Author Archives: Wayne Clark
From time to time, I get asked about ways to audit the finances of a congregation. Here’s a brief overview of three possibilities. It has been adapted from an original uumoney post by Don Mohr from the UU Congregation of Columbia, SC. Refer to the article, Three Options for Auditing the Finances, to read more.
The goal of a compilation is to take information that is on the general ledger and accumulate it into financial statements in the same format that would come out of a review or audit. The key sentence of a compilation report from the accountant reads, “We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them.”
The goal of a review is to provide limited assurance that financial statements do not have any known errors or departures from the accounting rules found in GAAP. The key sentence in a review report reads, “Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.”
The goal of an audit is to provide reasonable, but not absolute, assurance that financial statements are fairly presented in accordance with GAAP. The key sentence in an audit report reads, “In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of [organization name] as of June 30, [year], and the changes in its net assets and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.”
I have been thinking a lot about the definition of generosity. Recently, my colleague Ian Evison wrote: “I think we are going to enter into a time when the idea of getting people to be more generous is going to need to be much more balanced by focusing on sustainability—even what people will be generous about will be more about sustainability.”
Seems to me that since so many congregants have lost jobs or are currently under employed, that our congregations may be faced with flat annual budgets that reflect the new generosity.
For example, if a congregant had previously contributed $1,000 to the annual budget, and that same congregant is now unemployed, maybe a $250 annual pledge is even more generous than her previous pledge. Maybe you have a dozen other congregants, or more, facing the same dilemma.
By extension, it is quite possible that your annual budget might even be smaller than the previous year and could reflect even more generosity than the previous year.
Maybe a new definition of generosity is needed. Maybe we need to correlate generosity with sustainability. Maybe the idea of getting congregants to increase their generosity means that we focus on sustaining those most important aspects of congregational ministry, rather than expanding into new programs.
The Coming Death Tsunami, written by Lovett Weems and shared by Rev. Brian Covell of Third Unitarian Church in Chicago, pursues this issue. Take a look and see what you think. I would love to begin a conversation about this issue.
Looking forward to hearing from you.
I occasionally get inquiries along the lines of:
“How much money will we raise if a stewardship consultant guides us through an annual budget drive? How much more money will we raise than if we conduct the drive without a consultant?” What will be our ‘return on investment?’
Seemingly good questions, yes? Well actually, not so much.
There is simply no way to prove a direct link between your congregation’s annual budget drive success and the person who has led the drive, whether that person is a lay leader or a stewardship consultant. People who espouse this line of thinking believe that the ‘right’ person, using the ‘right’ technique will guarantee success. If that were the case, fundraising would be quite easy. Positive results could be guaranteed.
Unfortunately, there are just too many variables. For example, the amount of money raised can be effected by any one of several uncontrollable scenarios; a major congregational conflict, the sudden resignation of your minister, the death of a major donor, an economic crisis, an upcoming capital campaign, just to name a few.
So if there is no way to guarantee monetary success, what can a stewardship consultant promise?
- A stewardship consultant will help you frame an annual budget drive in term of abundance, rather than scarcity, thus setting the stage for a culture shift.
- A consultant will broaden the definition of ROI beyond a simple definition of how much money is raised.
- A consultant will introduce (or reinforce) the broad concept of stewardship, rather than a narrow focus on fundraising.
- A consultant will organize a drive so that you will prevent getting the cart before the horse.
- A consultant will help to create a clear, compelling case to justify the ask and answer questions like: “What difference will my financial commitment make? How will we be better able to fulfill our congregational ministry if I contribute more than last year?”
- A consultant will use the Suggested Fair Share Giving Guide to help donors create their own definition of fair share
Here’s how I framed this issue in Chapter One of Beyond Fundraising:
“We need to replace [the old tapes of scarcity] with positive, more accurate statements of abundance, such as ‘Our congregation has a clear mission, we are publicly passionate about that mission, and we will secure enough resources (people, time, and money) to successfully implement our mission.’ A congregation with a culture of abundance believes in the reality that there can always be enough. They believe that diligent stewardship will provide everything needed. The glass is at least half full. Sometimes there are several glasses. Sometimes they even overflow.
