The FDIC Question…
One of the questions I often get is, “What about FDIC? Does it matter that the Baptist Investment Fund is not FDIC insured?” It’s a great question and one that I think every prudent person should ask before making an important financial decision.
Banks make money by lending money (often home, automobiles and credit cards loans) at rates higher than the interest payments they are obligated to pay their account holders (minus operating and insurance costs, such as FDIC insurance). Traditional banks purch
ase FDIC insurance on their savings accounts and CDs in the event that the bank becomes insolvent. Insolvency means that the bank is unable to pay the debts they owe or the obligations they have made, perhaps because of bad loans or a lack of liquidity. If this happens, the accounts are honored by FDIC insurance up to $250,000 per account holder, per bank. Banks pay a premium for this insurance that is often passed on to accounts holders in the form of lower rates of return. However, FDIC insurance does not cover other financial products and services that banks offer such as stocks, bonds, mutual funds or other securities.
The Baptist Foundation of Indiana is a not-for-profit, charitable organization, owned by the State Convention of Baptist in Indiana. We exist solely to benefit Southern Baptists in Indiana. We manage over $6.3 million dollars in assets and partner with The Baptist Foundation of Oklahoma (BFOK) on our loan program. BFOK manages over $440 million and has been a tremendous resource and partner to our Foundation.
The savings accounts and CDs that we offer are part of The Baptist Investment Fund and are not FDIC insured. Because of the types of loans we make, our organizational structure and the conservative posture our board takes toward reserves, I believe you can have confidence that the Baptist Foundation of Indiana is a sound place to invest.
FACTS ABOUT THE BAPTIST INVESTMENT FUND
- The blessing of how The Baptist Investment Fund works is that by making a deposit in our savings accounts or CDs, funds are made available for loans to churches for building, expanding or renovating. The rate of interest we earn from these loans is used to pay the returns on our savings accounts, operate the Foundation and fund various ministries across Indiana. It’s a great synergy of investing in God’s kingdom.
- We are 100% invested in church loans. Loans to member churches of the Southern Baptist Convention in Indiana are screened by both the Indiana and Oklahoma Foundation staff, and ultimately approved or declined by the board of directors.
- Our loans are underwritten carefully, using a set of very conservative guidelines, reviewing 5 years of financial statements and making personal visits with church staff and leadership teams. Our policy dictates that we can only loan up to 50% of the value of a property and the annual payment must not be more than 25% of the churches’ tithes and offerings.
- Since 1946 neither BFOK nor the Baptist Foundation of Indiana has ever had a loan foreclose. Our average loan payoff is between 5-7 years.
- In order to maintain liquidity, our board of directors requires that we keep 10% of the balance of our CD accounts as well as 100% of the balance of our savings accounts in a cash reserve. Our cash reserve balance as of 8/31/16 is $1,373,000.
I guess you could say our accounts are backed by the full faith and credit of the church and the work God is doing in Indiana. I would be happy to sit down with you and go in to more detail about how the Baptist Foundation of Indiana prudently manages the resources God has entrusted to us.
“Much will be required of everyone who has been given much. And even more will be expected of the one who has been entrusted with more.” Luke 12:48 HCSB
Jennifer Hall, President
Baptist Foundation of Indiana
317-481-2400 ext. 300