The Best Shredders for Churches

Posted on April 30, 2013 Written by

The Best Shredders for Churches

Every office likes to have shredders. The finance office needs to shred sensitive financial files or personnel records; a counseling minister may need to get rid of confidential files; an administrative assistant needs to shred papers with members’ addresses and phone numbers. Shredders are good and necessary to protect the church from any liability resulting from sharing confidential information accidentally.

But shredders are not cheap. The smallest ones cost about $50, and industrial ones go for a few thousand dollars (way beyond what a church needs). Shredders are not used a lot, though. They are used heavily for few projects and then they may sit for a few days or even weeks till they are used again. A real drawback to shredders is the mess they make – every time the plastic liner is replaced, some shreddings fall on the floor which then requires a vacuum to come out to clean it all up. Finally, they have to be maintained and eventually replaced, all of which costs even more money.

Here’s my recommendation: don’t spend any money on a shredder. Instead, take all your papers to your bank to shred. Every bank (including small branches) has shred boxes for their own internal use. They have to have these because of the volume of confidential info they deal with each day. Every so often (usually once a week), the bank’s shred box is emptied and shredded by a professional company. This is a benefit of using a bank that a bank won’t tell you about, but they’ll most often provide this customer service at no additional charge.

Get a box or plastic tub and place it in your office somewhere. When people need something to be shredded, they put the papers in the box/tub. Then, when the financial assistant goes to the bank for the regular weekly or semi-weekly bank deposit, the assistant can take the shred box/tub with her to the bank. Talk with your bank ahead of time to ask about doing this. As long as you don’t flood them with a huge box each week, they’ll be glad to help (at least, that’s what they’ll say in front of you!).

So, let your bank’s industrial strength shredders do your work, save you some money, and keep your office cleaner (and give you a little more space). Take advantage of this (unadvertised) service.

 

Lead On!

Steve

Filed Under: church administration, strategy Tagged: ,

Financial Statements – Statement of Receipts & Expenses (Part 2)

Posted on April 16, 2013 Written by

Part 2: Receipts or Revenue or Income

The section listing receipts is always first in the R&E Statement and it is usually one of the smallest.  There are several factors to consider as this section is made:

  • There should be one line for every major revenue stream on which the organization depends. For most churches and non-profits this is one or two (sometimes three) lines such as gifts & offerings, bequests & memorials, and maybe endowment transfers (from your own endowment).
  • Some churches have separate revenue line items for gifts from members versus non-members or gifts from members who pledged versus gifts from non-pledgers. Unless you are using that information for reports and to make decisions there is no reason to separate those gifts. They were given for the operating budget as undesignated gifts so put them all in one line (keep it simple).
  • Small, inconsequential, and occasional revenues should be grouped together into an “Other Receipts” line which may or may not have a budget attached to it. Do NOT create a revenue line for every revenue source – it will make your document unwieldy.
  • Revenues from sources for which there is a direct expense should be in the expense section netted against the actual expense or in a revenue line (actually it is a “negative expense line”) just above the expense line. For instance, many churches have weekly suppers; the receipts from the
  • Transfers to the operating budget from designated funds should not be in the income section. This is not new money but merely a transfer of existing money to offset an expense. To show designated funds transfers as new money is disingenuous.
  • Gifts to designated funds should always go through the appropriate fund on the balance sheet, not through the R&E Statement. To do otherwise will inflate the total amount of operating budget receipts of an organization and make it seem like there are greater revenues from its primary revenue stream than there really is.
  • Budgeting receipts is not simple – you cannot take your annual expected figure for receipts and divide by twelve because every church and non-profit gets a significant bump in December. December is the 13th month because typically twice as much money is received in December as any other month (actually, for most churches the last week of December nets as much revenue as any other month). I created a spreadsheet to help calculate what you should budget for receipts for each month. Here’s how to use that spreadsheet:
    • Go to www.financeforchurches.org and under Free Resources, open the spreadsheet titled Monthly Gifts & Offerings Budget Calculation
    • Insert your church’s name in the title
    • From the Annual Revenue Projections spreadsheet (template is also under Free Resources at www.financeforchurches.org) get the total giving by month for all the years for which you have data. Put that data in column B by the respective month.
    • Delete the respective columns K through Z according to the total number of years for which you have giving data and that automatically changes the figure in  column C (Total # of Sundays). (To delete a column or row – click on the column or row symbol which highlights it, then right click and select “Delete”).
    • Make sure that column E has the correct number of Sundays for the current fiscal year (the formula gets the figure from the list of Sundays to the right on the spreadsheet)
    • In cell I19, type in the annual budget for receipts. The spreadsheet will calculate the monthly receipts figure for your new budget year based on historical giving and number of Sundays in the current year.
    • Take the monthly budget figures and put them into your financial software so that you know what an accurate figure for receipts is for each month, especially December.

