Catholic Diocese of Spokane, Washington
Official News Magazine of the Diocese of Spokane
P.O. Box 48, Spokane WA 99210
(509) 358-7340; FAX: (509) 358-7302
Catholic Foundation marks 30 years of service to the Church in Eastern Washington
the Inland Register
(From the Feb. 3, 2011 edition of the Inland Register)
Robert Hailey is chairman of the Board of Trustees of The Catholic Foundation of Eastern Washington. (IR file photo)
(Editor’s note: January 2011 marked the 30th anniversary of the Catholic Foundation of Eastern Washington. Although recent surveys among laity and clergy in the Diocese of Spokane have revealed that the existence and mission of the Foundation are not widely known, it has quietly played a significant role in supporting ministries throughout the Diocese. Published below is a Question-Answer interview version of a presentation given to the Bishop’s Presbyteral Council by Robert Hailey (left), chairman of the Foundation’s Board of Trustees.)
Q. What is the Catholic Foundation?
The Catholic Foundation of Eastern Washington – originally titled, “The Catholic Foundation of the Spokane Diocese” – was established in January 1981. At the direction of the late Bishop Lawrence Welsh and with the wise counsel of his advisors, a group of Catholic business men and women were called together to begin this effort in order to provide for the long-term financial stability of the diocese. That was long before the diocese’s bankruptcy case. But then, it is worth noting that because of the Foundation’s independent legal status, its funds were not jeopardized by the bankruptcy.
Q. How would you express the focus or purpose of the Catholic Foundation?
Our Mission Statement is the best place to begin, because our mission is very simple: “The Catholic Foundation furthers the work of the Church and serves the people of Eastern Washington by building, managing and distributing income from contributions and endowed funds.”
Our work is far different from that of a bank which manages short-term accounts available for immediate deposit-withdrawal. The Foundation is a repository for long-term endowment accounts, which can be restricted in their use either temporarily or permanently. The key is long-term investment. The ideal is for a Catholic parish or institution to establish an endowment in the Catholic Foundation and keep building up its corpus, or body, using only a portion of the income from that investment for operational or ministerial needs. One would be surprised how significant that kind of income can become in terms of the annual budget. Moreover, this kind of use of endowments gives individuals a marvelous way through bequests and special gifts to assure long-lasting support of their parish or chosen charitable cause.
Q. How successful has the work of the Foundation been?
One of the ways in which the Foundation has attempted to fulfill its mission to build the funds entrusted to our care has been by conducting major gift campaigns throughout the Diocese of Spokane. Over the past three decades those campaigns raised endowment money to support priest retirement, Catholic Education and religious education and, most recently, the Education of Seminarians.
In 2003-04 the Foundation achieved the goal for this last campaign, raising more than $10 million in gifts and pledges. From the amount raised, the Trustees of the Foundation allocated $4.2 million toward building the new Bishop White Seminary.
Q. How large are the assets of the Foundation?
Exercising good focus and skillful management, the Board of Trustees has exercised good stewardship over the funds entrusted to the Foundation. At the end of December 2010 the assets held in the Foundation totaled more than $15.2 million.
By joining forces with the Spokane Catholic Investment Trust (SCIT) in 1997, we were able to combine the Foundation’s resources with those of other Catholic organizations in order to increase the diversification of our investments and hire the services of professional money managers. This move maximized the rate of return and minimized the risk on our investments.
During the Diocesan bankruptcy from late 2004 through the end of 2007 – which was a dangerous time for all Catholic institutions – the Foundation was able to protect all of the permanent endowment funds entrusted to its care.
Q. How successful has the Foundation been in distributing earnings?
A critical part of the Catholic Foundation’s mission has been to make annual distributions of income to the beneficiaries of the various endowments within the Foundation. In 1983 the first income distributions totaled a mere $29,042. The Trustees have approved annual distributions every year since then – even in 2009, at the deepest part of the recession. Distributions for 2010 equaled $611,542. Over the past 27 years, the Foundation has made distributions of more than $10.6 million to parishes, schools and other organizations in the Catholic community.
The Foundation also distributes a portion of the income from its unrestricted and religious education endowment funds in the form of grants. For 2010, the Foundation awarded grants to 29 recipients (largely parishes and social service groups) totaling $46,760. Since the Foundation began giving grants in 1983, it has helped more than 1,200 parishes, Catholic schools and other organizations which assist Catholic groups and the broader community. The Foundation has given over $1.1 million in the form of grants to fund programs sponsored by those organizations.
That certainly is “good news” in these times of economic pressure! And, obviously, the more individuals, parishes and other Catholic entities engage in the use of the Foundation as part of their long-term financial strategy, the more they will benefit from the financial blessings of the collective efforts of the Foundation.
Q. As a practical matter, how does the Foundation serve the financial needs of parishes?
At this moment in time, numerous parishes and schools in the Diocese of Spokane have permanent endowment accounts in the Foundation. The Foundation is designed precisely to serve the needs of parishes.
As one example: if a parish has a reserve account or building fund that it does not need to draw on for some time, the parish has a really smart alternative in using the Foundation rather than simply depositing those funds in a relatively low-yield savings account or certificate of deposit.
As another example: if a parishioner would like to set up a permanent endowment to distribute income – either right now or after death – for long-term support of his or her parish, school, or other charitable endeavor, then that endowment can be created and tailored to their needs and wishes. We can even set up donor-directed endowments which give the donor the ability to specify the recipients of distributions during his or her lifetime – almost a miniature foundation.
