BY-LAWS FIRST UNITED METHODIST CHURCH FOUNDATION MARION, IOWA I. STATEMENT OF PURPOSE AND INTENTION

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1 BY-LAWS FIRST UNITED METHODIST CHURCH FOUNDATION MARION, IOWA I. STATEMENT OF PURPOSE AND INTENTION A. Statement of Purpose. The First United Methodist Church Foundation (hereinafter "the Foundation") shall have the purpose of: 1) accepting funds or other property made by gift to the First United Methodist Church (hereinafter ("the Church"); 2) investing and maintaining those funds or other property; 3) generating revenue for use in support of the Church; 4) report the earnings of the funds available for expenditure; 5) encouraging gifts to the Foundation; 6) educating persons on the means and methods of making such gifts; and 7) preserving the Foundation Fund principal. B. Statement of Intention. It is the intention of these By-Laws that the revenue received by the Foundation: 1) be used to support activities of the Church that would not otherwise be funded "but for" the existence of the Foundation; 2) not be used for the operating expenses of the Church, which is an on-going obligation of the then current membership; 3) be used for Capital Improvements to the Church facilities and equipment with the hope that Capital Fund Drives for the Church may not be necessary in the future; 4) be used as one-time contributions or "seed money" contributions to support the mission of the Church; and 5) be used as deemed necessary to support any special projects of the Church. II. DEFINITIONS The terms "gift" or "giving" shall mean any voluntary transfer of property by a donor to the Church without return consideration from the Church that is made with the intent that the gift be used for the long term benefit of the Church. The term shall include transfers made while the donor is living or after the donor is deceased, whether made by gift, bequest, devise or in any other manner. The term "gift" shall not include memorials or any other donations made for specific purposes such as capital fund drives, support of missionaries or the operations of the Church. The term "memorials" shall mean any voluntary transfer of property without return consideration by a donor for a specific one-time purpose and expenditure. The term "property" shall mean real property or tangible or intangible personal property. Property may be given in-kind or in cash. 1

2 The term "donor" shall mean the person giving the gift, whether such gift is made during or after the life time of the donor or whether made by gift, bequest, devise or in any other manner. The term "Foundation Fund" are those funds where the corpus or principal is to be perpetually invested and shall also mean the aggregate of the gifts, or the proceeds of the gifts given to the foundation and all income and gains (or losses) therefrom that are under the direction and control of the Foundation. The terms "restricted gift" or "restricted giving" shall mean those gifts made by a donor for which instructions concerning or limitations are placed upon the maintenance of the gift, the use of the gift, or the use of the income or gain from the gift have been made by the donor. Examples would be gifts whereby the income is to be used for certain expenses of the Church, to be used to support certain specified projects of the Church or are to be used for scholarships. The terms "unrestricted gift" or "unrestricted giving" shall mean those gifts made by a donor having no instructions or limitations concerning the maintenance or use of the gift or the income or gain resulting therefrom. The term "the Foundation Fund principal" shall mean the sum total of the dollar amount or value of all gifts given at a date set by the Foundation Board and the dollar amount or value of each gift thereafter made at the time the gifts were made. The term "the Foundation Fund earnings" shall mean all interest, dividends, rents, ordinary income and any other payments made as the result of ownership of the property in the Foundation Fund. The term "Foundation Fiscal Year" shall mean the period from January 1 to December 31 of each year. The term "disbursements" shall mean the amount determined by the Foundation Directors as being available during any fiscal year for use in the support of the Church within the terms of these By-Laws. The term "operating expenses of the Church" shall mean those expenses traditionally funded and paid for out of the Church's annual operating budget to include by way of example and without limitation, salaries, supplies, small equipment purchases, apportionments, utilities, and normally scheduled and routine maintenance, repair and replacement of Church real and personal property. 2