Focusing on abundance requires a new vocabulary, one that emphasizes the reality of abundance by diminishing our focus on money. This vocabulary puts fundraising under the umbrella of stewardship. Rather than discussing the goal of raising money, congregations should discuss money as no more than a means to an end. Money is most meaningful when we can move from thinking of it as a way to pay the bills and regard it as a way to fulfill the ministry of the congregation. . .
Some of today’s healthiest faith communities focus more on stewardship than fundraising. While fundraising refers specifically to money-raising efforts, stewardship is an attitude that is reflected in all of the congregation’s efforts. Fundraising emphasizes the need of the recipient; stewardship addresses people’s spiritual need to give. Stewardship must precede fundraising.
Healthy faith communities see stewardship as a vital component of their ministry. They understand that stewardship is an act of worship. Worship includes the joyful sharing of gifts (aptitude, ability, and money), call (willingness to proclaim the congregation’s spiritual message), and spiritual vocation (willingness to take up volunteer efforts to support the faith community). Note that gifts have a wider meaning than money exchanged for the programs and ministries of a faith community. For example, one’s gift to the faith community might be to serve on the finance committee because one has a good understanding of financial matters. Or a member with landscaping ability might agree to become the caretaker of the memorial garden. All kinds of gifts should be valued and considered meaningful.
Stewardship, then, is the growing, nurturing, promoting, and building of the gifts, call, and spiritual vocation of the members of a faith community. Stewardship is not necessarily the things people do, but the spirit that influences the things they do.”
The following article is an update of our October 5, 2010 blog post. Vanco Services provides a variety of e.services and they are currently working with nearly 200 UUA congregations in 46 different states. Some churches use only one e.service® solution while others use an entire suite of solutions that includes online giving, direct debit giving (ACH), credit & debit card giving and remote check deposit.
We encourage you to contact Vanco to explore the possibilities for your congregation.
Author: Stephen Rose
Director of Marketing
Vanco Services, LLC
As a provider of electronic giving solutions to thousands of churches, Vanco Services, LLC is pleased to share insights we’ve gained over the past 16 years.
Seasonal donation slump. Donations tend to track closely with the number of weekly worshippers, producing a seasonal donation slump in most congregations. A church’s operating costs and program expenses continue year round, but weekly check & cash offerings are erratic. Donations typically taper off after Easter and then drop—often precipitously—during summer months before recovering in the 4th quarter. Vanco data shows an average 43% decline in weekly giving by paper check from Easter to mid-summer. Even the most dedicated churchgoers miss services. Vacations, illness and weather (good and bad) all enter into the equation. In the fall of 2009, the flu—and even fear of the flu—depressed attendance at services. In recent winters, snowstorms also kept worshippers of all faiths at home in many areas of the country. One Greek Orthodox Archdiocese estimated that February 2010 snowstorms resulted in at least $1.4 million in lost weekly offerings.
Declining check use. Getting twentysomethings to attend services is one thing. Getting them to write a check is quite another. Many families no longer carry a checkbook and most young families never did. A growing number of households simply prefer to make electronic payments and contributions whenever possible. A December, 2010 study from the Federal Reserve reported that paper check use declined by more than 43% in the past decade. The same study showed that electronic payments increased by 276%. This shift in payment practices presents a stewardship challenge for every congregation. (more…)
Has your congregation ever been faced with replacing the heating and cooling system, or the electrical system, or the plumbing system, or the roof? Were you prepared? Did you have the money set aside for the work?
Here are some guidelines to prepare for the inevitable replacement of these systems:
Introduction. Because congregations are non-profit organizations, they generally do not pay taxes. As a result, leaders have little incentive to set up depreciation schedules for their various systems. Still, congregations must face the inevitable replacement of heating and cooling systems, the roof, the exterior paint and sometimes the electrical and plumbing systems
To address these issues in a systemic way, congregations are encouraged to create a maintenance reserve fund; the same type of fund that the business world uses to be eligible for depreciation under the tax laws. The fund enables congregations to create a long-range maintenance plan, as opposed to reacting to emergency situations.
Initial funding. There are at least two ways to start a replacement reserve fund.
1. A replacement reserve fund can be started immediately after the purchase of a new system, roof, or entire building. The congregation calculates the life expectancy of each component and creates a line item in the operating budget that is equivalent to the annual amount needed to replace the system.
