When you serve as a trustee, committee or board member of a congregation that has endowed funds, you may be shouldering more responsibility than you realized. Depending on how your congregation is organized, you may be considered a “fiduciary,” which means you have certain legal duties.
The basic requirement for someone considered a fiduciary for institutional funds is codified in state law*:
“In determining to appropriate or accumulate endowment funds, an institution shall: (1) act in good faith and with the care a prudent person acting in a like position would use under similar circumstances….”
The state laws governing institutional funds conform to the Uniform Prudent Management of Institutional Funds Act, or UPMIFA. You can find more detailed information for your state at this website.
As a congregational leader, what is your fiduciary responsibility as it applies to endowed funds? Some best practices will include:
- Establishing an investment committee and determine its operating procedures
- Developing an investment policy statement
- Select an investment advisor
- Implement and document compliance with your established procedures and policies
- Monitor and review investment performance and investment advisors
- Promote transparency and accountability
An outside investment advisor can carry the burden of specific investment decisions. However, as a fiduciary, you still have a duty to monitor the practice and performance of your investment advisor.
An endowment can be a blessing to a congregation when managed appropriately. Consult with a professional to ensure your endowment is helping you fulfill your mission, vision and ministry.
*Pennsylvania and Puerto Rico are the only two states/territories that have not implemented UPMIFA.