When church finances get tight, the initial desire is to cut expenses. Most churches can cut their expenses by 5% without affecting their ministries too much for a year or two. However, the other side of the equation is receipts – most churches should increase their revenues by at least 10% if not 20% based on the financial ability of their members. But asking people to give more is harder than asking a few staff members to cut their budgets. I strongly encourage churches to do both/and: cut expenses AND raise income. It will make your church stronger in the long run.

 

Lead On!

Steve

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

Financial Statements – Statement of Receipts & Expenses (Part 1)

Posted on April 9, 2013 Written by

Part 1: Overview

There are several names for this document:

  • Profit and Loss Statement (P&L)
  • Income Statement
  • Statement of Revenue & Expenses
  • Statement of Receipts & Expenses (this is more appropriate terminology for churches and non-profits; abbreviated R&E Statement in this post)

The R&E Statement is a summary of how well the organization is doing in the current fiscal year. It covers only one 12-month time period. It is comprised of line items which are grouped by classes according to the purposes and mission of the organization. Every line item has a number which helps organize the lines and speeds up the process of entering the information when a bill is paid from that line.

This post will review the major elements of the R&E Statement and factors to consider when creating and organizing it. My guiding philosophy in creating an R&E Statement is “keep it simple.” Making it complicated will lead to unnecessary questions and even worse, fears that someone is hiding something buried in the numbers. Be as financially transparent as possible but don’t make a line item for each expenditure (that’s called a checkbook).

Printed Format: the R&E Statement should have these columns (and this is the order I like):

  • Line item number
  • Line item description
  • Total annual budget for this line item
  • Actual figures for the current month
  • Budget figures for the current month
  • Variance between actual to budget for the current month
  • Actual figures for the current year to date
  • Budget figures for the current year to date
  • Variance between actual to budget for the current year to date

Auxiliary organizations

  • Some churches have wholly-owned and self-supporting subsidiaries. These are ministries which are not dependent on any funding from the church’s operating budget (undesignated gifts) but receive all their funding from other sources. Examples include a bookstore/café, childcare center, or music school. K-12 schools should be separate legal and financial entities and thus must have their own financial statements to keep any legal or financial matter from affecting the church.
  • These auxiliaries are effectively accounting departments in the expense part of the R&E Statement. The monthly financial data of these auxiliary orgs should appear on the church’s financial statements at the very end, after all the data for the church’s operating budget. The first line or two should be the receipts (which are technically “negative expenses” in this department configuration. The rest of the lines are expenses according to the needs of the ministry.
  • The bottom line of this “department” will be the net profit or loss of the auxiliary for the month and year (according to how the statements are printed).

Financial statements are very effective when you compare them year-over-year. If there are major differences (for good or bad) between years, those need to be analyzed as to why the change happened. As time goes by and needs change, financial statements must adapt to the current situation. Line items will change, ministries will begin and end, and revenue streams will ebb and flow. The R&E Statement is organic and the financial administrator must ensure that it changes each year to meet the needs of the church in ways that enhance transparency.

Finally, it is the responsibility of the person who created the financial statement and who input all the receipts and expenses to then interpret the data to the financial oversight committee. The financial administrator must be able to answer all questions fully and truthfully and the committee must be willing and empowered to ask hard questions.

 

Lead On!

Steve

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

Disaster Registry

Posted on April 2, 2013 Written by

A few years ago a massive earthquake devastated Haiti. About 300,000 people died, and a million others were left homeless. Even years later, people are living in tent cities. The poorest country in the western hemisphere was shattered by this event, and the world responded. Tens of millions of dollars were sent; thousands of volunteers traveled to the island to build homes, provide medical care, distribute food, and meet other needs. Haiti was an example of nature at her worst and humanity at its best.

But there were a few not-too-bright spots. Cholera had been eradicated from the island but some UN workers brought in the disease which killed thousands more and added to the already overburdened medical crisis. Well-meaning donors gave clothing and household items, some of which were senseless in Haiti: heavy coats, chandeliers, gloves, and other things from (mostly US) attics. Haiti needed money, money, and more money. Then it needed skilled workers to coordinate unskilled volunteers in various areas such as construction and health care. While Haiti did get that, it also got a lot of unnecessary junk which now the aid organizations have to figure out what to do with.

After Hurricane Sandy pounded the US northeast in October 2012, a plea went out for the same types of things that Haiti needed. And again, the US and other nations responded. And again, relief providers received items that were not needed. In the midst of the relief efforts and clean up after Sandy, some enterprising young people saw the well-intentioned junk that was being delivered and decided to do something. Occupy Sandy knew exactly what was needed, and they knew that the US would respond if we knew what to provide. So, they created a wedding registry at Amazon.com. Yes, that’s right, a wedding registry.

