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….”
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.