St Edmund's Episcopal Church San Marino

75th INITIATIVE UPDATE – Understanding True Endowment

One of the goals of The Next 75 Initiative is to seed a true endowment for St. Edmund’s.
There at two kinds of endowments: true endowment and quasi endowment.

What is true endowment?
When a donor makes a gift to the church and indicates that the gift is for the endowment, it becomes part of the True Endowment. The amount of the original gift (known as the corpus) can never be spent by the church but must remain invested; only the income, in the form of interest or dividends, may be spent by the church and, depending on the endowment policy of the church, sometimes some or part of the growth of the investment can be spent. Accountants call true endowments “permanently restricted”, referring to the permanent restriction on spending the corpus. A True Endowment is subject to legal regulations known as the Uniform Prudent Management of Institutional Funds (UPMIFA) which place limits on the management of endowments to protect the corpus of the endowment.

What is quasi-endowment?
A quasi endowment is created when the vestry believes the church’s financial situation is such that unrestricted, non-endowed gifts made to the church are in excess of the church’s projected needs for the long-term and they vote to endow the otherwise unrestricted funds. The intent is to restrict spending in the same way a true endowment is restricted but the restriction is not a legal one. The endowed status of a quasi-endowment fund can be unrestricted and the corpus can be spent when vestry votes in accordance with existing church rules to remove the endowed status so that all the funds can be used to support operations.

What is St. Edmund’s endowment?
The endowment which is the major goal of our our Next 75 Initiative is a true endowment. This endowment differs from the previous quasi-endowment in that the corpus will be subject to permanently restricted from expenditure. The only way to change that status is through a court order or a change order from the original donor. In this way, the endowment will be invested with a long-term perspective and can be expected to grow and increase the amount of income it provides the church over time.

How do I ensure my gift is part of a true endowment?
The key creating a true endowment is in the hands of the donor. When you make a gift intended for the true endowment, make your check payable to St. Edmund’s Endowment or, alternatively, send the church office an email or letter identifying your gift and stating you intention that it be included in the endowment. The Gift Commitment form included in the Next 75 Initiative prospectus package will also serve as your statement of intent.