Governing Rules

ARTICLE 1 - Establishment of Fund
1.1 Effective April 30, 1991, the session (the "Session") of the Mercer Island Presbyterian Church (the "Church") established an endowment fund to be known as the Mercer Island Presbyterian Church Foundation (the "Foundation"). The Foundation is not an independent foundation but is to be administered as a committee of Session.

ARTICLE 2 - Purpose of Fund
2.1 The purpose of the endowment fund is to expand and enrich the mission endeavors of the congregation beyond the operational budget. The Foundation is not to support the annual operating budget of the Church. The Foundation is established to further the Church's long-range goal of devoting 50% of its disbursements to mission work.
2.2 The Foundation is separate from the Gifts and Memorials Committee. The Gifts and Memorials Committee applies principal and income from designated and undesignated monetary gifts for particular projects or acquisitions. Gifts dedicated to the Gifts and Memorials Committee are not administered as an endowment fund.

ARTICLE 3 - Charge of Foundation
3.1 The Foundation shall encourage, receive and administer gifts in perpetuity and shall make distributions in accordance with these Governing Rules.

ARTICLE 4 - Gifts to the Foundation
4.1 The Foundation shall seek undesignated and designated gifts for mission causes. The Foundation may also accept designated gifts for other causes, including, but not limited to capital projects (buildings, grounds, equipment) and scholarships for college and post-graduate education. The Foundation must have the prior approval of the Session before accepting any designated gifts.
4.2 The Foundation may receive gifts through wills, trusts, annuities, assignment of life insurance, nonprobate transfers and gifts of property such as cash, stocks, bonds, real estate, art, collectibles, etc.
4.3 The Foundation may disclaim any gift it deems inappropriate upon prior approval of the Session.
4.4 As a fund under Session, gifts to the Foundation are deductible for tax purposes in the same manner as other like gifts to the Church.

ARTICLE 5 - Membership and Officers
5.1 The Foundation committee (the "Committee") shall consist of no less than seven (7) and no more than fifteen (15) voting members, selected by the Church Nominating Committee from the active roles of the membership of the Church and elected by the congregation for three-year staggered terms.
5.2 The Committee may make recommendations to the Church Nominating Committee regarding new Committee members. In doing so, the Committee shall make every effort to achieve and maintain a diversity in membership representative of the congregation as a whole, recommending candidates who will provide a balance in age, sex, race and profession, as well as an interest in mission causes.
5.3 Voting members may serve two consecutive three-year terms, or six years, but there must be a one-year separation from the Committee before a member may be nominated again to the Committee. If a nominee is elected to replace a departing Committee member who has served less than one year of his or her term, that partial term served will count as one of the two consecutive terms that a Committee member may serve.
5.4 A quorum shall consist of a majority of voting members. Except as otherwise specifically provided to the contrary, all decisions by the Committee shall be made by a majority of the voting members.
5.5 The Committee may also appoint, remove and/or replace any number of non-voting members who may be invited to attend meetings and to participate in carrying out the purpose of the Foundation. The Senior Pastor, or other pastoral staff person as designated by the Senior Pastor, shall serve as a non-voting member.
5.6 The Committee may elect from their membership the following positions: (1) President, (2) Vice President, (3) Secretary, (4) Treasurer, and/or (5) other Committee assignments as are helpful in carrying out the purpose of the Foundation.
5.7 The Committee shall meet at least quarterly, at such time and place as is established by the Committee.
5.8 Representatives of the Committee will report at least twice annually to the Session for the purpose of disbursing income for mission causes and increasing the Session's awareness of the Foundation. The Committee shall also provide the Session with annual financial statements of the Foundation as defined in Paragraph 10.2.
5.9 Any Committee member's term on the Committee shall immediately cease upon the member's removal from the active roll of the membership of the Church.

ARTICLE 6 - Investment Policy
6.1 The Committee shall invest and manage gifts it receives in perpetuity.
6.2 The Committee shall invest funds by applying a total asset management approach and exercising the judgment and care under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs. The Committee shall determine an appropriate asset allocation, which may be changed from time to time. In keeping with the purpose of the Foundation, the investment philosophy shall address the need to produce both income and growth. Principal and income as used in these Rules shall mean principal and income as defined under the Washington Principal and Income Act, RCW 11.104.
6.3 The Committee has the power and discretion to exercise all investment powers as are granted herein. Except as otherwise provided, this power and discretion includes the powers given to a trustee under RCW 11.98.070.
6.4 The Committee may, upon prior approval of Session, employ such agents, attorneys, accountants, brokers, investment counselors or advisors, custodians or appraisers as deemed reasonably necessary; rely with acquittance upon their legal, tax, investment, or other expert advice; and pay their reasonable fees for their services. The source of payment of such fees shall be determined by Session.
6.5 The Committee shall provide investment reports to the Session at least two times each calendar year and shall report to the congregation through the Annual Report.
6.6 The Foundation fund is not intended as a source of borrowing for the Church.