3 The term "the Foundation Fund gain or loss" shall mean any increase or decrease in the fair market value of either any individual item of property or of the collective items of property within the Foundation Fund. The "gain" shall be the increase in the Foundation Fund's fair market value over the Foundation Fund's principal. The "loss" shall be the decrease in the Foundation Fund's fair market value from the Foundation Fund's principal. III. MEMBERSHIP OF THE FOUNDATION All members of the Church are members of the Foundation. IV. RESPONSIBILITIES, DUTIES AND POWERS OF THE FOUNDATION BOARD OF DIRECTORS A. Maintenance of the Foundation Fund. It is the intent of these By-Laws that all gifts made to the Church shall be placed in the Foundation Fund and that such gifts shall be inviolate and shall be maintained in perpetuity in the Foundation Fund during the corporate life of the Church. In no event shall any appropriation be made from the Foundation Fund for the operating expenses of the Church. The Foundation Fund shall be kept separate from all other funds and property of the Church. The Foundation Fund shall be under the direction and control of the Foundation Board. No action of the Foundation Board or the Church shall be taken to invade the Foundation Fund, except where the very existence of the Church is in question. In such event, the Foundation Fund may only be invaded after consultation by the Church Board of Directors with the District Superintendent, followed by a three-fourths vote of approval of the Church Board of Directors followed by a three-fourths vote of approval by those attending the Charge Conference called for that specific purpose. B. Respecting the Restricted Gifts. The Foundation Board shall respect and follow any instructions concerning, or limitations placed upon, restricted gifts and shall not violate any conditions of such donation. In the event that any such conditions or limitations become inappropriate or impossible under the circumstances then existing, the Foundation Board may take action to propose a solution which would seem to be most appropriate to the donor's expressed intentions. The action recommended shall be approved by the Administrative Council prior to implementation. C. Investment of the Foundation Fund. The Foundation Board is responsible to receive gifts made to the Foundation and to manage and administer the Foundation Fund. The Foundation Board may sell or otherwise convert to cash any gift or property 3

4 in the Foundation Fund, unless such action would violate the terms of a restricted gift, and may purchase other property for the Foundation Fund. The Foundation Board may retain or convert property into any other form other than cash. The Foundation Board shall receive the earnings from the Foundation Fund, shall invest or re-invest (including buying and selling) from time to time the property of the Foundation Fund, and shall sell the assets of the Foundation Fund to provide for the annual distributable revenue. The Foundation Board shall not knowingly invest in any business or activity whose primary business purpose contradicts the Social Principles of the United Methodist Church. In these actions, the Foundation Board may act directly or through financial counsel. In no event shall the Foundation Board take any action which could result in the Foundation Board or the Church engaging in any business or other activity that would place in jeopardy the tax exempt status of the Church. Maintaining proper asset allocation within the Fund is a vital part of the disbursement program. In other words, the disbursement calculation is not sustainable without good asset allocation. Proper diversification within the Fund includes cash money markets, intermediate and long term fixed income, large cap growth and growth and income stock mutual funds, and international large cap mutual funds from developed nations. The majority of the Fund holdings, 60% to 70%, will be maintained in large cap growth and growth and income stock mutual funds. This mix is vital to the future health and perpetual gift-giving ability of the Foundation. D. Use of the Foundation Fund's Distributions. The annual distribution from the Foundation shall be distributed within 6 general funds for needs outside of the support of the regular budget. All Foundation requests should be supplied to the Foundation Board by March 31st. each year. 1. Mission projects supported by the Marion First United Methodist Church. Distributions may be made to specific FUMC mission projects or to support the mission efforts of individual members. 2. Capital improvements to the Marion FUMC buildings as requested by the Trustees 3. Special Youth Programs to support the spiritual development of the youth of FUMC or outreach programs. 4. Seminary Scholarship fund. 5. Special ministry opportunities. (Example of ministries 4

