2. Setting a blueprint for managing church investments going forward

Your board should develop a concrete investment policy that can be pursued easily by future board members. Putting the policy in writing, with the terms, requirements and budgetary guidelines may help contribute to the long-term viability of the investment policy while protecting both the congregation and the board members (or investment committee). The decision-makers who are tasked with overseeing the investment strategy should also be clearly identified in the organization’s by-laws or policy document.

The congregation or board should determine parameters for the investment policy.

For example, in setting the budget, your organization may consider designating and maintaining amounts in the following non-investment accounts to have financing available for different expenses:

• An emergency fund (such as $50,000) that may be deposited in a low-risk liquid account such as a bank savings account or money market fund
• An amount set aside for anticipated short-term expenses, such as salaries, utilities and other monthly expenses
• An amount held in a safe reserve account for intermediate expenses and other anticipated costs

Only the amount of savings beyond the emergency fund, the short-term expenses fund and the intermediate reserve would be considered for investment.

Your congregation might also set some limits on the investment fund. For instance, once it reaches a certain level, the board or congregation may be required to identify a project or cause for allocating a portion of the money. Having a growing reserve of investment assets is a great luxury, but the members of the congregation may prefer to see that their generous donations are ultimately being used for the greater good rather than simply generating earnings in an investment account.

3. Matching the church investment strategy to specific objectives and risk tolerance

In an era when most bank savings accounts are paying under 1%¹ and certificates of deposit less than 3%², your congregation may be interested in seeking a higher return by putting some of its money into an investment with the potential for a better return over the long-term.

Whether the stewardship goal is to save for future capital improvements, a scholarship fund, a mission program or simply for a rainy day, investing in the markets may help your congregation achieve those goals.

Investing your congregation’s savings can be an even bigger responsibility than investing your own money. Others have been generous enough to donate their money, and they have the expectation that their contributions will be utilized prudently.

For that reason, your congregation or board should be careful to pursue an investment strategy that is in line with the goals, objectives and threshold for risk of your congregation. The governing board should develop a strategy that lays out its reasons for investing, its goals and objectives and its primary investment strategy. Are you investing for income, long-term growth, or for intermediate or shorter-term goals? Your board may consider diversifying within the portfolio to include separate components designed to achieve long-term, intermediate and short-term goals. For instance, for shorter term goals, you may consider investing in a more conservative mutual fund than you would for your long-term objectives.

One type of investment you might consider would be an asset allocation fund, which is diversified across a broad range of investments. Asset allocation funds are available for several risk levels, from aggressive and moderately aggressive (which have a higher portion of stocks) to moderately conservative and conservative (which have a higher portion of bonds).

4. Your responsibility under the law

The board of directors for non-profit organizations, churches and other religious organizations has a fiduciary responsibility to exercise prudence in overseeing the funds of the organization. The board is subject to legal liability in administering the organization’s investment activities. Most states have adopted laws that set guidelines for the investment of assets held by non-profit organizations, including the Uniform Prudent Management of Institutional Funds Act and the Uniform Prudent Investor Act. (You can find more details on these rules at UniformLaws.com.)

While the guidelines tend to be fairly general, there are a couple of critical areas that are explicitly addressed. One key issue is diversification. When investing the assets of your organization, you are expected to spread the money around to different investments and asset classes to reduce risk. Although diversification does not eliminate risk, it may help reduce losses during market downturns.

Suitability is another important consideration. Your board is required to invest in assets that are deemed to be suitable—or appropriate—for your organization based on the risk tolerance and investment objectives already defined. That means generally staying away from speculative investments, such as options, futures, small stocks, high-yield junk bonds, foreign stocks and other types of investments that carry a higher than average level of risk.

However, your organization’s portfolio is viewed as a whole rather than by each of its parts. In other words, it may be acceptable if the portfolio or the mutual funds in the account include some higher risk individual investments, such as small-cap stocks, high-yield bonds or foreign stocks, if they represent a relatively small part of a diversified portfolio.

5. Tax implications for investing church funds

Qualified non-profit institutions, such as religious organizations, are typically exempt from income taxes on both donations and investment gains. Be aware, however, there are other sources of income that could be taxable, such as profits from unrelated businesses. (For more information, see: IRS Tax Guide for Churches & Religious Organizations.)

Before deciding to invest a portion of the congregation’s savings, it is advisable that the investment plan be discussed with an accountant or tax advisor.

Managing your congregation’s savings is an awesome responsibility, with many moving parts. It will be up to the pastor, the board and the congregation to allocate that money prudently, and use it wisely.

A great way to get started investing is with mutual funds which have built-in diversification, which can help reduce risk, but not eliminate it. When you invest in a mutual fund, your dollars are invested in multiple securities which helps spread your risk. Learn more about Thrivent Mutual Funds.

You can learn more about opening a Thrivent Mutual Funds church account at Thrivent Business/Organization Account. Download the application form today.

¹ Bankrate. “What is the average interest rate for savings accounts?” July 17, 2025 (July 22, 2025).

² Federal Deposit Insurance Corporation (FDIC)  “Nataionl Rates and Rate Caps – July 2025” (July 22, 2025).