Comprehensive Endowment Policy

Statement of Purpose
Covenant's endowment is one of the resources with which God has provided this congregation to be used on God's behalf.  The endowment consists of 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 Covenant's ministry.

Giving Options
Covenant 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 pastor 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 Covenant, 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 Investment Committee, 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 approved by Session.  In the unlikely event that Covenant should cease to exist, endowment funds would revert to the Presbytery of Santa Fe 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 a deferred gift becomes available to Covenant, the family, legal or financial advisor should notify the church office.  The Session is 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, the Session will undertake a serious review and is empowered to refuse the gift if the gift would interfere with Covenant'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 the 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
Covenant'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 and still permit growth in the value of the endowment.  Our two major funds, the General Fund and the Long Term Fund are managed separately.

Funds are managed by the Investment Committee and are normally invested in mutual funds.  Endowment fund assets are managed in accordance with Covenant’s  Investment Policy which is approved by Session.  The Investment Committee is responsible for asset allocation and for individual mutual fund selection.  No more than 60% of the total value of the endowment fund may be in equity at any time.

Reporting Policy
As soon as the information becomes available, the endowment's performance during the previous year will be reported in the ARK, 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 Covenant 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.  Any change will require ratification by the Session.

Endowment Practices and Procedures

Tracking Gifts
To assist in the church's long term financial planning, Covenant 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
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).  If the donor is willing to be acknowledged, an in memoriam notice mentioning the gift will be published in the ARK.  Annually, 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 the ARK and the Sunday bulletin.
 
Receiving Gifts
Gifts under $1,000 will be deposited in Covenant's General Fund.  Gifts of $1,000 and over will be deposited as soon as practicable in Covenant’s Long Term Fund.  Cash and checks will be deposited immediately in the church's money market account until disposition is determined.  Securities held for the owner by a brokerage firm (in "street name") should be transferred directly to the church’s brokerage account.  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 church.  The donor or his/her representative should obtain specific instructions from the Covenant church office. The donor or his/her representatives should contact the church office to discuss disposition of other types of valuables.

Budgeting
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 2007 budget, developed in the fall of 2006, would be based on the average of year-end values for 2003-2005.  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
The church's annual audit will include a review of compliance with the designations and restrictions effecting funds in the endowment

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

Relationship with the Presbyterian Foundation
The Foundation exists "to create an ever growing awareness among Presbyterians of the need and joy of making gifts from their accumulated resources."  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.  A donor may use any provider they choose in putting together a planned gift.