VI. Managing and Investing Church Financial Assets
A. Financial Management for Church Funds | B. Analyzing Financial Worthiness of a Charitable Organization

A. Financial Management For Church Funds

Information helpful for church leaders and/or board members charged with management of donor designated bequest funds, memorial funds, etc.

Introduction
Investment of reserve assets can be a matter of concern for board and staff members of charitable ministries. Covenant Trust Company has two specific ways to help: the Covenant Endowment Trust and the Investment Agency Account.

Presentation

Investment Agency Account
Current operating funds or amounts designated for specific items to be purchased are usually held in an account by the local church or ministry. When considering larger invested amounts which may or may not be designated for special projects, concerns may arise in three areas:

• Loss of purchasing power of the assets during inflationary periods because of highly conservative investment policies
• Loss of the principal due to inappropriate asset allocation decisions and/or inappropriate investment selections
• Inadequate bookkeeping and/or control of funds

An Investment Agency Account (IAA) with Covenant Trust Company responds to these concerns in three ways:

• The IAA provides professional money management for long-term investing.
• The IAA provides a personalized investment strategy to meet your specific needs.
• The IAA allows you to retain the ability to withdraw assets at any time.

Now does an IAA work?

Under the terms of this formal signed agreement, Covenant Trust Company provides professional investment and management services for funds deposited by the local ministry. The agreement designates persons from the local ministry who are authorized to request distributions to the ministry from the account, and where distributions are to be sent (e.g. to the ministry's checking account or directly to the ministry). The advantages of the agency account are that:

1) The local ministry is relieved of management and investment decisions.
2) The funds are segregated by being deposited in the agency account.
3) There is continuity for the management of the funds and for the purpose and use of the funds even through changeovers of ministry staff and/or boards.

Covenant Trust Company will charge a management fee on the market value of the assets as follows:

Annual base fee $200
First $300,000 0.80% (8 tenths of 1 percent) per year
Next $700,000 0.65% (61/2 tenths of 1 percent) per year
Over $1,000,000 0.50% (1/2 of 1 percent) per year
All fees will be billed quarterly.

Minimum quarterly fee, including the base fee = $150
Equivalent minimum investment = $50,000
Maximum allowable investment = None

There will be a per transaction fee for special services such as electronic wiring of funds to a bank.

(All material is presented for educational purposes only, and represents our current understanding based on information received from our tax and legal advisors. It is meant to provide information about the various personal, tax and economic benefits which may result from different estate planning and planned giving ideas. Because situations differ, it is important for you to have an estate plan specifically designed to fulfill your objectives. Nothing in this material is intended as legal, tax or investment advice. Laws and procedures are constantly changing, are subject to differing interpretations and may vary from state to state. If you require legal, tax or investment advice, you should consult a competent attorney, tax or investment advisor.)