The wedding registry is actually several for the various communities of New York and New Jersey. Each registry is different because the needs are different in each neighborhood. The idea is simple: a donor reviews the items in the registry, buys the items, and then Amazon ships the item to the appropriate Occupy Sandy office for them to use. The donor then gets a tax deduction and, more importantly, the knowledge that he or she provided exactly what was needed. That alone will create warm fuzzies!

There are several opportunities for churches and non-profits to take this knowledge and use it:

  • Create a registry now and advertise it to your church. This registry will be for items that are needed for mission trips and projects. Make a list, check it twice, advertise, and then thank people for their gifts.
  • Relief organizations should have a registry now. While you won’t get many people buying things before a disaster, when the disaster strikes, it will be easy to direct people to your website where you’ve already listed everything that is needed and where you can add to it as you see new needs.
  • Any number of different kinds of registries can be created for any number of needs: from schools to community organizations to camps to anything.

Be creative in what you list, but make sure that the items pertain to your work. Don’t put in items which require much explanation or might make you be defensive (those can be funded elsewhere in your budget). And do the list NOW. Don’t wait till the emergency strikes; do it now while you’ve got the time to think and get input from others.

 

Lead On!

Steve

Filed Under: church administration, generosity Tagged: ,

Postage Meters

Posted on March 19, 2013 Written by

There are two primary postage meter companies: Pitney Bowes and Hassler. Both provide excellent products which can help an organization stamp its outgoing mail very efficiently. The United States Postal Service is getting into the business with Stamps.com, by which you can print out your own postage in your office.

The problem is not in the efficiency but in the effectiveness of having a postage meter. Meters are designed to be time savers; that is their whole purpose. There isn’t much direct savings in using a meter except to accurately weigh outgoing mail to get the correct postage. However, organizations use first-class postage probably 85% or even 95% of the time, so that figure is well known. It should be easy to add the correct postage almost all the time. On the other hand, every organization has examples of someone running an envelope through the meter and then realizing there is a much higher figure on the meter left from a previous user, and those errors sometimes cost lots of money.

Meters rent for about $150 a month to several hundred dollars per month. In a year, that is at least $2,000, which translates to about 4,347 first class stamps (2013 postage is at 46 cents).

$2,000 is a lot for small to mid-sized churches, especially when that money doesn’t save the church any money, just some time. I believe that churches with smaller budgets (and thus smaller postage budgets) should not have a postage meter at all. It will take time for the staff to affix the correct postage and for the staff to go to buy several rolls of stamps, but the time saved is much less than $2,000 (or more if you’re renting a bigger meter).

Also, postage meters typically have a five-year contract, and contracts automatically renew (I hate that feature!) if you don’t cancel several months in advance. That locks you in for another five years at $2,000 a year. Another situation is that postage meters get the new postage rate when it goes up. The church office could instead buy the “forever” stamps at the current rate and use them for several months. Yes, that only saves you a penny or two per letter ,but “a penny saved is a penny earned.” And using www.stamps.com from the USPS is like paying a premium for your stamps and the convenience of not leaving your office. This costs $16 per month for small users so if you use $200 of stamps each month, your average first-class stamp costs 50 cents (4 cents more than the current cost).

Here’s my recommendation:

  1. Call your postage meter company to cancel your contract (even if you have several years to go, do it now so  you don’t forget later).
  2. Wait until your postage meter contract expires.
  3. The week before your postage meter contract ends, go buy a month’s worth of stamps and give the stamps to the heaviest users in the office. Do not buy too many; you don’t want to have too much money tied up in stamps in case some of the stamps “walk” out of the office.
  4. Then about once a month, resupply your office with the needed stamps. If you send packages, you may need a postage scale (available from any office supply store) and a variety of stamps of various amounts (but not too many of those).
  5. Then, use the money budgeted for the postage meter for something else in the office.

Lead On!

Steve

Filed Under: church administration, church finances Tagged: ,

New Income and Revenue for Churches

Posted on March 5, 2013 Written by

A brief audit of a client’s receipts over the past year revealed something interesting: 22% of their income came from sources other than the primary source. The organization has diversified their approach to receiving income so that more than one in five dollars comes from a non-traditional source. This means that if their primary revenue streams remain the same, this organization will have 20% more money to use – woohoo!

