ECCU Blog

Did you know that we found a direct correlation between a ministry becoming financially distressed and maintaining adequate cash reserves? Certainly makes sense that if you have a buffer, your ministry is less likely to focus on survival. So why don’t more ministries maintain adequate reserves?

Just as in our personal lives, putting money aside takes intentionality and discipline. Helping a ministry understand why cash reserves are so important is a first step in this process. Here are the three main reasons a ministry needs to maintain cash reserves:

Cash Flow Fluctuation. Revenues and expenses don’t always match up (or come in and go out at the same time). For example, many ministries will get a significant amount of donations at year-end and need to rely on those funds to pay expenses that occur during the remainder of the year.
Unplanned Events. We all know “things” happen that we haven’t planned. Even the best prepared budgets don’t anticipate everything that might occur. Having cash reserves set aside is critical to being able to cover these items when they occur.
Potential Opportunities. What opportunities, if presented, would you want the ability to act on immediately? To take advantage of a God-given opportunity, you will most likely need access to some funds before you have time to raise them.

Just as each ministry’s mission is unique, the appropriate amount of cash reserves is also unique to each ministry. It takes discipline to determine your ministry’s needs. Start now, or you may experience unnecessary pain and risk troublesome problems that could have been prevented.

Check out our white paper Cash Reserves: How Much Is Enough? It will help your ministry determine what level of cash reserves is appropriate for your ministry.

I was sitting at a luncheon where Frank Sommerville, a leading nonprofit attorney, was providing an update on legal and tax issues. He brought up a 2012 tax court case where the IRS disallowed contributions in the amount of $25,171 because the church contribution tax receipt didn’t contain the right disclaimer.

In the case, Durden v. Commissioner, U.S Tax Court Memo 2012-140, the IRS disallowed this contribution. The critical disclaimer on the donors’ receipt was missing the phrase, “No goods or services were provided in exchange for these donations except for general religious benefits.” The case went on to say the omission could not be corrected by a new receipt issued after the taxpayers had filed their tax return.

At my church, we changed our software system this past year, but unfortunately the default message on our contribution receipts didn’t include this IRS required disclaimer. So before we printed and sent our year-end receipts, we made sure we changed the wording to include this disclaimer.

How about your ministry? Does your donation receipt contain this disclaimer? If not, your donors’ contributions can be disallowed by the IRS.

Enough said. Okay, time to go check your donation receipts!

If I’m looking for answers to the question above, I’m going one place first…for two reasons. That place is the ECFA (Evangelical Council for Financial Accountability).

One reason is because ECFA President Dan Busby and Vice President John Van Drunen are experts on matters like this. The other reason is because I have the privilege of addressing this topic with Dan and John in an upcoming ECFA webinar.

To lay some groundwork for our webinar discussion, I emailed these two experts a couple questions related to the topic. Here’s how they responded.

Mark: What are some “worst practices” to avoid when handling church finances?

Dan and John: If you are a church treasurer, avoid:

• Counting the offerings yourself. Try to have two other people count all offerings.
• Paying or reimbursing expenses without adequate substantiation.
• Putting off reconciling the bank account. Reconcile monthly.
• Signing a blank check and giving it to someone to make a purchase for the church.
• Vesting all financial management authority in one person (if possible). This can place a volunteer in a compromising position if allegations are made, regardless of the trustworthiness of that volunteer.

Mark: If there’s a CPA or tax expert in the congregation, is it wise to tap into their expertise on these issues?

Dan and John: A tax professional will often provide needed expertise as the church treasurer or by serving on a finance committee. So yes, having a volunteer with specialized expertise is often a real bonus for a church. It is wise to have this person work with others in the congregation who can step into the role in case he or she needs to relocate suddenly. This can also prevent burning someone out in their volunteer service.

If you’d like to join Dan, John, and me for this webinar, it’s titled 5 Basic Financial Issues for the Small Church Treasurer.  We’ll be presenting from 10:00 to 11:00 a.m. (PT) on Thursday, April 4, 2013.

