3 Women

Posted on July 30, 2013 Written by

Who paid for Jesus’s ministry? Seriously. Who came up with the money to cover the living expenses of about 20 people for about 1,000 days (3 years of Jesus’ ministry)? Do the math in today’s dollars – what would it cost to feed, clothe, and house about 20 people (sometimes less but sometimes more) for a month, much less a year or even three? The answer is a lot.

So, who paid for Jesus and his followers for all that time? The answer is in Luke 8.1-3 and it is clearly spelled out with names.

Soon afterwards he went on through cities and villages, proclaiming and bringing the good news of the kingdom of God. The twelve were with him, as well as some women who had been cured of evil spirits and infirmities: Mary, called Magdalene, from whom seven demons had gone out, and Joanna, the wife of Herod’s steward Chuza, and Susanna, and many others, who provided for them out of their resources.

Here is a list of people traveling with Jesus and why they did it. He was their teacher and their healer. While Jesus taught, these followers could demonstrate exactly what Jesus had done so that newcomers would understand this is not just a prophet—he’s the Messiah. The most interesting thing to me about this passage is the three women:

  • Mary Magdalene: had seven demons which Jesus got rid of (a careful reading will show that she is never referred to as a prostitute – that is a misnomer). She is referenced 12 times in the Gospels, more than many disciples, indicating how important she was.
  • Joanna: her husband’s boss was the same guy who killed John the Baptist (albeit reluctantly) and who let his soldiers torture Jesus. I want to believe that Chuza had conversations with Herod such as, “my wife is off again with that crazy rabbi from Nazareth…” I can only imagine those talks.
  • Susanna: this is the only mention of her in the New Testament. There is a tradition that she was one of the women at Jesus’ entombment (see Myrrhbearers) but whoever she was, she was instantly recognizable with just her first name (like some celebrities today).
  • And many others: it is well-known that the combined efforts of many outweigh the power of one or two. Hundreds of small financial gifts are strong both in the total amount given and in the influence that these adherents bring.

These three women paid for Jesus’ ministry. They gave out of appreciation for what Jesus did for them and what they knew he could do for others. They gave because they had the financial means to do so. They gave because God led them to do it. These women of influence do not get acknowledged like they should, and that is our loss. These women stood toe-to-toe with men and used their wealth and influence to sustain a cause that was (and still is) earth-shaking.

Thanks to you,

  • Mary Magdalene, for using your experience with Jesus to demonstrate the power of healing and for using your money to buy whatever Jesus needed,
  • Joanna, for using your husband’s influence to support and protect Jesus and for using your husband’s paycheck from Herod to pay the expenses for Jesus and his followers,
  • Susanna, for using your social clout to help Jesus and for using your wealth to fund Jesus’ ministry.

Thanks also to the “many others” like you and me who give regularly and generously today to support Jesus’ ongoing ministry.

Lead On!

Steve

Filed Under: generosity Tagged:

2 Instincts

Posted on July 23, 2013 Written by

Humans, like other creatures, are born with instincts that lead to greater chances for their survival. Human babies are born with at least two instincts (there may be more but I want to focus on two). Other animals are born with more instincts (horses must stand up shortly after birth) but human babies have two easily recognizable instincts, and both are necessary for their survival: to suck and to hold on.

Sucking is how babies get nutrition from their moms and grasping is how babies hold on to the person holding them. Without those two instincts, babies would have a harder time living past a few days. Both of those instincts have something else in common: they are self-centered. Sucking and holding are meant to pull things into the person. Nothing about a baby is designed to help others or be outwardly focused (other than they are incredibly beautiful and remind us of God’s wondrous creativity).

Jesus and the New Testament writers continually teach us to “be like God.” That means shedding our human ways and instincts in order to be more God-like. That is difficult—some say impossible—for us, but it is a worthy goal.

My readings in the Gospels teach me that Jesus’ instincts were not to pull back, suck in, or hold on to anything. Generosity and selflessness were his characteristics. Giving away life, sight, healing, food, time, money, teachings, and so many other things were Jesus’ nature. Jesus taught – by definition an act of giving away – and lived out sharing the Good News. Even in death, he gave his life. John 3:16 has the verbs “love” and “gave” which are words inculcated with sharing.

Openhanded-ness is God’s instinct. God loves to give and serve. That is God’s nature. I pray that all people, but especially Christians because we know God, would live lives of sharing, openhanded-ness, giving, and generosity, because that is what being God-like is like.

