Endowment Bylaw Revision – For Approval at Annual Meeting

To: MVUC Congregation 
From: MVUC Board of Trustees  
Subject: Recommended bylaw revision for the Endowment section of bylaws.  

Dear Members,  

In our March and April Board updates, we described a proposed change to the MVUC Bylaws that will affect how endowment funds are distributed. This proposed change to the existing Endowment Bylaw moves away from the original focus on the preservation of adjusted principal. Although that approach made sense in the past when our Endowment was smaller, the restriction on spending adjusted principal has made it difficult to develop a consistently balanced budget in part because there is persistent uncertainty about the annual amount available to transfer from the Endowment Fund to the Operating Fund. 

The new approach will result in a more consistent and generous boost from the Endowment and help MVUC meet its financial obligations, including ensuring that our staff is fairly compensated and addressing long-deferred maintenance. This change, which moves to a distribution model that annually allows the use of Endowment funds up to 4% of the total value of the Fund as of December 31 of the previous calendar, was created by the Bylaws Task Force with the help of the Endowment and Finance Committees. It was approved by all these groups and approved by the Board at the April Board Meeting.  

We are asking that this bylaw change be approved at the May Annual Meeting to help ensure availability of funds for next year’s operating budget. Additional Endowment bylaw changes will be presented with the other bylaw changes to be voted on in the fall of this year.

With the help of the Endowment Committee, the Board will monitor the implementation and effectiveness of these changes, over the next year or two, and entertain other changes in the future based on church needs, suggestions from members, and performance of the fund. If you have any questions, please email the Board (bot@mvuc.org) or visit the Board Table during coffee hours.  

Below is the recommended bylaw change for Endowment – Expenditure of Endowment Funds.  The plan is to pass this section of the revision to replace the strike-through section of the current bylaws below. 

Proposed amendment to Bylaws section 8.6:

Delete the highlighted language in Section 8.6 below, and add a new Section 8.6(1) as follows:8.6(1) Endowment  

1. Expenditure of Endowment Funds as authorized by the Board 

a. The Board of Trustees may authorize use of principal or earnings of the Endowment fund for general church operating or capital expenses, except that:  

1. in any fiscal year, such use of funds may not exceed 4% of the total value of the Endowment Fund as of December 31 of the previous calendar year; and  

2. the use of such funds may not reduce the total value of the Endowment Fund to less than $1,500,000.  

3. Either or both of these restrictions may be suspended in any fiscal year by an affirmative vote of at least two-thirds of voting members present at a congregational meeting convened in accordance with Article 5 of these bylaws.

2022 Current Bylaw – Endowment Fund Committee 

8.6 Endowment Fund Committee The Endowment Fund Committee shall be responsible for all matters pertaining to the management and administration of any or all endowment fund(s) established by the Board. Specific responsibilities shall be:  

• Stewardship and investment of endowment fund assets, either directly or via a professional investment manager. All such assets shall be maintained in accounts separate from other church assets and shall be controlled by officers of the Endowment Fund Committee.  

• Maintenance of all financial records associated with the endowment fund(s), including tracking of any special provisions or stipulations associated with contributions to the funds. 
• Annual appropriation, for use by the church, of appreciated assets (if any) after adjustment for inflation.

The Endowment Fund Committee shall have no authority to spend any endowment fund assets, other than reasonable and necessary management and administration costs. Its authority shall be restricted to the transfer of funds to church accounts under control of the Board. In addition, the committee shall be specifically restricted from transferring to the church any part of the adjusted principal of any endowment fund. This Bylaw provision may be changed only by a two-thirds vote cast at a congregational meeting called by the Board in accord with article V.  

Membership of the Endowment Fund Committee shall consist of six persons, plus the church treasurer. Members shall be appointed by the Board for three- year staggered terms. Terms shall commence upon appointment. Officers of the Endowment Fund Committee shall be determined in accord with the charter of the committee.