Church Finances during COVID-19 (part 1 of 5)

Posted on April 13, 2020 Written by

Issues to address immediately:

  1. Online giving – if you don’t have it, get it now. My currently preferred vendor is Tithely. They can get you set up in a few hours (they say they can do it in minutes but…). Then, promote the heck out of your online giving.
  2. Audio & video technology – This crisis has forced many churches to acknowledge their AV equipment wasn’t ready. PLEASE invest more money into this area. You won’t regret it. After this is over you’ll have really good microphones. With your video equipment, you can improve or launch an online service so that members can watch you whether they’re homebound, traveling, sick, in a retirement community, or just want to watch the service again during the week.
  3. Paycheck Protection Program – the $2.2 trillion CARES Act (and its related additional acts) provide churches federal money. This is the first time the US government has offered money to faith groups. Fill out the forms, work with your local banker, and get the money. If you don’t need or want the money – get it anyway. You can always
    1. Return the money later
    2. Give it to a non-profit that you partner with
    3. Use it for missions in your community

 

I think every church in the world has realized the need for those two things. These are no longer “wants” but actual needs. Yes, it will cost some money but it may be the difference in survival and closing your doors.

Lead On!

Steve

Listen to the podcast:
https://anchor.fm/cbf-va/episodes/Church-Finances-during-the-Pandemic-Navigating-the-Financial-Fallout–the-CARES-Act–and-Making-Tough-Decisions-ecfgm7

Filed Under: budget, church administration, church finances, faith, future, leadership, planning, strategy Tagged: , , , , , , ,

An Expensive Football

Posted on April 7, 2020 Written by

Years ago my church had an auction to raise money for a summer missions trip for the youth. It was a big event – it took two days to stage, the youth were waiters, we had a professional auctioneer (he donated his services), it was an event! One of the live auction items was a football signed by a nationally known coach who was a legend in the state. The football started at $100

$200

$300

$400

$500

$750

$1,000

At this point everyone dropped out except for one older man and a younger man whose 10-year old son was sitting beside him. The boy was incredibly excited about the prospect of getting this football.

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

The father bid again, $4,000

The other man bid $4,500

 

The father looked down at his son, shook his head and said he couldn’t go any higher. The son was crushed. He hung his head and was terribly disappointed.

The auctioneer awarded the bid to the older gentleman who came forward, wrote a check, and was handed the prized football. The man looked at the football and walked to the boy and handed him the ball. “It’s yours.” And he left.

This is a completely true story – you can’t make up this stuff.

Lead On!

Steve

Filed Under: faith, generosity, leadership Tagged: , ,

$10

Posted on March 31, 2020 Written by

When I was a poor college student I had barely enough to get by. I certainly didn’t have any money to tithe. And when the offering plate was passed, I wanted to give but I couldn’t. I had no financial margin in my life.

One Sunday morning I walked from my parking spot to the church and noticed on a ground a $10 bill. I put it in my wallet knowing I could use it for a meal or some expense. Before going too far I felt a nagging question (from God? Probably): why don’t you put this found money in the offering plate.

I sat through the service and when the plate was passed, I passed. The money never left my wallet. I felt guilty afterward – I was given money, I was asked to give it away, and I didn’t.

That was almost 40 years ago but I remember it quite well. The lesson I’ve tried to learn is to be generous whenever I can. Opportunities will appear out of nowhere and you’ll be asked to give. Do it – you won’t regret being generous but you will regret being stingy. I still do.

Lead On!

Steve

Filed Under: faith, generosity, leadership Tagged: , ,

Fixed Assets

Posted on March 24, 2020 Written by

I take these off every balance sheet I possibly can. There is no reason for a church (or any other non-profit) to track their fixed assets (land, buildings, and furnishings). CPAs will tell you these must be included on a balance sheet and that is simply not necessary for a non-profit.