This is a good lesson for churches: are you dependent on your mainstay revenue source (tithes and offerings) or have you begun to look at other revenue streams? Churches must be creative in getting money in the door and then very transparent in how it is spent and used. Here are 21 different revenue streams (the first 10 come from a list prepared by George Bullard and the rest are from me):

  1. Special offerings
  2. Tithes and Offerings
  3. Designated gifts
  4. Fee for Services
  5. Capital Campaigns
  6. Foundations of the Organization
  7. In-kind resources and services from individuals and businesses
  8. Sale of Products
  9. Foundation grants
  10. Investment Income
  11. Rental Income
  12. Event Registration
  13. Cost Recovery
  14. Business Partnerships
  15. Offerings After Special Events
  16. Sponsorships and Scholarships
  17. Ownership of Facilities
  18. Memorials and Memorial Gifts
  19. Capital Investment Lists
  20. High Capacity Donors
  21. Gratitude Gifts
  22. Alumni Gifts
For a fuller description of these, visit Free Resources at www.financeforchurches.org
Lead On!
churchfinancialleadership.blogspot.com
Filed Under: budget, church administration, church finances, planning, strategy Tagged: , , , ,

Church Staffs Just Wanna Have Fun

Posted on February 26, 2013 Written by

One of the many legends about Google as a work environment is the different places they created for their staffs to have fun. It’s not just work at work, there is some fun involved, too – by design. The folks at Google (and tons of other companies) realize that employees need to have their brains stimulated in new and creative ways, the staff need to decompress even during the work day, and they need do things together so that they can bond and bind together as a team. Coming to work, doing just work, going home and then repeating that ad naseum creates a workplace that can lead to employee burnout.

Here’s a solution for churches:

  • Allocate $1,000 from your church budget to be spent $250 each quarter (feel free to allocate more, it just depends on the size of your staff)
  • Divide your staff into four groups and assign each group a quarter of the year.
  • Each group is tasked with finding something fun, creative, and new for the staff to do and they’ve got a budget of $250. It may cost a little more and then each staff person might have to chip in a couple of bucks, but try very, very hard to not make this an expense for the staff.
  • Find one day each quarter when the church is closed for a “staff development day” (if you can only do a half day, that is okay, too)
  • Then, close the church, put a volunteer on the switchboard, and go have fun. Once you do this a few times, it will begin to change the way the staff interacts with each other. They will recall fun times, goofs by each other and themselves, etc.
  • This will create memories that are NOT church or work related. The staff will have something to talk about other than work. This will create a much healthier work environment.

Here are some suggestions:

  • Bowling
  • Painted pottery
  • Movies
  • Tour of a local historical site
  • Team Hide & Seek in a mall
  • Paintball
  • Ropes course
  • Kayaking or canoeing
  • Frisbee golf
  • Scavenger hunt
  • Raking leaves for a shut-in
  • Habitat for Humanity home build

You get the idea. Some of these ideas are free; some are not; all are beyond the walls of the church. Some are outside the comfort zone of a few staff; none are difficult; all are different.

Go have FUN with your staff!

Lead On!
Steve

www.financeforchurches.org
www.facebook.com/financeforchurches.org

Filed Under: church administration, church staff Tagged: ,

Community Foundations

Posted on February 5, 2013 Written by
  • Every major city has a community foundation which is where people have given money, to be held in trust, until the donor or the board of directors distributes grants. Some CFs are very, very large (think billions of dollars investments) and some are small. All are legally required to give money away.
  • For two years I worked as the CFO of a community foundation. Nothing gave the staff and board more pleasure than giving away money. It was so much fun to see the faces, hear the stories, and dream about how much more could be done for the region.
  • CFs have major classifications for grant-making:
    • donor advised funds (DAFs) – the donor recommends to the CF which non-profit should receive a grant and how much the grant should be
    • field of interest funds – the board gives money to organizations which meet the donor’s criteria when the fund was established such as literacy, health, etc.
    • unrestricted – funds which the board gets to distribute according to their wishes and the grant requests which are received by the staff
  • CFs are in the business of helping local non-profits – most CFs have a geographical restriction – and improving the quality of life in their community. They are tied to their community – the staff and board shop in the same stores as you do, worship in the same churches, attend the same movies and theaters, etc. These people know what is going on in their city and they want to make it a better place.
  • Many churches have high net worth individuals who already have DAFs with the local CF. Churches would be well-advised to meet with their local CF staff to get to know them, to be known, to educate the CF of what the church wants to do, and seek ways to partner together.
  • A church can also work with the people who already have DAFs to educate the church leadership about how the church can work with other high-net-worth individuals (whether they are members or not) to accomplish what the church wants to do.
  • CFs are experts on all local non-profits. If your church wants to do something, meet with the CF staff to learn about other non-profits with which the church can partner to accomplish far more than each can do separately.
Lead On!
Filed Under: church administration, church finances Tagged: ,
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