Endowments: Blessing or Curse?

Reflecting on an Episcopal Pulse Survey
By The Rev. Ken Howard

The latest Episcopal Pulse micro-survey asked two important questions:

  1. Does your congregation have an endowment? (Yes | No)
  2. If so, what does your congregation primarily use the investment proceeds for? (select one)

The results were very interesting


Question #1 Results:
Does your congregation have an endowment? (N-381)

By the numbers:

  • YES (My congregation does have an endowment): 73% (277)
  • NO (My congregation doesn’t have an endowment? 27% (105)


Question 2 Results

If so, what does your congregation primarily use the investment proceeds for? (N-277)

By the numbers:

  • Normal Operating–Undesignated: 38% (104)
  • Normal Operating–Designated (staff, programs, etc.): 14% (38)
  • Buildings & Grounds–Deferred Maintenance: 10% (28)
  • Buildings & Grounds–General Maintenance: 8% (23)
  • Outreach–External Charitable Organizations: 5% (14)
  • Buildings & Grounds–New Construction: 3% (8)
  • Outreach–Congregant Delivered: 2% (5)
  • Other: 20% (56)


Key Insights

Percentage reporting endowments:

  1. Nearly three quarters (73%) of respondents’ said their congregations have endowments
  2. More than one quarter (27%) said their congregations did not.

Of those 277 with endowments:

  1. 87% used their endowments primarily for categories other than New Construction (3%) or Deferred Maintenance (10%), with the remaining 9/10ths regularly using for categories that would best be spent from general operating funds.
  2. Even if we exclude Other as a category, the remainder still would be the overwhelming majority by a two-to-one margin.



Assuming these numbers accurately represent the state of The Episcopal Church, what do we make of these survey results?

When FaithX developed the Congregational Vitality Assessment, the research (and our own observations based on years of stewardship consultation) led us to score the existence and manner of use of endowments in a way that some found controversial. 

  1. We rated the stewardship of congregations with endowments one point lower than those who did not.
  2. We rated congregations that regularly used more than 3% of their endowment proceeds lower than those that did not.

Our reason for rating them this way is that, on average, the overall impact of having an endowment and using it for general operating expenses on anything more than an emergency basis was to depress individual stewardship. That is, regular household giving was a percentage of the operating expenses over time, and when the endowment ran out, operating income dropped significantly (our research sources may be found at cvatool.org).

So from our point of view, it is concerning that the vast majority are using their endowments for spending categories that should most appropriately come from general operating funds.

And we wonder, could these results be a sign that most Episcopal congregations are increasingly managing decline, with decreasing hope of achieving sustainability?

Time will tell…

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