Endangered by Endowments?
Lyle E. Schaller
April 1, 1988
The caution, at first, sounds unnecessary.
"If I've seen one church demoralized by excessive reliance on an endowment fund, I've seen at least twenty," declared one denominational executive. "It's a guaranteed way to pauperize a congregation."
Many churches are tempted to dismiss this caution. Who wouldn't want the "problem" of a large endowment?
A growing number of churches have been actively encouraging members to remember the congregation in their wills. So many have been so successful that it's time to ask, "What if you encourage members to leave a tithe or more of their estate to your church, and they do it?"
A large bequest sounds wonderful. But horror stories abound of congregations that became dependent on the dead to pay the bills incurred by the living, thus draining the church's vitality.
Who controls the endowment fund?
One congregation, for example, decided to construct a new sanctuary. They raised one-fourth of the cost in cash, received pledges over three years to pay for another fourth, and arranged a twelve-year mortgage to cover the balance. The income from the three-year pledges met the mortgage payments in the first years following completion of the new sanctuary.
During the third year, a committee was appointed to plan a new campaign to secure pledges for the second three years of mortgage payments. About that time, the committee received news that a member had died and her bequest to the church would provide income to more than cover the mortgage payments. The committee never met again.
A few years later, the finance committee found the budget requests exceeded the anticipated level of giving. No problem. They took the remainder of the bequest income to balance the budget.
Three years later the finance committee ...
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