Vanguard Stories

Posted on January 19, 2016 Written by

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Vanguard is a financial investment company based in Philadelphia, PA. They didn’t pay for this blog post.

In 1997 I attended a conference in Bryn Mawr which is a suburb of Philly. The first evening of our conference there was a reception for the 100 of us at a member’s home. It was a nice, but not large, house but inside was tastefully decorated with original art and sculptures. Before we went, I asked a friend to tell me about the owner of the house. He looked incredulous and said, “John Bogle, the founder of Vanguard.” I was pretty naïve and that didn’t ring a bell at all. Lunch the next day was hosted by the Presbyterian Women. I noticed that the woman who served us the night before was walking around with pitchers of tea and water refilling glasses of the conference participants. That was Mrs. John Bogle doing what she enjoyed, serving others.

In the years since I’ve learned a lot about Vanguard and I now have all my investments with them where they’ve done quite nicely. I also read one of Mr. Bogle’s books. I encourage my family and the churches I consult with to have accounts at Vanguard.

I noticed this about Mr. and Mrs. Bogle is this: they are quite humble and seek to find ways to serve. Even though this couple is worth a lot of money, they are generous with their home and time. My professional experience with Vanguard says that they have instilled those values in the company they founded. Customer service at Vanguard goes out of their way to help.

I’ve worked with other high net-worth individuals and families and noticed the same traits: humility, gratitude, generosity, openness, and rarely seek the limelight. I encourage pastors to minister to high capacity donors because these members have the same human needs as everyone else but too often society sees them only as a checkbook.

If pastors would set aside one hour a week to meet individually with the top 20-25 donors and talk about their pastoral needs, some of those high net worth individuals may do what comes naturally to them – be generous with their church. Pastors should never have meetings with ulterior motives (to gain money), but they must absolutely never avoid meeting with the rich. Many high capacity donors would feel honored to have an hour of the pastor’s time and I can assure the pastor, you’ll learn a lot about leadership by just being with them.

 

Lead On!

Steve

Filed Under: budget, church finances, leadership, strategy Tagged: , , ,

Beetles

Posted on January 12, 2016 Written by

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There are 350,000 types of beetles. New beetles are discovered frequently in the tropics which are still being explored. Some estimate that beetles constitute over 20% of all current life-forms in the animal kingdom. Lady bugs, cockroaches, dung beetles, rhinoceros beetles, etc – there are LOTS of beetles.

Why? Why did nature create so many beetles? Why did God allow so many different types of one animal? I don’t know. It really doesn’t matter to me and probably not to you.

What I do know and what does matter to me is that beetles show how creative God is. I would have been happy to know that we had just 20, 30, or even 100 types of beetles. But God is completely about creativity. Just look around – there have been 8 or 9 billion people on earth and everyone has 10 different fingerprints, retina patterns, face, etc.

God is all about creativity. And we should be creative, too, especially in church. But too often we resort to comfortable patterns and routines. These ruts embed grooves in our brain and in our way of thinking.

Please do not succumb to “because that’s how we’ve always done it” mentality. God doesn’t – why should we? Be creative in all you do. Be creative in worship, education (especially with young minds), in music, in office administration, and even in finances (without doing anything illegal!).

There are so many opportunities to “think outside the box” but too often we restrict ourselves or others. Don’t do that. Be more like God – BE CREATIVE and IMAGINATIVE!

 

Lead On!

Steve

Filed Under: leadership, strategy Tagged: ,

Changing Plans

Posted on December 22, 2015 Written by

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Question: Several years ago (2009 or 10), Grace Church entered into a building program for a Family Life Center. They set up a designated fund for the project, and after voting on a design and posting it around the church, they started collecting money. There was an early attempt to set the fund as a general building fund, but it was set as the Family Life Center Fund. Some contributions were significant (at least $10,000 dollar gift). The goal was over $850,000 but the plan was to raise $450,000 within a few years and finance the rest.