Lead On!

Steve

Filed Under: faith, generosity Tagged: ,

1 Bank Account

Posted on July 16, 2013 Written by

The rule of thumb is that a church needs just one bank account for its financial needs. If you have more than one account, you are incurring additional bank charges, taking up staff time to transfer funds and reconcile bank accounts, and constantly tracking all the changes and balances.

I recognize the concern over the FDIC cap of $250,000 but there is a way around that ceiling; see this post for that info. The CDARS program is a legal tool which can insure up to $50 million, and if you have even more than $1 million in a bank account, you should consider investing that in a way that has better returns than a bank.

I’ve seen organizations that didn’t have a cash flow problem, but prior church leaders were leery of exceeding the FDIC cap so they opened bank accounts—lots of them. One had nine accounts and another had an astounding 20 bank accounts (including three that were never on any financial statement). When one organization had an audit, the auditors spent scores of hours tracking funds flowing from one account to another, and that increased the audit cost by tens of thousands of dollars.

Another concern with multiple accounts is that it can make it easier to hide malfeasance by an employee. Tracking so many accounts is hard and if one is omitted from a financial statement, then after a while that account can be tapped by an employee for personal purposes. If you only have one bank account, it is pretty hard to leave it off the balance sheet!

I strongly encourage all organizations to have just one bank account. However, there are times when a church needs more than one account. When a church has cash flow issues, it struggles to make its regular payments, and its leadership doesn’t have the fiscal control to ensure they don’t spend too much, then there should be a second account. That second account will receive transfers from the main account and hold funds until those funds are needed for payroll, debt service, or other critical expenses.

Unless you have an incredibly good reason to have more than one account, please close all your excess accounts, save the church some money and time, and make your financial reporting more efficient and transparent.

Lead On!

Steve

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

Church Fellowship Budget

Posted on July 9, 2013 Written by

Decades ago many churches decided that they would be intentional about church fellowship, so they created the Wednesday night supper followed by the mid-week Bible study and children’s programs. This system worked well till about the mid-1990s. For the past several years, this form of fellowship has encountered many problems, and increasingly churches are finding it hard to continue this programming. Some churches are overly wedded to the Wednesday night supper and view that time as the most important fellowship activity in the life of a church.

 

Fellowship is critically important to a church. I wholeheartedly believe in and appreciate fellowship times. Many, if not most, church fellowships involve people coming to the church for a food function. I’ve been blessed countless times with Pot-Luck Suppers, Dinners on the Grounds, etc. But I want to challenge the church of the 21st century to think outside the box regarding fellowship. In fact, I want to challenge the church to think outside its four walls and into its community.

 

The purpose of fellowship is for church folks to get to know each other in venues and activities outside of Sunday worship and Sunday School. This is an opportunity for people to talk about football, children, work, etc. in a “non-churchy” setting. This is a time for people to get more closely acquainted, to hear one another’s heart concerns, to laugh uproariously at stories and jokes, to make memories which will be recalled in years to come, and just to enjoy being with each other.

 

I realize that Wednesday suppers are a good attempt at accomplishing this goal, but frankly they don’t reach their intended goal. Here is an alternative: planning family-oriented events which are held outside the church grounds at least on a quarterly basis.

 

Three to six times a year, the fellowship committee of the church can use its budget to find, promote, and schedule events which put the church members into their community. For instance, the church will attend a baseball game together, have a bowling night, have a picnic in a local park with inflatables, or plan a weekend retreat at a beach or mountain locale, etc.

 

The idea is to involve the church in its own community and to be identified as a church. Too often the community sees the church as the people who attend and stay inside the building at a specific address. We all know that the church is not a building; it is the people, and they must be integrated into their community. Jesus himself spent a lot more time wandering around villages and cities than he did inside a synagogue. Jesus knew the value of being out and about instead of in and within.

 

How will this affect the Wednesday fellowship and activities? That is for each church to decide. I think many will decide that those funds could be better used to fund these events outside the walls of the church. If a church will conduct a study on how best to use their limited financial resources, they may determine that there is greater impact on their neighbors by having fewer but more significant events outside the church’s buildings. Will this affect current age-level programming on Wednesday evenings? Yes, and this is an opportunity for the church to be creative: to decide if it should change its age-level programming, to think about new dates and times to implement new opportunities, to “think outside the box” in ways that will help the church reach its community with the Good News of Jesus. Doing the same thing again and again isn’t reaching our world very well; in fact, it’s often not even reaching our own members very well.

