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Church Policies

Comprehensive Endowment Policy for the Madison Avenue Presbyterian Church

Statement of Purpose

MAPC's endowment is one of the resources with which God has provided this congregation to be used on God's behalf. Since its inception in 1899, our endowment has been built up by the gifts and bequests of "faithful stewards," both members and friends, to strengthen the ongoing work of the church. These donors recognized the opportunity to give a gift that keeps on giving, since investment returns magnify the impact of their original gifts. Just as annual stewardship giving is a chance to return to God a portion of our annual income, contributions to the endowment provide a means to share the accumulated gifts which God provides us as a durable support for MAPC's ministry.

Giving Options

MAPC encourages its members and friends to think seriously not only about their annual support of the church, but also how they can help maintain the church's ministry in the long term. The pastors and members of the Planned Giving Committee are always happy to discuss the full range of giving options, including cash, securities, real property (real estate and valuable tangibles), life insurance, and life income plans (annuities, pooled funds, and trusts).

Use of Endowment Funds

We believe that endowment funds should be used to support the mission of our church as described in the Great Ends of the Church (FG - 1.0200, The Book of Order): "the proclamation of the gospel for the salvation of humankind; the shelter, nurture and spiritual fellowship of the children of God; the maintenance of divine worship; the preservation of the truth; the promotion of social righteousness; and, the exhibition of the Kingdom of Heaven to the world.". We do not, therefore, restrict the use of endowment funds to one or another area of ministry unless we are requested to do so by the donor. The bulk of our endowment is not restricted, that is, Session designates its use wherever the need is greatest at a particular time.

We encourage donors to leave the use of their gifts to the discretion of Session. Nevertheless, we recognize that some gifts will be restricted. Designations/restrictions are scrupulously observed and compliance audited. Donors of such gifts will be asked to include language such as the following: "Should a time come when the purpose of this gift no longer meets the mission and objectives of the MAPC, the donor gives Session permission to use these resources in a manner consistent with its objectives."

Responsibility for Endowment Funds

Session is responsible for the use of endowment funds as part of its overall mission and budgetary responsibilities. The Board of Trustees, as proxy for Session, is responsible for management of these funds. Both boards take their stewardship of these funds very seriously: Use of funds and investment performance are regularly reviewed and audited. Decisions on the specific use of endowment funds in a given year are reviewed as part of the budget process at the annual joint meeting of Session and the Board of Trustees and approved by Session. In the unlikely event that MAPC should cease to exist, endowment funds would revert to the NY Presbytery which would be bound by donors' desires in using the funds.

Budgeting Process

Funds from the endowment are budgeted annually to be used based on expected total return (and taking designations/restrictions into account). That is, we use interest income, dividends, and a portion of capital appreciation. Our goal is withdraw no more than 5% per annum of the endowment's market value. We do not invade the original principal of a gift given to the church unless the donor's instructions require us to do so. Moreover, we seek to reinvest enough every year to assure that over time the principal value of our entire endowment grows at or faster than the rate of inflation.

Procedures for Soliciting, Receiving, and Acknowledging Gifts to the Endowment

Where possible the church keeps track of anticipated donations and donors' intent about acknowledgment and similar issues. When the donor of a bequest dies or deferred gift becomes available to MAPC, the family, legal or financial advisor should notify one of the pastors. The Board of Trustees and Session are responsible for accepting such gifts and bequests. Normally this is a pro forma process; however, where restrictions or designations apply or where the gift may entail some liability, these boards will undertake a serious review and are empowered to refuse the gift if the gift would interfere with MAPC's pursuit of its mission. To avoid any misunderstandings, donors whose proposed gifts contain designations, restrictions or entail some potential liability are urged to discuss these issues with a pastor or member of the Planned Giving Committee as their gift is being planned. When gifts that have been accepted are received, they are handled responsibly, e.g., cash invested, securities placed in safekeeping, real property maintained, etc. until whatever arrangements necessary to place the funds in the endowment corpus have been completed. Once received, gifts are acknowledged by the church to the donor (if a living gift) or their kin (if a bequest) and, if they consent, made known to the congregation or acknowledged in other ways.

Management of the Endowment

MAPC's goal in managing its endowment funds is to conserve capital while obtaining returns that will enable the church to withdraw the funds needed to support the budget each year (see Budgeting Process, above) and still permit growth in the value of the endowment. Our three major funds, the General Fund, the Luce Fund (designated to support administration), and the Cutter Fund (designated for mission) are managed separately as balanced accounts. Our target is to outperform a market index based 60% on the S&P 500 Stock Index and 40% on the Lehman Brothers Corporate/Government Bond Index.

Funds are managed by an outside investment counselor, recommended by the Investment Committee of the Board of Trustees and approved by Session. This counselor is responsible for asset allocation and for individual stock and bond selection, subject to the guidance and approval of MAPC's Investment Committee, consistent with the Board of Trustees' responsibilities under the NY State Religious Corporations Law. No more than 80% of the total value of the accounts may be in equity at any time. The funds are also subject to other restrictions based on prudential and ethical concerns (for details, see MAPC's Endowment Practice and Procedures statement below).

Reporting Policy

As soon as the information becomes available, the endowment's performance during the previous year will be reported in UPDATE, including beginning and ending balances, the amount of income earned, the total return, the amount of money withdrawn and the amount donated to the endowment. These results will also be reported at the Annual Meeting. Any member of MAPC may inspect the records of the endowment at the church on any business day.