Currently there is $211,000 in the fund and many people want to either change the plan to a smaller, cheaper building that does not meet the original use ideas and does not match the floor plan voted on or cancel the project altogether. Undesignated receipts haven’t been over $150,000 in the past 20 years. The problem is that most of the money was accepted, but no records were kept as to who donated what.

At a recent called meeting to discuss this, the questions were about what they could do legally about the situation. Can we change the building? Is there any way to cover ourselves if we cancel or change the program but cannot identify most of the contributors? I know what I have always been told, but some of my members insist that the money was given, so they can decide how to use it.

Answer: This is a tough situation with a hard answer but this is the proper way to handle this. Here are the proper steps to follow:

  1. Contact every donor that you know about and ask them to sign a document giving the church permission to use the funds for another purpose or even unrestricted uses (aka, to the ministry budget). After that, move out of this fund all monies you’re given permission to move to whatever purpose the donor permits.
  2. Get the church to formally vote on how the church would like to use the remaining funds. Use paper ballots and retain the ballots in case there is a need to show them later. I strongly encourage you to find a purpose that is as close as possible to the original purpose and get the church to vote on giving the money to that. The reason for doing this is to prove to others what the owners (church members) want to do with the money. Again, the church should appear unanimous in what it wants to do with the money but this vote does NOT permit the church to move the money as it wants. It is merely an indication of what the church wants to do.
  3. Contact the state Attorney General’s office at (804) 786-2071 and use the courts to seek release.Explain to the AG’s office what the story is and what the church wants to do with the money. The AG should take this request to a judge and get a judge to sign off on it. This may be done in the judge’s offices or the judge may want to have a public hearing on this – I don’t know and I suspect that each judge will handle it differently. Hopefully it is a perfunctory process but that is probably only possible if no one in the church squabbles about where to use the money. Always follow the instructions of the AG – that way you’re doing exactly the right thing.

Lead On!

Steve

Filed Under: accounting, church finances, leadership, strategy Tagged: , , ,

10 Financial Ratios (part 10 of 10)

Posted on December 15, 2015 Written by
Startup Stock Photos

Planning Meeting

Capital Campaign

  1. Definition: a multi-year fundraising church-wide event
  2. Results:
    1. Minimum: Held every 5-10 years
    2. Purpose: Raising money for a church need (a building, debt reduction, etc) and maybe an intangible goal (a missions project or missionary support)
  3. Consequences:
    1. Capital campaigns are additional times to do member education about stewardship and generosity
    2. Capital campaigns are opportunities to receive input from members and to cast vision for the future of the church
    3. If these are too infrequent, the church can have
      1. Complacency by members about their roles in the church
      2. Deferred maintenance on the church facilities and church’s vision

Now What? So What?

  • Compare your church’s financial ratios to the optimum range for each ratio.
  • Develop a 2-3 year plan to bring your ratios in line with best financial practices.

 

Lead On!

Steve

Filed Under: accounting, budget, leadership, strategy Tagged: , ,

10 Financial Ratios (part 9 of 10)

Posted on December 8, 2015 Written by

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Weekly Offerings to Weekly Budget Goal

  1. Definition: Divide weekly receipts by weekly goal
  2. Results:
    1. Worst Case Scenario: this should not go below 75% for more than three consecutive weeks
    2. Best Case: if this ratio goes above 125% for more than three weeks in a row, thank the church
  3. Consequences:
    1. If your weekly budget receipts drop below the weekly goal for more than three consecutive weeks without a visible reason, then
      1. Push the “Concerned” Button (but not the Panic Button just yet). Push the Panic Button when you go five consecutive weeks
      2. Tighten up on expenses and explain to the congregation ASAP about the financial situation and encourage (never belittle) them to be generous.
      3. When the financial situation returns to normal, thank the members publicly for their gifts and God’s faithfulness.
    2. If your weekly budget receipts exceed the goal for more than three consecutive weeks, determine why this happened
      1. A one-time only gift such an inheritance or bonus
      2. Increased giving by several people
      3. Several new people joining and giving

Now What? So What?

