarantee investment returns for funds of InFaith.

How long will the endowment fund last?

The fund continues to offer support to the

organization on a permanent basis.

Can we use the endowment fund for

scholarships?

InFaith cannot distribute scholarship awards

through organizational endowment funds unless

the organization is an accredited educational

institution. This is due to an IRS requirement that

scholarships from a charitable fund must be awarded

on an objective and non discriminatory basis with

no “private benefit” conferred. Given the familiarity

endowment committees typically have with potential

scholarship candidates, objectivity is often an

issue. If you have questions or concerns regarding

scholarships, please contact InFaith.

Who promotes giving to the endowment fund?

Your endowment committee is responsible for

encouraging giving among the membership, and

InFaith is here to support your efforts in a variety

of ways:

• InFaith will help the committee design a

promotional brochure and giving options web

page tailored to the fund. There is no charge

for the design service and the organization is

responsible for printing expenses;

• InFaith offers charitable giving materials that can

be included in bulletins or other publications; and

• Staff is available to work directly with donors

and their legal and tax advisors as they design a

charitable gift consistent with their wishes.

How can individuals make gifts to the

endowment fund?

Cash gifts of $1,000 or more and gifts of non-cash

assets can be made directly to InFaith. Checks may

be made payable to InFaith Community Foundation

for the benefit of (insert name of your organization’s

fund) and sent to InFaith. Individuals who wish to

make an anonymous gift may contact InFaith directly.

Cash gifts of less than $1,000 should be directed

to your organization. You can then hold these gifts

and forward them to InFaith when the total reaches

$1,000 or more.

Because of state and federal tax laws, including the

Uniform Prudent Management of Institutional Funds

Act (UPMIFA), it is important that potential donors

be advised, prior to making a gift, that distributions

from the endowment fund may include principal as

well as earnings from time to time.

ANSWERS TO YOUR QUESTIONS

AGREEMENT ESTABLISHING

FIRST CHURCH ENDOWMENT FUND

THIS AGREEMENT is made by and between First Church (the Church), a religious organization located in Star City, Minnesota, and InFaith Community Foundation (Foundation), a Minnesota nonprofit corporation located in Minneapolis, Minnesota.

The Church hereby creates a charitable fund to be known as The First Church Endowment Fund (the Fund). Gifts conveyed by or on behalf of the Church are irrevocable contributions to the Foundation.

1. The Foundation shall hold and administer all gifts the Church or any other person or organization contributes to the Fund in accordance with the provisions of this agreement, the Foundation’s Articles of Incorporation, bylaws, and policies, as amended by the Foundation from time to time, all of which provisions and amendments are hereby incorporated by reference. The Articles of Incorporation and bylaws authorize the Foundation’s Board of Directors to modify any restriction or condition of this Agreement, if, in the sole judgment of the Board of Directors, such restriction or condition becomes unnecessary, incapable of fulfillment, or inconsistent with the charitable purposes of the Foundation.

2. The Foundation shall pay as much of the Fund’s net income or principal or both, as determined by the Distribution Policy adopted by the Foundation and amended from time to time, to such charitable organizations as the Foundation determines to be appropriate. All distributions will be made in such amounts and at such times as determined by the Foundation.

3. The Foundation may make distributions from principal, in addition to distributions pursuant to the Distribution Policy, as the Foundation determines to be appropriate.

4. The Church hereby appoints its Endowment Committee Chair to act as Advisor to the Fund. The Church may at any time in writing remove an Advisor without cause and name a successor Advisor.

5. The Advisor may from time to time recommend to the Foundation, preferably in writing, the charitable organizations to which distributions should be made from the Fund. The Advisor may also recommend, preferably in writing, that no distributions be made from the Fund in a given year, either from income or from principal.

6. The Advisor may recommend in writing that distributions be made from the Fund’s net income or principal or both, as defined in the Foundation’s Distribution Policy.

7. The Advisor’s recommendations are not binding on the Foundation.

8. The Church’s purpose in establishing the Fund is to encourage its members and supporters to make legacy gifts to the Church and to create a stable and growing source of revenue for the Church’s mission and ministries.

9. The duration of the Fund is perpetual. If at any time the Church or its successor ceases to qualify as an IRS-qualified charitable organization, the Fund shall continue for the benefit of the InFaith Community Fund.

10. The Foundation shall be paid an administrative fee from the Fund in accordance with the policies adopted by the Foundation Board of Directors, as amended from time to time.

11. The Foundation may commingle the assets of the Fund with the assets of any other fund or funds which the Foundation holds and administers, provided the separate identity of the Fund is at all times maintained.

This agreement consists of one (1) typewritten page, dated: ________________________.

First Church

By: _________________________________________

Its: _________________________________________

InFaith Community Foundation

By: _________________________________________

Its: _________________________________________

Sample Fund Agreement

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YOUR NEXT STEPAt InFaith Community Foundation, you’re at the center of the process as we work together to achieve

effective, positive and lasting change throughout our community. We look forward to working with you

to create an endowment solution that meets your specific needs and interests. To discuss your charitable

interests and learn more, contact:

InFaithFound.org 625 FOURTH AVENUE SOUTH, SUITE 1500, MINNEAPOLIS, MN 55415

p 800.365.4172 f 612.844.4109

HOW TO ESTABLISH YOUR ENDOWMENT FUND

1. Complete the Fund Workbook for Organizations and send or fax to InFaith Community Foundation.

2. InFaith drafts a Fund Agreement and returns it for your review.

3. The appropriate person signs the Fund Agreement on behalf of the organization and returns it. InFaith,

in turn, signs the agreement and returns a copy to the organization for your files.

4. Initial gifts to your endowment fund can be sent with the signed Fund Agreement or sent later.

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InFaith COMMUNITY FOUNDATION®

VISIONThroughout our community and by God’s grace, we will achieve

effective, positive and lasting change.

MISSIONTo serve our donors with integrity as together we change lives

and spread joy by sharing our blessings with the world.

VALUESAs a Christian organization, our work reflects our service,

stewardship, collaboration, possibilities and results.

InFaith Community Foundation is committed to environmental stewardship, printing on paper made from 100% post-consumer fiber using Green-e Certified renewable energy and meeting Forest Stewardship Council standards.

WE OFFER· Donor advised funds, collaborative

funds and organizational endowments

· Breadth of giving options, including

cash, stock, real estate, bequests,

beneficiary proceeds, life insurance,

charitable gift annuities and charitable

remainder trusts

· Flexibility to give to any charity and

make changes if you wish

· Maximum tax benefits based on when

and how you give

· Donor-centered and online services

© 2015 InFaith Community Foundation 4000-0515

Spreading Joy. Changing Lives.

InFaithFound.org 625 FOURTH AVENUE SOUTH, SUITE 1500, MINNEAPOLIS, MINNESOTA 55415 p 800.365.4172 f 612.844.4109