5 that may be included, but is not limited to, hand bells, special music programs, FLY, Homeless Projects, etc.) 6. Approved Special Projects. Recognizing that there are special needs of the Church that could be fulfilled, the Foundation Board may determine, subject to approval of the Church Board of Trustees and the Church Administrative Council, to provide funding for a special project, which generally would be a one-time payment from the annual distribution. E. The Restricted Bequest Gifts Funds. Some contributors may desire to contribute to a specific ministry. Bequests to specific FUMC approved ministries will be honored and donations must be made in accordance with the FUMC gifts policy. F. Calculation of the Annual Disbursement: In managing the Foundation assets, the Foundation Board of Directors has implemented the total return concept of investment management for setting investment objectives and determining investment performance. This is more specifically stated in The Investment Policy Statement of the First United Methodist Church Foundation. This concept recognizes traditional yield (dividends and interest), plus or minus realized and unrealized gains or losses, in determining the total return earned or performance of the Foundation Fund during any particular period. While it is a goal of the Foundation Board to preserve the Fund principal, it is a more important and higher goal to support the church ministries on an annual basis. It is understood that due to market fluctuations, there will be times, though rare, when the Fund account value will be less than the Fund principal. These circumstances should not prevent the Fund from making annual disbursements to the ministries. A proper asset allocation coupled with a prudent withdrawal schedule will ensure the Fund s prosperity and long-term growth. Calculation of the annual disbursement will be based upon and begin with a conservative 4.5% of the total Fund balance and will be increased in subsequent years to account for inflation. These annual inflation increases can be up to, but not exceeding 4%, as determined by the Foundation board at the January meeting. The inaugural year of this calculation will be Therefore, 2011 disbursements will be calculated as 4.5% of the Funds total 5

6 balance on Dec 31, In each subsequent year, the Foundation Board will determine an appropriate increase for inflation, up to 4%, and the absolute dollar amount of disbursement from the previous year will be increased accordingly. This will be the new disbursement amount for the new year. Example: Disbursements in 2015 equal $18,000 and the Board determines an inflation increase of 3%. Therefore, the new disbursement for 2016 would be $18,540. If no increase for inflation is called for, the disbursement remains at $18,000. Only in the first year of the program will the disbursement be calculated as 4.5% of the Fund total. All future disbursement amounts will be determined by the addition of the inflation factor. In the event of a substantial gift to the Foundation, The Board has the option to re-set the disbursement at 4.5% and determine inflation adders in subsequent years. The allocation of the revenue related to unrestricted gifts between the unrestricted gift funds shall be directed by the Administrative Council. The Foundation Board will then distribute the annual distributable revenue to the recipients responsible for the expenditure of the revenue. This disbursement calculation method will ensure that the Church ministries are supported annually with Foundation gifts. The assigned gifts for each ministry will be available in total after Board approval for that calendar year. G. Reporting the Annual Disbursements. Following the annual Foundation meeting, the Foundation Board shall first report to the Administrative Council: 1) the operation of the Foundation during its prior fiscal year; 2) the annual disbursements to be allocated to the unrestricted funds; and 3) the status and operation of gifts within the Restricted Gifts fund. H. Stewardship and Education. The Foundation Board shall be responsible to: 1) promote stewardship within the Church of accumulating resources and property for potential giving; 2) promote opportunities through which persons may give to the Foundation; 3) provide counsel to prospective donors of gifts to the Foundation; 4) provide a pledge system whereby persons may give to the Foundation on a regular or periodic schedule; 5) solicit gifts for the Foundation; and 6) provide counsel and education on the various means available to make gifts to the Foundation, including by way of example, the use of grants, leases, exchanges, trusts, life income gifts, deferred gifts or wills covering all types of property. I. Other Powers and Duties. The Foundation Board shall hold and possess such other powers and duties as shall be incident to, or inherent in, and not inconsistent with, the aforesaid enumerated responsibilities, powers and duties. 6

