Tuesday, June 17, 2014

How Much Income Can We Spend From Our Endowment?

By David S. Bell

At the United Methodist Foundation of Michigan, we receive inquiries regarding the appropriate rate of distributions from Endowment Funds. Many churches limit their distributions to "interest" and do not take any portion of the capital gains or market appreciation as a part of their earnings. Twenty years ago this may have been appropriate as interest rates averaged 6-8% and about half of all stock market returns were in the form of stock dividends.

Today, interest rates on bonds are in the 3-4% range and yields on stock dividends are less than 2%. An endowment invested in roughly equal allocations of stocks and bonds will receive little more than a quarter of its total investment return in the form of interest and dividends. Realizing these changes in the investment landscape, many thoughtful organizations are amending their endowment policies to provide for annual distributions as a percentage of fund value, not limited to interest or capital appreciation. Historically, the sustainable rate of endowment distributions has been in the 4-5% annual range.

To limit endowment income to interest only may not be good stewardship. This reduces funds available for ministry. If you would like to explore this concept more fully, why not schedule a consultation by a member of the United Methodist Foundation staff? You may also wish to receive a free copy of Dr. Barrett's useful booklet, The Thoughtful Christian's Guide to Investing Church Funds. Contact us for more information today.

David S. Bell is the President and Executive Director of the United Methodist Foundation of Michigan. David has a keen understanding of current economic and consumer trends impacting charitable giving, which he gained through experience as a pastor, development director, and national church leader. David is Chairperson of the Board of Directors of the Ecumenical Stewardship Center and active member of The Alban Institute, the Association of Fundraising Professionals, Christian Leadership Alliance, and the National Association of Church Business Administrators. David graduated from Drew Theological School and holds a BA in Religious Studies and Secondary Education from The College of Wooster. David and his wife, Ethel, have two children and reside in Brighton, Michigan.

Tuesday, June 3, 2014

Spare Change

By David S. Bell

What happens to spare change? Many people have developed interesting ways of collecting or using their spare change. Some families collect it in a jar for a designated family activity, like vacations. Parents often give these coins to their children for safe keeping in a piggy bank. Still others keep it in the change holder of their car for road tolls or quick stops at a drive-thru.

The value and use of spare change is relative depending on one’s income level. For instance, one might consider generous giving to the mission and ministry of the church. A few dollars of spare change may represent a generous offering for some people. However, these coins also represent the leftover money – truly spare change – placed in an offering plate by others with greater monetary means.

By definition, spare change is money not required to cover the expense of daily existence. Some people won’t even carry spare change. They want to avoid the jingle of the coins, the perceived hassle of finding the coins, or even the actual weight of the coins in their pocket or wallet. Spare change to one person may be the equivalent to a daily wage for another person. Money is relative to one’s point of view or socio-economic position in our global community.

Luke 15:8-10 records the Parable of the Lost Coin. Jesus’ message to his disciples is not focused on spare change, but rather on a perspective of abundance and generosity. Jesus compares finding a lost coin to finding treasure in heaven. He provides lessons in economics, wealth management, and repentance.

The woman in the parable lost the equivalent of one day’s worth of wages – well beyond the spare change in her life. Today, a daily minimum wage employee would earn approximately $60.00. This daily wage might seem like spare change to a millionaire. Frankly, many people who are far from being millionaires live a lifestyle where spending $60.00 here or there is treated like spare change. Yet for others, this daily wage may be the difference between providing food and shelter or being hungry and homeless. The value of the lost coin decreases relative to the wealth of the individual.

As one’s disposable income decreases, one’s desire and need to make prudent spending choices increases. However, many North Americans have fallen into the cultural pull of satisfying our perceived “needs.” In this self-indulgent society, we treat ourselves first. We are swept up in the enticing ideology of living for today. The more one becomes entangled in self-indulgence, the less one can maintain the biblical principles of saving and giving. Money ends up controlling people’s daily lives. Jesus reminds us that generous giving frees us from this bondage and opens the possibility for other pervading, God-honoring principles to direct our daily lives. When spare change is dropped in the offering plate, spiritual poverty supersedes economic poverty.

Jesus offers hope for the spiritually impoverished. This hope is the gift of salvation offered to those who repent of their sins. God offers everyone, regardless of economic standing, the gifts of freedom, hope, and deliverance. Like the woman in this parable, we are called to treasure the gift of God’s grace so freely given to all. Generous giving is one example of living a lifestyle grounded in God-honoring principles. What do our habits with spare change suggest about our values, priorities, and commitment to God?

David S. Bell is the President and Executive Director of the United Methodist Foundation of Michigan. David has a keen understanding of current economic and consumer trends impacting charitable giving, which he gained through experience as a pastor, development director, and national church leader. David is Chairperson of the Board of Directors of the Ecumenical Stewardship Center and active member of The Alban Institute, the Association of Fundraising Professionals, Christian Leadership Alliance, and the National Association of Church Business Administrators. David graduated from Drew Theological School and holds a BA in Religious Studies and Secondary Education from The College of Wooster. David and his wife, Ethel, have two children and reside in Brighton, Michigan.

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