Unitarian Universalist Church of Palo Alto

Funds of the Church

Just as individuals have both checking and savings accounts, churches maintain different kinds of funds for different purposes.  The UUA¹ identifies four common kinds of funds:

1. Operating funds, set up to pay for day-to-day activities.
2. Reserve funds, which make up for occasional shortfalls in the operating fund.
3. Capital funds, established to provide for new buildings and other major capital projects.
4. Endowment funds, established to provide long-term security through a steady stream of income, independent of pledge support and other money-raising activities.

Any fund can be broadly classified in two different ways:

1. Restricted-Use versus Unrestricted-Use. Money in restricted-use funds can only be spent for pre-specified purposes. Unrestricted-use funds have no such limitations.  Unrestricted funds provides maximum flexibility to respond to current needs, but  donors often want their gifts to be used for specific, longer-term purposes.
2. Endowment versus Non-Endowment.  With an endowment fund, the income generated can be spent, but – except for emergencies – the principal is always preserved.  Non-endowment funds have no such limitations.

The financial assets for the UUCPA are currently divided among several different named funds, each with its own purpose:

In general, all income (whether derived from pledge payments, the Sunday offering, fund raisers, or rent of the facilities) is directed to the Operating Fund, and all unrestricted bequests are directed to the Endowment Fund. 

Part of the monies held by the church are kept in cash or cash-equivalent accounts, and the rest are invested in equities.  The Treasurer is responsible for accounting for the church’s monetary assets.  Management of investments is the responsibility of the Investment Committee.

Notes
¹M. Bailey-Adams, “ Endowment Fund Guide for Unitarian Universalist Congregations,”UUA, Boston, MA, June 2003.