7 V. ADMINISTRATION OF THE FOUNDATION A. Membership. The Foundation shall be administered by a Board of Directors (hereinafter "the Foundation Board"), which shall consist of nine members. Nominations and elections to the Foundation Board shall be made by the Annual Charge Conference of the Church after receiving recommendation from the Foundation Board, Church Administrative Council and other interested Church groups. The Foundation Board will also include three ex-officio members. The three ex-officio members are the Senior Pastor, the Church Business Administrator and the Chair of the Memorial Committee. B. Qualifications of Elected Directors. The elected directors shall be members of the church and shall have one or more of the following attributes: 1) interest in long-range financial development of the Church; 2) interest in the support of the Church by the dedication of time, talents, gifts or service; 3) ability in the professions of law, life insurance or broker trading; or 4) ability in fund raising. C. Term of Office and Tenure of Elected Directors. The term of office for elected directors of the Foundation Board shall be for a period of three years commencing with their confirmation by the Annual Charge Conference. The terms of the elected directors shall be so arranged that one-third of such members shall be elected each year. A director may be elected to succeed himself or herself to one subsequent three-year term of office. A director shall be eligible for re-election after an absence from the Foundation Board for one year. D. Meetings of the Foundation Board. The annual meeting of the Foundation Board shall be held in November of each year for the election of officers and for the determination of the final annual distributable revenue. Regular meetings of the Foundation Board shall be held quarterly and special meetings may be held upon call of its Chairman. Robert's Rules of Order shall be the guide for parliamentary procedure in the conduct of the meetings of the Foundation Board. E. Voting. The voting members of the Foundation Board will be the nine members of the committee and the Chairperson of the Memorials Committee. There shall be no minimum quorum for any regularly scheduled meeting of the Foundation Board or for any special meeting for which mailed written notice has been provided to the Foundation Board at least ten days in advance of the meeting. Unless otherwise stated herein, action shall be authorized upon a majority vote of the members in attendance and voting. 7

8 F. Officers of the Foundation Board. The officers shall be elected at the annual meeting of the Foundation Board and shall hold office from December 1 of that year until November 30 of the succeeding year. The officers of the Foundation Board and their respective duties and responsibilities are: 1. Chairperson. The Chairperson shall be the chief executive officer of the Board, shall preside at all meetings, appoint such committees as shall be established, execute all documents in the name of the Foundation, and perform all other duties normally incumbent upon such office. 2. Vice-Chairperson. The Vice-Chairperson shall act in the absence or disability of the Chairperson to perform all duties of that office, and shall perform such other duties and have such responsibilities as the Chairperson may assign. 3. Secretary. The Secretary shall keep full and accurate minutes of all meetings of the Board, shall attest to the signature of the Chairperson or Vice-Chairperson on all documents executed by such officers, and perform such other duties normally incumbent upon such office. 4. Executive Secretary. The Foundation Board, Administrative Council and the Senior Minister, may appoint or employ an Executive Secretary of the Foundation, who shall be a qualified staff person, to assist in the implementation of the policies and programs of the Foundation. The Executive Secretary shall guide, direct, control, coordinate and evaluate activities of the Foundation according to the purposes as stated in these By- Laws, and the goals which reflect the needs and desires of the Church and which may be adopted by the Board. The Executive Secretary shall be: - the chief administrative staff person for the Foundation and shall report directly to the Senior Minister and the Foundation Board; - responsible for developing short and long range plans which are compatible with the goals adopted by the Board; - responsible for motivating and assisting the leaders of the Board's committees; and shall be the authorized representative of the Board in matters for which the Board has not formally designated some other person. 8

9 - responsible for maintaining all financial and accounting records for the Foundation G. Committees. The Foundation Board may form such committees, standing or ad hoc, and appoint the membership thereof from its own membership or otherwise, as it shall deem necessary or appropriate for the conduct of the business of the Foundation. VI. MISCELLANEOUS A. Dissolution of the Church. In the event that the corporate structure of the Church shall be dissolved and shall not be succeeded by another corporation, the Foundation shall thereupon be liquidated, and the funds thereof shall follow the disposition of the other assets of the Church. B. Amendment of By-Laws. Any amendment of these By-Laws may be proposed by the Foundation Board at any time to the Administrative Council as provided by the Resolution to Establish the Foundation. By-laws approved by the Church Charge Conference and adopted by the Church Administrative Council this 20 day of September, Charles Alexander Chairperson, Administrative Council 9

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