by Paul Herrgesell
Trinity Cathedral is blessed to have an endowment that was established by the founders of the cathedral. Its original purpose was to generate investment returns that would fund major maintenance and repair expenses for the cathedral and the entire campus far into the future. Since these types of projects are often expensive and occur at varying frequencies, they are difficult to include in the annual operating budget.
The endowment has served the cathedral well for 100-plus years. However, the economic conditions today are different from those of 100 years ago, and the endowment has taken on a second purpose. It is now the largest source of funds for our operating budget. This means that the endowment is critical in maintaining our facilities, but it is also key to our outreach and mission work. The work that we do every day is supported by the endowment.
The endowment works in the following way—the Vestry has established an investment policy with goals to maximize returns while minimizing risks and avoiding investing in entities that are not aligned with our beliefs. The Vestry has also created an Investment Committee consisting of financial professionals and members of the congregation to implement the investment policy. The Investment Committee decides on specific investment strategies and works with our advisor, Key Bank, to implement them. The Investment Committee reports back to the Vestry periodically to confirm that the investment policy is being followed.
During the fourth quarter of every year, the controller, staff, and clergy prepare a budget for the upcoming year that covers the operating and capital expenses. In order to balance both operating and capital budgets, the Vestry has to determine how much of an annual draw to make from the endowment. This is an extremely important decision because the returns generated by the endowment need to cover the annual draw, an increase to the endowment to compensate for inflation, and an increase to add real growth to the endowment. A reasonable goal in this matter would be to limit the annual draw to 5% of the endowment so that we can compensate for inflation and add real growth.
Our situation today is that the endowment serves double duty: it maintains our facilities and supports our annual operating budget. In order to continue the good work that we do, and hopefully expand that, plus ensure that future congregations have the resources to continue this work far into the future, we need to grow the size of the endowment. Growing the endowment is one of the goals of the current Capital Campaign.