The curse of a (dead) major donor

Last week we talked about how a single generous major donor can be a blessing or a curse.  The same is true for a significant bequest.

It seems whenever I talk with church leaders about a planned giving program, they are worried about it ruining their church. I don’t blame them, I’ve seen it happen. But I am also aware that people get smooshed crossing the street and I still think people should leave the sidewalk.

Having someone leave the church in his or her will and the gift ultimately doing damage seems to fall into three categories.

The first is that members believe that since the church is suddenly flush with cash, they can stop giving. This is quite real. While there is no sure-fire way to keep this from happening, church endowment experts agree that the key is to limit how these funds can be used. Using them to pay for new programs, missions, building maintenance, evangelism or similar efforts can leverage the gift. But endowments or planned gifts should never be used for regular operations such as salaries, utilities, or general expenses. The exception to the rule in salaries would be a new position, such as a youth director, where the endowment pays the salary in full the first year, 75% the second year, and so on. Your Endowment Policy should make clear how funds can and cannot be used.

The second way is that a gift without clear instructions can divide a church. Consider a gift where the will stipulates the money can only be used “for the care and maintenance of the church.” Some would feel that this clearly means the bricks and mortar. But others point out that in Sunday School we teach that the church is the building, not the people. A Planned Gifts Acceptance Policy indicates what group in your church has the power and the responsibility to consider such matters and make the final decision and can help head off such a situation.

The final pitfall is when the endowment outlives the useful life of the congregation. The rule of thumb is that it takes about 125 in worship on Sunday for the church to break even. This number is lower with a part-time pastor or other staff configurations. But if a large endowment is paying the bills a church can stay open with just one member who is authorized to sign checks. The problem with this, of course, is that at some point a church in serious decline stops doing kingdom work and is solely focused on its own members. “Just keep the lights on long enough for my funeral,” some might say. I don’t have an easy solution for this. Few in a church want to predict the congregation’s demise. I think it becomes a leadership issue for the clergy and lay leadership at the time, but these can be very difficult decisions and seem to be born more from emotion that mission-based thinking.

But as they say, don’t let perfect be the enemy of good. Planned giving can provide critical long-term financial support to your church. If you need help with your program, or if would like a copy of either policy discussed, let me know.

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