ECCU Blog

Last week I blogged Billy Burnett’s responses to three budget-related questions to give you a preview of the expertise that resides on the panel for the upcoming budgeting workshop ECCU is presenting at the Christian Leadership Alliance (CLA) National Conference. (How to Build a Better Budget).

Next up is Vonna Laue, audit partner with CapinCrouse LLP.

MBG:     What top three priorities should guide the budgeting process?

Vonna:    First, be realistic, if you budgeted a 6 percent increase in 2011 and contributions were down 5 percent, don’t expect that without significant changes you will have 6 percent growth in 2012. Second, be missional. Your budget should reflect the direction of the ministry by funding strategic initiatives. This requires that you honestly evaluate programs to identify those that may be good but not part of the mission. Finally, be vigilant. Monitor, monitor, monitor and be ready to respond.

MBG:     What are two or three major changes you’ve seen ministries make to their budgeting process and what was the result?

Vonna:    One is budgeting year round instead of it just being a one-time annual event. This results in a deeper analysis and more proactive response than getting to the end of the year and being disappointed. Another change that some ministries are considering is building three budgets. Start with your basic budget, then build two more. One reflects what you will cut if the projected revenue doesn’t come in. The other accounts for how you will expand if excess funds are received. Doing this removes some of the emotion from those decisions when you actually have to make them.

MBG:     How can an attendee prepare to gain the most value from this workshop?

Vonna:    Consider in advance the struggles that you face in your ministry’s budget process and come ready to participate, looking for suggestions to help.

Again, this budgeting workshop will be on Thursday, April 11, from 4:00 to 5:30 p.m.

To register for the CLA conference, visit www.claconference.org.

Have you ever attended a Christian Management Association (CMA) brown bag luncheon? If not, April is a good time to get in on one of these monthly events if you’re in the San Jose or Sacramento area. They provide an informal roundtable atmosphere to network with your ministry peers and engage in a guided discussion led by an industry expert.

Two luncheons are scheduled for April:

April 12 (Thursday) from 12:00 to 1:00 p.m.
Crossroads Bible Church
1670 Moorpark Avenue
San Jose, CA 95128

April 13 (Friday) from 12:00 to 1:00 p.m.
Epic Bible College
4330 Auburn Boulevard
Sacramento, CA 95841

These luncheons are open to all ministry executives. The San Jose luncheon is geared specifically for business administrators, chief financial officers, and IT/technology staff, while the Sacramento luncheon will be of special interest to business administrators. CMA members attend free; cost for non-members is $10 (pay at the door). Everyone brings their own lunch and no RSVP is required.

To learn more about these luncheons, email Pam Boersma at pam.boersma@cmanational.org or visit www.eccu.org/resources/events.

In a recent letter to his shareholders, Warren Buffet makes mention of wisdom he learned from his grandfather, Ernest.

Buffet, who was listed again as the third richest individual in the world by Forbes Magazine, shared a copy of a letter* written by his grandfather in 1939 to his uncle’s family, outlining his instruction and encouragement to maintain $1,000 in cash as a reserve for unexpected events. Buffet included the letter to highlight both his personal commitment and the importance of this principle for all organizations, especially those he’s considering as investments.

Buffet says about his grandfather, “Ernest never went to business school—he never in fact finished high school—but he understood the importance of liquidity as a condition for assured survival.” 

Think you’re off the hook as a nonprofit? Not so. The importance of cash reserves applies every bit as much to ministry organizations as it does to for-profit businesses.

During my 25 years of working with evangelical non-profits, I have seen far too many that essentially lived paycheck to paycheck. Except it sounds more spiritual when they tell me they are “trusting God” for his provision. While I completely agree that we must trust our sovereign God (and that he is able to do exceedingly more than what we can accomplish with our meager savings), it is also clear that we have a responsibility to be good stewards of his resources. The challenge is finding that balance between God’s sovereignty and our responsibility. It takes both. A reliance on one without the other can prevent us from fully accomplishing what God intends.

So how do we live out this balance in our ministries? Warren Buffet says, “Because of that commitment (to maintain cash reserves), we customarily keep at least $20 billion on hand so we can both withstand unprecedented insurance losses…and quickly seize acquisition or investment opportunities, even during times of financial turmoil.” 

I know, I can’t comprehend a number as big as $20 billion either, but his approach shows how important the principle of maintaining adequate reserves is for any organization.

I’m going to go out on a limb here and say that maintaining adequate cash reserves is even more important to a non-profit than a for-profit organization. For-profit businesses have a much easier job of quickly generating cash, either by slashing expenses or increasing sales. Businesses focus on increasing shareholder value and act quickly to accomplish this objective. Non-profits, on the other hand, are typically slower to react and less nimble when needing to cut expenses or increase revenues.

So how do you approach maintaining cash reserves for your ministry? What has worked for you? What have you learned by going through the last four years, which some have called “the great recession”?

If you’d like to learn more about how to build cash reserves, check out the ECCU white paper, Cash Reserves: How Much Is Enough? It outlines the three main reasons cash reserves are required and how to set an adequate cash reserves target for your ministry.

* Go to page 22 of this PDF to view the letter.

Despite the economic challenges of the past few years, some ministries were actually able to boost giving during the recession. Three of them, all ECCU member ministries, were recently featured in a webinar titled Proven Ways to Increase Giving to Your Ministry. A recording of this webinar is now available online.

Watch this free recording and you will hear what these ministries did to generate more revenue. You’ll also discover how to manage finances in ways that free up more for ministry.

By listening to this webinar, you can expect to learn:

• Specific things ministries have done that actually increased giving
• How to communicate your ministry’s story so people clearly see how it aligns with their passion for ministry
• How to better manage financial resources and free up more to invest in ministry

You’ll also have access to additional giving and stewardship resources, including: Attendee questions with answers from the webinar presenters, online tools, videos, articles, book recommendations, and much more.

To watch this webinar recording and access the additional resources, visit www.eccu.org/giving-webinar.

There are three ways to communicate. You can tell people something. You can show them. Or you can do both. A couple days ago I told you that ECCU is presenting a panel discussion workshop at the upcoming Christian Leadership Alliance (CLA) National Conference. It’s called How to Build a Better Budget. I also told you that the panelists know whereof they speak when it comes to ministry budgeting.

Starting with today’s post, I’d like to show you that these people know their numbers. How? I emailed three questions to each one of them and asked them to respond from their ministry and financial perspective. Consider this a preview of the richness of the discussion you’ll get to experience by attending this workshop.

First up is Billy Burnett, executive vice president and CFO with Joni and Friends.

MBG:  What top three priorities should guide the budgeting process?

Billy:     First, make sure it aligns strategically and tactically with your ministry’s mission. Second, be sure it’s based in biblical and financial reality. And third, be sure to tap into the collective wisdom and experience of your entire organization.

MBG:  What are two or three major changes you’ve made to your budgeting process and what was the result?

Billy:     One is that we switched to a live budget preparation, collaboration, and approval process. The benefits were that we got instant approvals and people walked away from the process with their budgets in hand. Second is to shorten the budget preparation time, which resulted in sharper focus and better planning.

MBG:  How can an attendee prepare to gain the most value from this workshop?

Billy:     I’d say come with a list of objectives. Include problems you’re facing that need solutions. And come prepared to contribute to the group by describing things you’ve done that have proved to be fruitful.

Like I said, these panelists know how to budget. Their workshop will be on Thursday, April 11, from 4:00 to 5:30 p.m.

To register for the CLA conference, visit www.claconference.org.