 

Think creatively – after all, we are made in the image of the Creator, our incredibly imaginative God!

 

Lead On!

Steve

Filed Under: budget, church administration Tagged: ,

Church Debt #2

Posted on July 2, 2013 Written by

My previous post was a primer on church debt. In this post, I want to focus on the interest rates that churches pay. There is a simple way for churches to pay less in interest and use that money for staffing, buildings, programming, or additional payments on the principal.

First, indicators that you should refinance:

  • If a church has an interest rate that is more than 1% over the current market rate, then refinance
  • If the church’s current terms are less than 12 months from renewal, then refinance
  • If the church needs additional capital for a project AND the church’s debt-to-budget ratio is less than 200%, then refinance and include the additional amount in the new mortgage

One of the biggest questions facing church finance committees on the subject of refinancing is whether to get a fixed or floating rate interest note.

  • A fixed-interest-rate note is just that: for the life of the loan, you’ll always pay the same interest rate. It is easy to budget for this and there is a measure of certainty and even security in knowing exactly what the monthly mortgage bill will be. This is a good tool for small amounts.
  • A floating-interest-rate note is pegged to one of two interest rates: US Prime Rate (set by the US Federal Reserve and major US banks) and LIBOR (an acronym for the London Inter-Bank Offered Rate and is set in London as a basis for international loans). Floating rates can be either higher or lower than fixed rates – it is all dependent on the financial world. note that many banks will allow floating rates to be changed to a fixed rate at some time during the five year period.

No one knows what the interest rates will do over the next five years, yet that is exactly what finance committees are trying to guess. Do they lock in a fixed rate for five years to have a stable figure for the budget, or do they try to pay less with a floating rate knowing that if they’re wrong, the floating rate could go sky high before they can lock it in? Here’s my suggestion as to which interest rate tool a church should use: BOTH.

Instead of trying to guess either/or, do both/and. The church should take its current loan and get the bank to finance half in a fixed-rate note and half in a floating-rate note. Each month the church will make its regular principal and interest payments from its budget and capital campaign receipts. Then, as the church receives additional gifts toward the debt, the church will make additional principal payments against whichever note has the highest interest rate (fixed or floating). This is important – you want to first knock down the debt of whatever note has the highest interest rate. This may change during the course of the debt: the floating rate may go higher than the fixed or vice versa, but you always want to pay down whichever note has the highest rate, not the one with the highest debt.

This is a simple concept which may take your bank a while to accept, because it is not to their advantage. But this is God’s money – use it to the church’s advantage!

Interest Rate Hedges or Insurance: The financial world has come up with many tools to decrease the perceived risk in interest rates. My experience is that these are usually balanced in favor of the bank and they are not worth the extra cost to the church.

 

Lead On!

Steve

Filed Under: budget, church administration, church finances Tagged: , ,

Church Debt #1

Posted on June 25, 2013 Written by

Many churches have sizable amounts of debt. Too often this debt hampers the church from paying its staff properly, maintaining its buildings adequately, or funding its programming sufficiently. Let me be clear: I despise church debt and encourage every church to do everything it can to get out of debt ASAP. Church debt is nothing more than giving money to a bank when the money should go elsewhere.

 

That said, I understand the reason for debt: to get some money up front to enable the church to construct facilities which will draw in people who can then provide additional receipts to pay for the staffing, buildings, programming, and debt.

 

I also understand that banks like to loan money, and they’ll tell a church that the debt limit is three times their annual income (much like a homeowner’s mortgage). I disagree: anything beyond two times will hamstring the church financially for years to come (much like a homeowner’s mortgage!). If your church’s debt is over 200% of your annual budget, you need to have a capital campaign to eliminate your debt as soon as possible or at least reduce it to a manageable level. Please pay attention to your debt.

 

All debt has three components:

  1. Time: Church debt is commercial debt in that it almost always has a five-year repayment time period. It is not like a homeowners’ mortgage which lasts 30 years but instead, church notes are a five-year note with a “balloon” at the end. The balloon means that the bank knows you won’t pay it all off during the note’s time limit of 5 years, so that means you’ll pay it all off in a balloon payment at the end of the time period OR you’ll refinance the debt (the latter is almost always the case). However, the bank bases its fee schedule on a 30-year note to keep the monthly mortgage payment low enough for the church to pay.
  2. Amount: This varies from church to church based on the need. I’ve seen churches do foolish things such as giving in to the desire to obtain a short-lived item and then putting that cost into the mortgage. For instance, some churches want a van so badly they’ll take that expense and add it to the mortgage, which means they’ll pay for that van for 30 years—about 20 years longer than the van will last. Please make sure you only finance things that will last at least the life of the mortgage.
  3. Rate: See my next post on this subject.