Policy Review and Amendment

Every two years this policy shall be distributed to and reviewed by the Session and the Trustees. Any change will require ratification by the Session after review by the Trustees.

3/17/94 rev Ratified by the Board of Trustees and approved by Session, April 1994

Endowment Practice and Procedures for the Madison Avenue Presbyterian Church

Tracking Gifts

1. To assist in the church's long term financial planning, MAPC will seek to develop and maintain a database including the following data:
• donor (current or planned)
• name
• member/nonmember
• preferred contact address/phone
• programs/activities /area of mission individual is interested in
• willingness to have gift publicly acknowledged
• interest in others types of giving
• honoree if a memorial
• name
• member/nonmember
• date of death
• gift type and value or expectancy
• restrictions or designations, if any
• next of kin/closest contact
• name of attorney or financial advisor if applicable.

Acknowledging Gifts

1. When a gift is received, a letter from a pastor will be sent as soon as possible to the donor (if living) or family or estate (if deceased).
2. If the donor is willing to be acknowledged, an in memoriam notice mentioning the gift will be published in UPDATE.
3. Annually, on or near Palm Sunday, a list of donors to the endowment who are willing to be acknowledged and an indication of the total of gifts for the year will be published in UPDATE and the Sunday bulletin.

Receiving Gifts

1. Gifts under $10,000 will be deposited in MAPC's operating account. Gifts of $10,000 and over will be forwarded as soon as practicable to our investment counselor.
2. Cash and checks will be deposited immediately in the church's money market account until disposition is approved by an officer of the Board of Trustees.
3. Securities held for the owner by a brokerage firm (in "street name") should be transferred directly to the investment counselor. Bearer securities or those registered in the donor's name should be signed over to the church and delivered in a secure manner to the investment counselor. The donor or his/her representative should obtain specific instructions from the MAPC Business Office.
4. The donor or his/her representatives should contact the church Business Office to discuss disposition of other types of valuables.

Investment Guidelines

1. The investment counselor will have an impeccable history of integrity and professionalism and must agree to our investment parameters. It is further expected that conflicts of interest will be avoided in managing MAPC's funds. Should such a conflict arise, it should be communicated to the Investment Committee at once.
2. Borrowing of funds or securities is not permissible; margin accounts and short sales are prohibited.
3. Direct investment in real estate and commodities is prohibited.
4. Funds may not be invested nor obligations incurred in futures, options, swaps, forwards, CMOs, or any other financial derivatives. However, preferred equity or debt securities convertible into equity securities of the same issuer are permissible.
5. Recognizing that many U.S.-based companies derive much of their income from non-U.S. activities and that many foreign-based companies derive substantial income from U.S. activities, no restriction is placed on investment in non-U.S. companies. However, to limit currency risk, no more than 15% of the funds may be invested in securities denominated in any single foreign currency, and no more than a total of 40% of the funds may be invested in non-U.S.-dollar denominated securities. In addition, when investing in non-U.S. securities, particular care must be taken to ensure that markets are sufficiently liquid to permit timely implementation of investment decisions.
6. No more than 10% of the funds at cost may be concentrated in the securities of any one issuer (other than U.S. Government and Agency debt), and no more than 20% in any one industry.
7. All securities shall be readily marketable, and fixed income securities shall be investment grade.
8. No specific restriction is placed on portfolio turnover, but funds are notto be managed for short term gains.
9. The Investment Committee may further restrict security selection based on ethical investing criteria.
10. MAPC's investments must be held in custody by a bank or trust company based in N.Y. State.
11. The investment counselor is responsible for reporting the value of the funds to the Business Manager of the church monthly, for preparing a quarterly summary of the performance and transactions in each account for review by the Investment Committee, and for meeting as requested at least semiannually with the Investment Committee and annually with the Board of Trustees to review performance.

Budgeting

1. Each year's budget for withdrawals from the endowment will meet the goals set forth in the Endowment Task Force Report (March 1993) to reduce MAPC's dependence on endowment funds, e.g., 9.5 % in 1994, 9.0% in 1995 and so on reducing by .5% increments to 5% in 2003.
2. The target percentage for the next fiscal year is applied to the average of the year-end market values of the endowment for the three years prior to the year in which the budget is being set. For example, the 1994 budget, developed in the fall of 1993, was based on the average of year-end values for 1990-1992. The one-year lag is due to the fact that the budget is developed before the current year's final endowment value is known.

Auditing

1. The church's annual audit will include a review of compliance with the designations and restrictions effecting funds in the endowment

Communications Policy

1. In addition to regular reporting (see MAPC's Comprehensive Endowment Policy), Session or its designees will see that materials about giving options are available to the congregation on an ongoing basis.
2. At least annually a program will be made available to educate members and friends about their giving opportunities.

Relationship with the Presbyterian Foundation

1. The Foundation exists "to create an ever growing awareness among Presbyterians of the need and joy of making gifts from their accumulated resources."
2. If a donor wishes to make a structured or lifetime gift to the church, the Presbyterian Foundation offers a number of annuity, pooled, and trust products appropriate for different amounts and current income needs. Because the Presbyterian Foundation is focused on providing for the church and its members and because its investment returns have been acceptable, we provide information about their products.
3. A donor may use any provider they choose in putting together a planned gift.

Changes to Policies and Procedures

The Board of Trustees and Session will be notified of any changes in these practices and procedures by the responsible staff person or committee.

[3/17/94 rev CLP]

For more information on endowment policies, consult the PEER Network (formerly the National Association of Endowed Presbyterian Churches) site.

 

 

 

 

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