2. A replacement reserve fund can be created as part of a capital campaign. Most congregations do not include depreciation money in their annual operating budget. As a result, the initial funding is often provided as part of a capital campaign.
Annual Funding. Whichever of the two methods is chosen, the key to success is the annual appropriation to the replacement reserve fund. The annual budget should include a line item for depreciation equal to the decline in the value of the depreciable assets as calculated according to the General Accepted Accounting Practices (GAAP). We recommend that money should be deposited in a separate account that already contains the initial funding and held until approved for expenditure. Interest accruing on the funds should be held in the same account.
Expenditures. Expenditures from the replacement reserve fund should be limited to the replacement of depreciable assets. In Unitarian Universalist congregations, expenditures can be recommended by the governing body and then approved at a duly called congregational meeting.
Adapted by Wayne B. Clark from a document written by David L. Rickard
Is your church alive or is it dying? Take a look at the following whimsical poem to see if you recognize your congregation.
Living churches always have a parking problem; dying churches don’t.
Living churches are constantly changing their methods; dying churches don’t have to.
Living churches have lots of noisy kids; dying churches are quiet.
Living churches expenses always exceed their income; dying churches take in more than they ever dream of spending.
Living churches are constantly improving and planning for the future; dying churches worship the past.
Living churches grow so fast you forget people’s names; dying churches you’ve known everyone’s names for years.
Living churches move forward and out in faith; dying churches operate totally by sight.
Living churches support community work heavily; dying churches keep it all at home.
Living churches are filled with healthy pledgers; dying churches are filled with tippers.
Living churches dream great dreams of beloved community; dying churches relive nightmares.
Living churches have the fresh wind of love blowing; dying churches are stale with bickering.
Living churches don’t have can’t in their vocabulary; dying churches have nothing but.
Living churches EVANGELIZE, dying churches fossilize.
The following post has been excerpted from the December 9, 2010 issue of Science Daily and shared with us by stewardship consultant Larry Wheeler. The article supports our long held belief that there is a clear connection between community building and successful annual budget drives; stronger congregational communities create many financially committed donors.
Does your congregation have that secret ingredient?
‘Secret Ingredient’ in Religion Makes People Happier.
While the positive correlation between religiosity and life satisfaction has long been known, a new study in the December issue of American Sociological Review reveals religion’s ‘secret ingredient’ that makes people happier.
“Our study offers compelling evidence that it is the social aspects of religion rather than theology or spirituality that leads to life satisfaction,” said Chaeyoon Lim, an assistant professor of sociology at the University of Wisconsin-Madison, who led the study. “In particular, we find that friendships built in religious congregations are the secret ingredient in religion that makes people happier.” (more…)
Here’s a short story recently shared by a lay leader. Sound familiar?
“We used to have a lot of fundraisers to help balance our annual budget. Most notably, we ran a fall at-your-service auction and a spring yard sale. After a while, people got worn out from all the hard work and the excruciating pressure of needing to raise a certain amount of money each time. It got harder and harder to recruit volunteers to run these events.
Then, someone had an epiphany: ‘Not only is this really hard work, but, for the most part, we are just exchanging money among ourselves.’ And then someone estimated the amount of time required to run each fundraiser. It was easy to see that conducting fundraisers to balance an operating budget was not at all cost effective.”
Fundraisers to build community are great. Fundraisers to support external ministries are also great. Using fundraisers to balance an operating budget . . .not so much. (more…)
The following question was recently posted on the UUmoney listserv:
“Is there a best way for a church to receive the donation of a car and turn it into cash?”
While that’s an intriguing question, a better question might be, “Should a church accept donation of a car?”
Ideally, a congregation has anticipated this second question and has written a clear endowment document. This document provides written policies for a planned giving program and clearly describes what types of gifts can be accepted without review and which gifts require approval of the governing body or the entire congregation.
It is especially helpful to outline a procedure for reviewing gifts of real estate, used cars, or other personal assets that may be difficult to sell. Does the congregation really want to be in the business of managing a piece of real estate, or brokering a deal on a donated car, or assessing the value of Aunt Maude’s priceless bric-a-brac? (more…)