 

Church bonds: I’ve never been part of a church that floated bonds. However, I’ve seen churches use a bond issuance very successfully. This is a creative way to finance a church’s capital needs. Most of the bondholders will be the church members who will give money to the church to pay off the bonds. Occasionally someone from outside the church will buy a church bond.

 

It does take some money up front to work with the bankers and lawyers to get all the legal work done so ensure that you have some capital before you start down this path. Some churches encourage bondholders to gift their bonds back to the church during the course of the note. For instance, sometime people give a bond to the church at Christmas: they’ve “forgiven” the debt, so the church no longer owes principal and interest on that specific bond. Throughout the life of the bond, the church will pay out interest to the bondholders – the interest is paid from funds raised and gifted by members. Also, bonds are bought back by the church as the church has funds available.

Lead On!

Steve

Filed Under: budget, church administration, church finances Tagged: , ,

Wedding, Funeral, and Other Services Income

Posted on June 18, 2013 Written by

Question: When a pastor performs a wedding, funeral, or other event and is paid, does he/she have to claim that money as taxable income?

Answer: Yes, wedding/funeral/speaking gifts to a pastor are considered taxable income. These gifts usually go straight to the pastor and are often not given by the family through the church. Keeping it off the church’s books is the cleanest and simplest.

More Info: A way to use that money for ministry is this: the pastor takes the money from a wedding/funeral, records it for his/her taxes, then gives it to the church into a designated fund (“Pastor’s Ministry Fund”) which only the pastor can access. Then, during the year as the pastor has meals, buys books, buys a gift for someone, etc., the pastor can pay for that expense out of the designated fund. That expense won’t affect the church’s budget (because it’s a designated fund), the pastor gets a tax break on the gift he/she received because the gift was donated to the church, and the pastor gets to use that money for something related to his/her work AND there is proper oversight because the money is run through the church (meaning, it is subject to a review by members of the Finance or Audit Committee – that oversight protects the pastor lest someone accuse him of spending money frivolously). It is a neat way for the pastor and church to get a win/win.

 

Lead On!

Steve

Filed Under: church administration, church finances, church staff Tagged: , ,

Moving Expenses

Posted on June 11, 2013 Written by

Question #1: If the church creates a form which states that an employee agrees to repay the moving costs if their employment is voluntarily or involuntarily terminated before two years of service are completed, does this constitute an employment contract or cause concerns regarding the At-Will employment laws?

Answer: A moving contract is fine. Just to be on the safe side, I would include a sentence in it to the effect that the moving allowance does not constitute an employment agreement and that the at-will employment laws of the respective states are completely applicable. You might even tell the employee that any repayment would be first taken from their pay and if there is still a balance the former employee would be expected to reimburse the church.

Question #2: If the church gives money to a new employee to cover moving expenses, is that money considered income, non-taxable income, or is there a way to give the money/cover the expenses without it affecting the employee’s income all together?

Answer:

  1. Publication 521 from the IRS is a doc from the IRS which details everything there is about moving expenses. Download a copy into the church’s “IRS Forms & Publications” folder in your church’s server. Whenever you need to, send that Publication to the employee to whom it applies.
  2. There are two ways to go about this:
    1. Give a lump sum to the employee and add that amount to the employees’ W-2 at the end of the year.
    2. Reimburse the employee for expenses based on receipts/invoices turned in.
    3. Either way, the employee must keep track of all invoices, bills, expenses, etc. and either turn them for reimbursement or list them on their next 1040 as an itemized deduction. It is a lot of paperwork to keep up with, but it is well worth it so that the employee does not have to pay taxes on the lump sum or pay out of pocket for the expenses incurred.
    4. On the church’s side, the easiest method is to give the new employee a lump sum payment and have the employee keep track of all his paperwork without turning in anything to the church. That makes things very easy and simple for the church (which is why I recommend it) and makes the employee responsible for his expenses. It also encourages the employee to be frugal; the less he spends on the move, the more he can keep in his bank account!

 

Lead On!

Steve

Filed Under: budget, church staff Tagged: ,
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