Fixed assets are usually listed on a balance sheet for the price they cost. If a building costs $1 million, that is the figure it is listed on the balance sheet. Same for furnishings, building improvements, etc. This figure is what it cost at the time of purchase and that is my hang up. Church pews that cost $100 each 50 years ago now have a replacement price of $2,500 or whatever. Yet, on the balance sheet it is listed as $100 less a full-depreciation of $100. That doesn’t mean anything to the average church member reading a balance sheet. Fixed assets never reflect the current amount of money you need to replace that tangible asset and that is the short-coming a fixed asset and depreciation policy and why it can actually harm a church. People will presume it costs $1 million to replace the church’s fixed assets (which were bought 18 years ago) when the true cost is closer to $5 million.

 

Instead, do this. Remove all fixed assets from your balance sheet. Then, when you do your annual audit or present the annual financial report to the church, have a footnote in the document in which you list the insured value of the physical plant and the furnishings and add in the tax value of the property (land/soil is not insurable because it can’t be destroyed). This footnote tells the reader the current value of what you own (presuming you keep your insurance value updated).

Finally, take a camera (such as your phone) and record every room, every cabinet, every drawer, and every space in your building. It is so easy to do with modern smartphones. Two people can do an entire church in a morning (or a day if it is a very large church). Then, store that recording in different locations or in the cloud so it can be used if need for insurance purposes. Keep multiple years’ recordings, too – don’t discard one after you get a new one.

Please keep your balance sheet simple – no fixed assets, cash only, and keep restricted funds to as few as possible. Thanks!

Lead On!

Steve

Filed Under: accounting, budget, church administration, church finances, church financial statements Tagged: , , , ,

Cash Balance Sheet

Posted on March 17, 2020 Written by

Cash is King. Especially in non-profits. I’ve spent too many hours trying to get CPAs to understand that in non-profit accounting, there is no need for the balance sheet to list fixed assets, pre-paid expenses, depreciation (in any of its myriad forms), and other forms of for-profit accounting. Sometimes the CPAs get it and follow my lead. Other times they are so entrenched in their methods that they can’t think outside the AICPA lines.

 

A cash balance sheet means that the only thing on the asset side is your cash and where it is located (E.g., “Main Checking-1st National Bank….$47,738.83”). This is known has “how much money do you actually have available to you as of the date of the balance sheet.

 

And, please, please, please include ALL your accounts at ALL your financial institutions. I’ve worked with too many churches who tell me they’ve listed everything only to learn later that there is a discretionary fund, an endowment fund, a benevolence fund, etc. that someone doesn’t want others to know about. That is being dishonest – plain and simple. You’re not revealing the whole truth because someone doesn’t trust others. That is wrong.

 

The other side of the balance sheet is divided in two:

  • How much of the cash you have is encumbered for others?
    • What are your payroll liabilities (money you’ve withheld from employees which you’re going to send to the Federal and State tax authorities, to the employees’ retirement, health or life insurance, or other benefits. That money isn’t yours; you’re just holding it for a little while.
    • The other “liability” is commonly known as restricted funds. Again, this money isn’t yours, you’re just holding it until it is used for the purpose that the donor gave it for. That may be for the music program, for a building campaign, or for benevolence. Whatever it is for, you MUST use it for that purpose and nothing else unless the donor gives you written permission.
  • How much of the cash you have is “left over?”
    • That leftover is known as retained earnings or net assets. That money is truly under the full authority and control of the governing body of the church whether that is elders or the congregation.

A cash balance is simple and that’s the way it should be for churches. You want a document that is clear enough so that a non-accountant can understand it after a 5-10 minute explanation. If you have to go longer, then people are going to think you’re hiding something – and you just might be. Keeping it simple keeps it honest.

Lead On!

Steve

Filed Under: accounting, budget, church finances, church financial statements Tagged: , , ,

Columbarium – Part 6: Moving?

Posted on March 10, 2020 Written by

One of the serious considerations that each church faced was moving the columbarium should the church ever relocate and the property be sold. As cities and suburbs change, churches wax and wane; some are closed for good and some move to a new location. In either case, what would the church do if moving the columbarium was necessary?

