Endowment Policy

I. Purpose

It is the intent that this Fund will be managed in such a way that it provides a significant on-going income stream for the mission outreach and ordinary expenses of the church.

II. Source of Funds

All acceptable donations will fall into two categories:

A. Unrestricted Funds: All sums of money or other property or real estate transferred to the Fund without any conditions or restrictions as to the use thereof by the donor shall be held in the endowment fund. All transferred assets such as stocks in individual companies, real estate, etc., shall be promptly liquidated, and the proceeds invested according to the endowment investment policy.

B. Restricted Funds: All sums of money or other property or real estate transferred to the Fund, subject to specific conditions or restrictions as to the use thereof by the donor, shall be held as special Restricted Funds. These special Restricted Funds will be managed according to the wishes of the donor, but where possible, also following the policies for Unrestricted Funds.

III. Distribution of Withdrawals

After the Fund has reached $500,000, the Trustee Ministry shall annually determine an amount that can be withdrawn from the Fund, while maintaining the Fund assets at a level such that the inflation adjusted withdrawal can be maintained in the future. The decision on the way in which these withdrawals are spent, shall be a part of the overall budget process of the church.

Withdrawals will be a percentage of a three-year moving average of the value of the endowment fund. It is expected that this withdrawal percentage will be four to five percent of this moving average fund value.

IV. Investment Policy

Prudent investment of endowment funds by non-profit organizations (universities, the arts, charities, etc.), involves significant allocation of assets to equities and the bond market. Some risk is necessary to produce long-term investment results that are sufficient to meet the Fund’s objectives.

Unrestricted Funds will be invested as follows:

A. Simplicity, low maintenance – To simplify the review process for the Trustees Ministry investments should be simplified by :

Consolidating investments with a single provider having a national reputation.

Not investing in assets that require more extensive on-going monitoring of performance (e.g. individual stocks or mutual funds with narrow investment goals).

B. Academic investment guidelines – We will generally use investment guidelines that have broad acceptance in the academic community that studies investment and portfolio management:

	Risk will be minimized by broad diversification to bonds, equities, and to U.S. and foreign markets.
	Equity allocation should cover the range of small and large capitalization companies.
	Market timing moves will be avoided.
	Ownership of equities in individual companies, or concentration in narrow market segments will be avoided.

C. Prohibitions – Prohibited investments include, but are not limited to: commodities and futures contracts, derivatives, private placements, options, limited partnerships, venture-capital investments and real estate properties. Prohibited transactions include, but are not limited to: short selling and margin transactions.

D. Acceptable assets – All investments will be in no-load, low-cost mutual funds, certificates of deposit, or insured money market accounts.

E. Investment risk – We will use an allocation to equities which is high enough to insure noticeable gains over time, but also is not so high as to noticeably jeopardize the year to year value of the fund. An appropriate investment horizon is five to ten years.

F. Specific investment recommendations – This investment policy makes no recommendations with repect to specific mutual funds, however, the overall performance of the Fund should closely follow the performance of accepted market indicies. A suggested investment mix with a five to ten year horizon that has been found to consistently outperform professionally selected, managed mutual funds is:

	50% total U.S. stock market index (range 45 to 55%)
	40% total U.S. bond market index (range 35 to 45%)
	10% total international stock market index (range of 5 to 15%)

V. Management Committee and Responsibilities

A. Management Committee: The management of the Fund shall be the function of the Trustees Ministry.

B. Audit. The books shall be audited periodically, as directed by the Trustees Ministry, by the auditor of the church or by an independent certified public accountant or by any other appropriate person who is not a member of the Trustees Ministry.

C. Compensation: Trustees Ministry members shall serve without compensation.

D. Reports: The Trustees Ministry shall report to the congregation at each annual meeting of the congregation, providing a full and complete account of the administration of the Fund during the preceding year.

E. Employ Agents: The Trustees Ministry may, at the expense of the Fund, engage the services of investment advisors, accountants, attorneys and such other professional assistance as may be reasonably required.

F. Liability: Members of the Trustees Ministry shall not be liable for any losses which may be incurred upon the investments of the assets of the Fund, except to the extent such losses shall be caused by bad faith, willful misconduct or gross negligence. No member of the Trustees shall be personally liable as long as the member acts in good faith and with ordinary prudence. Each member of the Trustees shall be liable only for that member's own bad faith, willful misconduct or gross negligence and shall not be liable for the acts or omissions of any other member. No member of the Trustees shall engage in any self dealing or transactions with the Fund in which the member has direct or indirect financial interest and shall at all times refrain from any conduct in which the member's personal interests would conflict with the interests of the Fund.

G. Records: Brokerage statements, transaction confirmations, and other records for the Fund shall be kept by the church bookkeeper for a period of five years.

H. Review: The Trustees Ministry shall annually review the performance of the Fund.

I. Authorized Agents: The Chair of the Trustees, Church Moderator, and the Church Treasurer, shall be authorized agents to execute transactions as directed by the Trustees Ministry..

VI. Investment Guidelines

A. Title to Assets: All assets are to be held in the name of First Congregational Church of Naperville, UCC.

B. Investments: The Committee will hold, sell, exchange, transfer, convert, invest and reinvest the assets of the Fund, including stocks, bonds, or other securities according to the Investment Policy.

C. Determine Principal and Income: The Committee shall determine what is principal and what is income of the Fund, except that:

	In the case of securities purchased at a discount, the entire subsequent sale price shall be credited to the principal;
	In the case of securities purchased at a premium, the premium shall be charged against principal without amortizing the same;
	Dividends on shares of stock payable in the stock of any case of the corporation declaring or authorizing the same shall be treated as principal, except that any such dividends paid in lieu of periodic cash dividends or in lieu of recoupment of dividends defaulted or accumulated while shares of stock are held in trust estate shall be income;
	Rents, royalties and cash dividends received from wasting assets (including, without limitation, cash dividends paid by oil, coal, lumber or mining companies), extraordinary cash dividends other than the corporation declaring or authorizing the same shall be income;
	The proceeds of the sale of unproductive or underproductive property, liquidating dividends and rights to subscribe to stock or bonds shall be principal; and
	All realized capital gains and losses shall be allocated to principal.

D. Borrow Money: The Committee may borrow money, for any purpose connected with the protection, preservation or improvement of the Fund whenever, in the Committee's judgment, it appears advisable, and as security, to mortgage or pledge any assets of the Fund, upon such terms and conditions the Committee may deem advisable. Any loan obtained should be accompanied with a plan for repayment.

E. Voting Securities: The Committee shall vote in person or by proxy with respect to any shares of stock or other securities held in the Fund, and to consent to the reorganization, consolidation, merger, dissolution or liquidation of any corporation in which the Fund may have interest.

F. Documents: All documents required to be executed in connection with the authority granted to the Committee in this article shall be signed by the financial secretary and the Committee chairperson.

VII. Other Use of Endowment Assets

Any other use of the Fund assets shall be done only according to the by-laws of the church.

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Approved by the Trustees

May 10, 2004

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