Long-Range Stewardship Planning
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.”
“To rebuild Church, stop looking for quick fixes,” speaks to congregations that try to meet fundraising goals by selecting the ‘perfect’ technique. The best possible technique will not guarantee success unless congregants really care about the church.
Dan Dick writes, “At what point do we finally wake up to the fact that there is no such thing as a lasting, transformative ‘quick fix’? The United Methodist Church has suffered through over 50 years of ‘church-in-box’ programs that have produced poor results at best.
Disciple Bible Study came closest to delivering transformation, but ultimately “popular” did not translate into “effective.” Literally thousands of people have had wonderful, meaningful, enjoyable Disciple experiences. However, a variety of independent follow-up evaluations indicate that there is a very low retention rate, that few people adopt sustained spiritual formation practices, and few report any transformed behavior in their daily lives. I hear about the handful whose lives were completely changed, and I do not devalue any such experience—but unless Disciple has been an integrated component of a comprehensive developmental process of spiritual formation, it remains a pleasant experience for the vast majority. ”
You can read the entire article on the United Methodist Portal’s website.
We have some exciting news . . . .
FORTH: A Stewardship Development Program has been launched after four years of input from hundreds of congregational leaders. FORTH has been created because we know that some of the healthiest faith communities focus more on stewardship than fundraising. As noted in chapter one of Beyond Fundraising: A Complete Guide to Congregational Stewardship fundraising emphasizes the need of the recipient; stewardship addresses people’s spiritual need to give.
Take a look at FORTH. Start by watching the 8-minute introductory video and decide if you would like more information about how your congregation can adapt this year-round program to fit the unique needs of your congregation. You may also want to look some other new FORTH resources including The Art of Thriving and the Stewardship Self-Assessment pages.
You can join the FORTH Community by completing the Congregational Self-Assessment. Upon completion, you will have access to many free and helpful resources:
- Several short videos of lay leaders who have had some experience with FORTH
- Suggested Year Round Calendar
- Recommended Stewardship Language
- Sample Stewardship Team Job Description
- Recommended Stewardship Team Formation and Charge
- Stewardship Information and Ideas
- Sample Organizational Charts
- Annotated Bibliography (currently more than 130 items)
- Operational Support for Effective Stewardship
- Suggested Four-Year Activities
Once you have completed the Self-Assessment, you will receive an email from the Congregational Stewardship Services Administrator with information on accessing these resources. In this e-mail, the Administrator will include a link to the web pages with these resources and the username and password required for logging on to these pages. Please save this information.
Want to get your leaders involved in an exciting interactive process? Become a FORTH Partner by asking five of your congregational leaders (lay and/or professional) to complete the Congregational Self-Assessment and your congregation will gain access to all the resources listed above, plus these free interactive activities:
- Closed Facebook group
- Regularly scheduled conference calls
- Occasional webinars hosted by UUA congregational stewardship consultants
- Updates distributed through Constant Contact
After five of your congregational leaders have completed the Self-Assessment, Wayne Clark will create a profile for your congregation, sending it to your FORTH Partner contact person. Information about FORTH Partner activities will soon follow.
Interested in some on-site consultation from a UUA stewardship consultant? Ask us about our fee-for-service program, with a sliding scale to match the size of your congregation.
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
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…)
When visiting with different congregations I encourage the leadership to think about how to help the children become good stewards of their faith community. Even the littlest ones can plant a bulb on the grounds and watch it grow over time. By the time they are teens, however, they are able to articulate in joyful and powerful ways what their faith community means in their daily lives. They freely share what they like, what they wish were different and are almost always so willing to help bring about their desired future. Adding teenage youth to your discussions about the future, in your committee meetings, and sitting at the table with the adults is a wonderful way to grow their understanding of stewardship in the fullest possible meaning. Teens also serve as a powerful reminder to adults that their decisions today will impact the next generation.
How is your congregation including youth in their most important discussions? Are they prepared to be givers of time, talent and treasure as they become adults and members?
“[My congregation] does not have a coherent policy regarding earmarked gifts, special funds, special fundraising etc… We also have a history of programs raising their own funds as well as some history of people who participate in just one aspect of church life not pledging to the whole stewardship campaign but contributing to their favorite program, if at all…”
That statement has been excerpted from a current discussion on the UU-Money email list. The following information might be helpful if your congregation has experienced the same dilemma.
Sample Endowment Investment and Distribution Policy
The Endowment Fund Committee shall invest the assets of the endowment with the objective of earning an average total return of 8 to 12 percent consistent with moderate risk. The Committee shall endeavor to invest the assests of the endowment in a socially responsible manner. It is intended that reasonable restrictions placed on any gift by the donor will be faithfully followed, subject to the Committee’s determination of the integrity and best intersts of the endowment.