The Foundation has taken steps just in the last half year to provide much greater flexibility to parishes, individuals and institutions in designing their accounts to meet their financial needs. The Foundation also has worked with its accountants to expedite reports and to provide better accessibility to certain types of holdings.
Q. Why should an individual, a parish or a Catholic institution look seriously at creating (or increasing) an account in the Catholic Foundation?
A church, a school, a religious or charitable organization of any kind has only two choices – to grow, or to stagnate and eventually die. By establishing and adding regularly to endowments, whether long-term or perpetual, you are telling parish members and supporters that the parish or entity is “in it for the long haul,” that you are planning for the future, and that you expect that your future financial needs will be even greater than your needs today. At the same time, an endowment guarantees that earnings will be available when they are needed to support building plans, ongoing and expanding operations, and a whole host of charitable works.
Over the past 29 years, the Catholic Foundation has been true to its mission to support the work of the Church through the parishes, schools and religious and charitable programs throughout Eastern Washington, as it has built, managed and distributed income from contributions and endowment funds. The Foundation’s work is by no means finished, because the need for a dependable source of income from these kinds of permanent endowments is greater now than ever before.
Q. What are the Foundation’s future goals?
We intend to seek slow but steady growth by encouraging individuals to establish new endowments or add to existing endowments through special fund drives, estate planning or special gifts. Each of this is an important reflection of Christian stewardship. We also will continue to encourage parishes to establish endowments or add to existing endowments as a means of long-term strategic planning to meet the future needs of those parishes.
One of the ways in which we can encourage individual stewardship is through estate planning seminars that educate both laity and clergy regarding the many options that are available. We’re now in the process of assembling our seminar teams, and soon those individuals will schedule estate planning events in parishes throughout the Diocese.
Q. How has the recent economic downturn challenged the value of the assets held by the Foundation?
The Board of Trustees has always kept a close watch on the performance of the professional money managers we hired. Because the underlying investment policy was sound, there was no need to change it, but we did respond to the present economic turmoil by temporarily modifying our distribution policy, to make certain that endowment beneficiaries would not suffer catastrophic reductions in their annual distributions.
By doing all of these things, and avoiding overreaction, the Foundation has weathered the storm of the past two years. Like everyone in this nation, we suffered dramatic reductions in the value of our investments in the autumn of 2008. Unlike many institutions around the country, however, we have completely recovered from those “paper losses.” That means that, collectively speaking, the accounts which have remained in the Foundation throughout the current economic crisis are now worth almost a million dollars more than before the recession began.
The Foundation’s overall investment portfolio has had an average rate of return of more than 7 percent over the past 30 years, and more than 5.7 percent even over the past 10 years, a period which includes some of the worst economic conditions since the Great Depression. At the same time, we have consistently sought to ensure that the endowments we hold not only meet Catholic ethical and social justice standards but also that those endowments continue to support the purposes for which they were established.
Q. Are the funds in the endowment accounts of the Foundation subject to seizure in the course of litigation against the holder?
The diocese’s recent bankruptcy experience has certainly made us all very sensitive to this issue. The answer lies in the type of endowment which the individual or institution chooses to establish.
The most secure type of account is a permanent charitable endowment. Funds held in this type of account are permanently restricted in their use and are protected against claims of creditors, and distributions can be made in perpetuity, in accordance with the terms of the endowment and the Foundation’s distribution policy. This gives potential charitable donors tremendous flexibility, and the security of knowing that their wishes will be honored far into the future.
Most of the accounts in the Foundation are of this type. However, there is another type of account – sometimes referred to as a “Type 4” account – which is not permanently, but only temporarily restricted. These accounts still enjoy the long-term investment benefits of the Foundation – that is, a higher yield than a regular savings account or certificate of deposit. Nevertheless, because Type 4 endowment account holders have the right to withdraw the principal on demand, those funds are not protected from creditors, any more than money in a bank account would be. At the present time, the Foundation holds 16such accounts.
Q. Who oversees the work of the Catholic Foundation?
In addition to an executive director – currently Steve Kocharhook – a board of volunteer trustees meets regularly to review and make decisions regarding the management of investments. Bishop Cupich is a member of the Board. Over the past three decades the members of the Board of Trustees has included parishioners, priests and members of Religious orders. They have come from places like Clarkston, Walla Walla, Pasco, Colton, Colfax, Uniontown, Sprague, Colville, Oroville, Brewster, Lind, Wilbur, Deer Park, and, of course, the Spokane area.
The members of the Board have been a diverse group – not just geographically, but also in terms of their life experiences. In addition to priests and Religious, there have been lawyers, accountants, investment advisors, doctors and other health professionals, insurance professionals, businessmen and women, teachers, administrators and civic leaders. These men and women bring a wealth of insight and experience from their involvement in a whole host of other Catholic organizations: Catholic Charities to Gonzaga Prep, Gonzaga University, and Sisters of Providence, to name just a few.
We’re always looking for more capable people, and we have openings on our board right now that we would like to fill with additional pastors or laity nominated from parishes around the diocese.
(For information about the Catholic Foundation of Eastern Washington call 509-998-0654 or visit the web site: www.spokanecatholicfoundation.com)