For more information and to register, visit www.eccu.org/ecfa-webinar.

Have you ever tried to look at a website on your smartphone only to be frustrated because you can’t really navigate the site easily? With more than one billion smartphones now in use worldwide, nonprofits are reporting that up to one third of their web traffic is coming from mobile devices. So how easy is it to navigate your ministry’s website with a mobile device?

According to the Network for Good and PayPal, these eight tips can make your website more mobile friendly.

 Make it snappy.

Keep your website’s page load times under five seconds—under three is even better for mobile delivery. Remove anything that makes your pages stall or fail to load.

Minimize data entry.

Whether it’s on a donation form or a newsletter sign-up box, try to minimize the amount of typing your visitors have to do. It’s already a best practice on a desktop (they’ll be more likely to fill out your form or complete the action they’re trying to take), and it’s absolutely critical for mobile users, since typing a lot of information can quickly become a drag on even the smartest of phones.

Your copy must be short and sweet.

Remember: Online visitors don’t read, they skim. Reduce the amount of text you have on each page and break up longer blocks of text with headings. Use an easy-to-read font size and type. Choose shorter sentences and clear calls to action instead of long paragraphs.

Focus on one high-quality image.

Images can help quickly communicate a story or call to action, but make it your mission to focus on one high-quality photo rather than using multiple images on a page. More images will take longer to load and won’t look good on a smaller screen.

Remove the roadblocks.

Website roadblocks can make your site virtually unusable on a mobile device. Reduce your dependence on Flash, JavaScript, pop-ups, or other animations for best results—most mobile devices can’t correctly display content in these formats. Swap them out in favor of static images and clear, compelling copy.

Keep relevant content front and center.

Don’t force mobile users to scroll across three columns and all four corners of your site to find what they’re looking for. Make it easy to access the key pages of your site by placing them prominently near the top and center of your page.

Make links and buttons easy to use.

Review your links and buttons: Are they large enough to click on from small screens without zooming? Be sure to provide enough space between links or buttons to prevent a wayward thumb from clicking on something by accident.

Keep it simple.

A simple, clean design is a good idea for any site, whether it’s accessed on a desktop browser, tablet, or smartphone. Embrace the use of white space, clear the clutter, and narrow your visitor’s focus to one or two clear calls to action. This improves the usability of your website and removes unnecessary distractions .

For the complete article and a corresponding e-book on this topic, visit Network for Good.

After the economic crisis that began in 2008 triggered the Great Recession, news media reported countless stories of the impact on individual churches. Few of those stories included trends, because the data simply wasn’t available. Today, the numbers are in, and some of them are surprising.

The School of Philanthropy at Indiana University recently published the findings of a survey they conducted with more than 3000 churches. How did the Great Recession impact churches and how have congregations responded? Here are some key findings.

• U.S.congregations are generally improving financially. However, those with older attendees and those whose clergy are uninformed about congregational giving are experiencing the greatest challenges.
• Despite overall positive trends in fundraising receipts, pledges, and budgeting in 2011, the majority of congregations’ revenues have not kept pace with inflation in recent years.
• Changes in average congregational gift size and the number of donors are the main drivers of fundraising success.
• Congregations are increasing their budgets in the areas of missions and revenue-generating activity.
• Congregations have more work to do in the area of educating congregations on financial planning and charitable giving.
• The majority of congregations employ some type of electronic giving.

Are these findings consistent with what has happened at your church? If you have been successful in one of these areas, to what would attribute your success?

At my church, we weathered the Great Recession well, not that any one of us can take any credit. I do, however, believe that maintaining adequate cash reserves before the recession hit was one critical reason we were able to stay focused on our mission and vision. And by being transparent and letting our congregation know that we would live on what was given, we were able to build trust in a time of uncertainty.

What did your church or ministry do that helped it get through the Great Recession?