Frequently Asked Questions

What is the purpose of the Foundation?

The Foundation was established to provide a means for individuals and organizations to provide long-term financial stability for the diocese and its churches, schools, agencies and organizations.  Through the creation of individual endowments, the Foundation provides a means to generate income to help sustain the long-term strength and viability of these Catholic institutions in central Texas.

The Foundation uses the strict definition of endowment:  a permanent fund from which the income can be used in accordance with the wishes of the donor organization or individual.  The principal as it is defined includes the initial contribution given to establish the endowment as well as all additional contributions to the endowment. The assets of the Foundation grow through sound investment policies and from additional gifts.  An endowment fund should not be confused with a capital fund, a reserve fund or a special projects fund, all of which generally allow expenditures of principal.

In general terms, by creating an endowment, an individual can take another step in living out the life of stewardship – giving of time, talent and treasure in gratitude for God’s many gifts to us.  Just as we have the opportunity to make our gifts of treasure from our monthly income, we also have an opportunity to give from our accumulated assets to endow the church of the Diocese of Austin.

By creating an endowment, a Catholic entity such as a parish or school can tell the community that the parish or school is providing for the future and intends to continue serving the community for many years to come.

In specific terms, an endowment fund provides a permanent and secure source of income, which can ensure the future of our Catholic parishes, schools, agencies and organizations.

Over the past 25 years, the most stable and effective colleges have established endowment funds.  Likewise, it is important that our diocesan programs such as our seminary program and our other Catholic entities have endowments to ensure their stability and effectiveness into the future.

Do individuals receive any recognition for making a planned gift to the Foundation?

Yes, anyone who agrees to make a planned gift to the Diocese of Austin or any of its parishes, schools, agencies or organizations can be a member of the Perpetual Light Society.  The Society is a way of honoring the Christian generosity of Catholic friends who are providing for the future of the church.  Individuals can become a member of the Perpetual Light Society by leaving a bequest in a will, a gift of life insurance, a gift of real estate or a life income arrangement such as a trust or annuity.

Who manages the Foundation?

The Foundation is managed by a Board of Directors composed of clergy and lay people.  The Board’s objective is to pursue an investment policy consistent with reasonable growth while prudently safeguarding the principal.  The directors are leaders in their parishes and communities and are accountable to both donors and recipients.  As good stewards, they have hired a professional investment advisory firm to manage and invest the assets of the Foundation and have had the Foundation’s year end financial statements audited. The investment strategy is guided by the foundation’s investment policy and includes socially responsible investing guidelines established by the USCCB.

What are the investment goals for the Foundation?

The investment goals for the Foundation, ranked in order of priority, are:

• To preserve capital through establishment of and compliance with prudent investment standards including socially responsible strategies as outlined by the USCCB.

• To provide growth in principal combined with a sufficient return on investment that will generate continual income.

• To invest in such a manner as to satisfy anticipated liquidity requirements.

• To provide sufficient diversification so as to control volatility and exposure to loss.

What is your income distribution policy?

The Foundation has initiated a total return concept as it relates to investing permanent endowment assets.  This is a concept widely used in the non-profit field, particularly in foundations, colleges and universities, and allows the foundation to invest its funds in the most advantageous vehicle to provide a reasonable return.  In a total return environment, distributable income is based on the investment return of the fund regardless of whether that return was fueled by dividends, interest or appreciation.

The annual income distribution available to the endowment funds is currently at 4% of the endowment’s average asset value.  The initial income distribution will be available after the endowment fund’s first anniversary and will be based on 4% of the endowment’s 4 quarter average asset value.  Annual income distribution thereafter will be calculated on 4% of the accumulated quarterly average asset value – i.e., the second year’s distribution will be based on the 8 quarter average asset value; and the third year based on the 12 quarter average asset value.  Thereafter, annual income distribution will be calculated on 4% of the moving 12 quarter average asset value of the endowment fund.  Because of this averaging, the effect of temporary fluctuations in the market will be smoothed out, thus making it easier for endowments to anticipate their available amount for distribution.  Distributions cannot be made that would result in the endowment fund value falling below the principal amount.

Why does the Foundation limit the income distribution to 4%?

Limiting the distribution to 4% helps meet the investment objective of providing growth in principal combined with a sufficient return on investment to generate a continual income over time.  The 4% limit allows a portion of the income to be reinvested in the principal so as to build the endowment.

Once a Catholic entity sets up an endowment, can that entity take out money from the principal for other purposes such as capital projects?

No, all endowments are permanent and, thus, the endowment principal can not be withdrawn and used for other purposes.  The income from the endowment, however, may be used for purposes such as capital projects unless restrictions on the endowment prohibit that.

How much money is necessary to start an endowment fund?

An initial gift of $10,000 or more is required for a Catholic parish, school, agency or organization to set up a separate endowment.  Distributions will not be made from the fund to the beneficiary until the value reaches $25,000. An initial gift of $25,000 or more is required for an individual to set up a separate named endowment.

Can we/I add to our/my endowment fund?

Yes.  In fact, most Catholic entities and individuals develop a plan for building their endowment.  You may add to your endowment fund in any amount at any time.

Does the Foundation charge a fee for managing endowments?

Yes.  The Foundation’s fee for management and administration of the endowments is approximately 1% of the fund balance.