Relocating the Church

  1. The columbarium committee secured a commitment from the church leadership at the time that if the church ever moved, then the columbarium would go to the new location. That leadership will certainly be gone when/if the church ever moves but at the time that was comforting to the people who were buying niches.
  2. The niches were in a brass box – a series of about nine rows and seven columns which created 64 niches (singles and doubles). This brass box is exceedingly heavy and sturdy.
  3. The decision was made that should the church relocate, then a mason would chip away at the bricks surrounding the brass box of niches, each box would be lifted out and moved. At the new location, a new columbarium would be constructed and house the brass boxes.
  4. As to the areas where ashes were scattered or interred in the ground, the committee said that as much dirt as possible would be transported to the new location and placed in a new area set aside for ashes. It was recognized that not all dirt could be moved but that every effort would be made to move as much as possible in a dignified way.

Closing the Church

  1. Should the church close, the decision was that the church would approach a cemetery and make arrangements to move its niches and dirt. The sale of the church and the perpetual fund would cover the moving costs and the permanent fund at the cemetery.
  2. Then, the move would follow steps 3 and 4 above.

The committee was thorough. We wanted to ensure we created a sacred space for the eternal rest of people created in God’s image and then ensured that they would be taken care of forever. The committee achieved that and then disbanded. We gather now only when we meet at the funerals of friends but we also are glad that we made a place for them to be and their families to visit.

Lead On!

Steve
www.churchbestpractices.org – all kinds of FREE church manuals and sample documents
www.financeforchurches.org – 400 plus blogs on every church administration topic you can think of

Filed Under: buildings, church administration, facilities, future, planning Tagged: , , , ,

Columbarium – Part 5: Extra Info

Posted on March 3, 2020 Written by

I kept 2-3 urns in my office for quick access and so I didn’t have to get one right away when someone died. Don’t let families go buy their own urns – they may not fit. I also had 3-5 niche face plates in my office. When someone died, I took the niche plate to the engraver who had a pretty quick turnaround. When the funeral day came, I removed the blank niche plate and after the service put up the engraved one. If a spouse of someone already in the niche died, then I took the engraved niche plate off, put up a blank plate, got the niche plate engraved with the second name, and returned it in time for the service.

For tracking purposes, I created a spreadsheet in which I color-coded which niches were available, which were sold but not yet occupied, and which niches had urns in them. I did the same for a place where ashes were interred in the ground (by the way, it takes three years for ashes to totally be absorbed so on my spreadsheet I marked those plots as being occupied for a three-year term).

I installed a glass-enclosed bulletin board on which I posted the spreadsheets for the niches and for the interment area. This allows passersby to see what spaces were available and which had been claimed (either occupied or paid for but not yet occupied). There was some marketing material there, too. This bulletin board was right next to the door leading to the columbarium garden.

Lead On!

Steve


www.churchbestpractices.org – all kinds of FREE church manuals and sample documents
www.financeforchurches.org – 400 plus blogs on every church administration topic you can think of

Filed Under: buildings, church administration, facilities, future, planning Tagged: , , , ,

Columbarium – Part 4: Where to Put It

Posted on February 25, 2020 Written by

I’ve led in the construction of two columbaria, one at a Baptist church and another at a Presbyterian church. There was no denominational difference. Our respective goal was to honor the saints and provide a place of sanctuary for people visiting those saints.

In each case we found a secluded area of the church’s grounds. One was an existing patio immediately outside the sanctuary and the other took a grassy semi-circle at the end of a building. The patio was far cheaper because the walls and concrete flooring were already there; the masons just had to build up a structure into which the brass niches were installed. The other was a much larger construction project requiring about six months of work. It was designed by a landscape architect; it required a lot of bricks, major landscaping improvements, plumbing for a waterfall and electricity for some uplighting. It also contained seven sets of niches whereas the first one I did only had one set of niches.

Both columbaria provided a quiet place even though they are both near a major street. One of them has a waterfall which covers the noise of the nearby road and both have lots of greenery to enhance the atmosphere and provide privacy. Both have benches for people to sit while they visit and they are open to the public at all hours-the gates are never locked. The seclusion of each one ensures that for the most part only church-goers even know the columbarium is there.

In both cases the columbarium has enhanced the landscaping of the church. Each has been a wonderful addition.

Lead On!

Steve


www.churchbestpractices.org – all kinds of FREE church manuals and sample documents
www.financeforchurches.org – 400 plus blogs on every church administration topic you can think of

Filed Under: buildings, church administration, facilities, future, planning Tagged: , , , ,
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