ARTICLE 7 - Distributions of Principal
7.1 The principal of the Foundation is intended to grow in perpetuity. The principal of the Foundation is not to be invaded to support the operating budget of the Church or for other temporary needs of the congregation.
7.2 Neither the Committee nor Session has the authority to authorize distributions of principal. Any proposals for distribution of principal must be submitted to the congregation and must pass by at least a two-thirds vote upon affirmation of unforeseen compelling human need, catastrophic economic circumstances for the Church or inability to carry out the fundamental ministry of the Church.
7.3 Notwithstanding Paragraphs 7.1 and 7.2, in keeping with the purpose of the Foundation, Session may annually approve expenditures of principal in keeping with the purpose of the Foundation if and only if:
(a) the principal balance of the Foundation is at least $12,000,000,
(b) the Foundation's annual income to be distributed (excluding income from designated non-mission funds) has exceeded the total disbursements of the Church (as defined in the Church operating budget) excluding the Mission Department disbursements, for at least three consecutive years, and
(c) the Session affirmatively finds that the Foundation is holding an excessive principal balance.

ARTICLE 8 - Distributions of Income
8.1 It is the intent of the Foundation that all net income generated from undesignated gifts will be expended at least annually in furtherance of the purpose of the Foundation.
8.2 Except as may otherwise be directed by a particular donor, income shall be distributed to the Session in furtherance of mission activities of the Church.
8.3 Disbursements from designated gifts, whether income or principal, shall be distributed in accordance with the terms of the gift as directed by the Session.

ARTICLE 9 - Ethical Guidelines
9.1 The Committee is to value the privacy, freedom of choice and interests of all donors and potential donors. Although a gift may involve personal, financial and tax considerations, the primary emphasis of any gift must be the philanthropic motivation of the donor. The Committee shall do its utmost to assist a donor in structuring a gift to achieve a fair and proper balance between the interests of the donor and the purposes of the Foundation and to assure that gifts are used in accordance with the donor's intentions.
9.2 Information regarding donors or potential donors shall be kept strictly confidential. The name, amount and/or conditions of any gift shall not be made public without prior approval of the donor.
9.3 The Committee shall make every effort to ensure that the donor receives a full and accurate explanation of all aspects of any proposed gift.
9.4 Early in the gift planning process, the Committee shall strongly encourage all donors to seek the independent counsel of competent estate planning professionals. Donors shall be advised that, unless the donor has received written notification to the contrary, estate planning professionals who are Committee members represent the Committee and not the donor. If the donor requests recommendations for independent estate planning professionals, the Committee shall attempt to provide the names of at least three persons. If any one of the recommended persons serves on the Committee, that shall be disclosed at the time of recommendation. Disclosure to donors shall be in written form similar to Exhibit A.
9.5 Committee members shall act with fairness, honesty, integrity and openness at all times.
9.5.1 It shall be assumed that every Committee member represents the interests of the Foundation in all dealings with donors or potential donors unless, early in the gift planning process, the member provides written notification to both the Committee and the donor that the member is representing the donor.
9.5.2 If a Committee member represents a donor or potential donor individually, the member must recuse himself or herself from any decisions of the Committee regarding the donor.
9.5.3 Committee members shall not exploit any relationship established as a result of their role as a Committee member to further their personal or financial interests.

ARTICLE 10 - Books and Records
10.1 The Committee shall maintain complete and accurate minutes of all meetings, which shall be delivered to all members, voting and non-voting.
10.2 The Committee will maintain complete and accurate financial statements reflecting all receipts and disbursements and, in addition, will maintain written investment guidelines and a record of investment results.

ARTICLE 11 - Annual Audit
11.1 The Foundation shall be audited annually by the auditing committee appointed by the Session to inspect the records of societies and auxiliary groups of the Church. At such time as the Session deems it appropriate, the Committee shall provide Session with an accounting of the Foundation, examined and reported with an opinion expressed by an independent certified public accountant who is not a voting or non-voting member of the Committee.
11.2 The Session shall annually review all disbursements from designated funds to ensure compliance with the donor's intent and shall annually review disbursements from undesignated funds to ensure compliance with the purpose of the Foundation.

ARTICLE 12 - Amendments
12.1 These Rules may be amended only upon presentation of the proposed amendment at two successive Session meetings at least seven days apart, each meeting at which at least the majority of the active elders vote affirmatively for the amendment.
12.2 Notwithstanding any amendment, all gifts shall be administered for the purposes in effect at the time the gift was made.

ARTICLE 13 - Distributions Upon Dissolution
13.1 In the event the Church lawfully merges or consolidates with any other church, all provisions of these Rules will be deemed to have been made for and in behalf of such merged or consolidated church, which will be entitled to receive the benefits of the Foundation and will be obligated to administer the Foundation in all respects and in accordance with these Rules.
13.2 If the Church is dissolved, the Presbytery of jurisdiction will be entitled to receive all the benefits of the Foundation and will be obligated to administer the Foundation in all respects and in accordance with these Rules.