  • Compare your church’s financial ratios to the optimum range for each ratio.
  • Develop a 2-3 year plan to bring your ratios in line with best financial practices.

 

Lead On!

Steve

Filed Under: accounting, budget, church finances, leadership, strategy Tagged: , , ,

10 Financial Ratios (part 8 of 10)

Posted on December 1, 2015 Written by

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Receipts & Expenses: Ratio of Actual to Budget

  1. Definition: Divide actual receipts and expenses to the budgeted figure
  2. Results:
    1. Annual receipts should be between 95%-100% of the budget goal
    2. Annual expenses must never exceed the annual receipts figure (unless there was a significant event in the history of the church – departure of pastor, major local employer shutting down, etc.). Based on the figure above, expenses should be 90%-95% of the budget.
    3. Annual expenses should be less than the annual receipts in order to have a positive cash flow at the end of the year. There should be a difference of 2%-5%.
  3. Consequences:
    1. Receipts: if your receipts fall outside the 95%-100% of the budget (and there hasn’t been a significant event in the church), then you may not be budgeting properly.
    2. Expenses: these can exceed revenues for one or perhaps two consecutive years but any more than that is a sign of poor budgeting or lack of control over expenses. Both are unhealthy.
    3. The difference between receipts and expenses:
      1. This should be a positive cash flow which is added to the cash reserves at the end of the year.
      2. These reserves can be used for capital investment needs in the church.

Now What? So What?

  • Compare your church’s financial ratios to the optimum range for each ratio.
  • Develop a 2-3 year plan to bring your ratios in line with best financial practices.

 

Lead On!

Steve

Filed Under: accounting, budget, leadership Tagged: , , ,

10 Financial Ratios (part 7 of 10)

Posted on November 24, 2015 Written by

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Designated Funds

  1. Definition: The major ministry areas should have at least half their annual budget in a fund designated for their ministry. These major ministry areas are: Worship & Music, Care & Fellowship, Discipleship & Education, and Missions & Outreach.
  2. Results:
    1. Minimum: At least one-fourth of the annual budget for the major ministry areas
    2. Maximum: No more than the entire annual budget
  3. Consequences:
    1. Ministries should and must rely on their budget to accomplish the main tasks entrusted to them. If a church isn’t budgeting appropriately, then the church is setting the minister up for failure.
    2. Ministries should also have a designated fund from which they can use occasional funds to do things they didn’t budget for because they weren’t aware of these opportunities when the budget was requested.
    3. Ministers must never do aggressive fundraising for their designated funds because that can undermine gifts to the budget.

Now What? So What?

  • Compare your church’s financial ratios to the optimum range for each ratio.
  • Develop a 2-3 year plan to bring your ratios in line with best financial practices.

 

Lead On!

Steve

Filed Under: accounting, budget, leadership Tagged: , , ,

10 Financial Ratios (part 6 of 10)

Posted on November 17, 2015 Written by

Cash Reserves to Annual Budget

  1. Definition: Divide Total Unrestricted Cash Reserves by Annual Budget
    1. Unrestricted cash reserves are also known as Net Cash Assets
    2. Unrestricted cash reserves do not include donor designated funds, only monies the church has complete spending control over; these reserves can include building reserves and emergency reserves
  2. Results:
    1. Minimum: One month of the annual budget; e.g., if your annual budget is $1,200,000 then you should have at least $100,000 in reserves.
    2. Maximum: Three months’ of the annual budget. Any more than that then you can be considered hoarding and not spending money on God’s mission for your church
  3. Consequences:
    1. Not having sufficient reserves can lead to financial hardships if you have a major building system need (roof replacement, air conditioner or heating system failure, plumbing disaster, etc.).
    2. Having too much in reserves can lead members to give less because they feel “the church doesn’t need my money” or the church is hoarding money.

Now What? So What?

  • Compare your church’s financial ratios to the optimum range for each ratio.
  • Develop a 2-3 year plan to bring your ratios in line with best financial practices.

 

Lead On!

Steve

Filed Under: accounting, budget, leadership Tagged: , , ,
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