ECCU Blog

It can be challenging to stay abreast of legal and legislative changes affecting your ministry. What, for example, are you to make of recent legislation passed by Congress to avoid the so-called fiscal cliff?

To find out, I emailed a few questions to Dave Moja, partner and national director of not-for-profit services with CapinCrouse LLP. Here’s how he responded.

MBG: What’s the most important thing ministry leaders should know about the legislation Congress passed to avoid the fiscal cliff?

Dave: One thing is the extension of the deduction from an IRA rollover. Taxpayers who are 70½ years of age can roll up to $100,000 from their IRA without having to take it as income. This expired at the end of 2011 but has now been extended through 2013.

MBG: How about healthcare legislation? If a ministry isn’t familiar with its implications, are there a couple first steps they need to take in response to it?

Dave: There are several items here. First, ministries need to make sure they are reporting health benefits to their employees on Form W-2. Next is the new 0.9% Medicare withholding on higher income employees. Ministries should make sure they are up to date on these rules for their executives.

MBG: Is there an update that you think might catch most ministries off guard?

Dave: Ministries should be aware of the new rules that take effect in 2014 with regard to potential penalties.

One reason I asked Dave these questions is because he’s presenting an upcoming Christian Leadership Alliance (CLA) webinar titled Need-to-Know Tax and Legal Trends and Updates. When I asked Dave for some important takeaways those who attend this webinar can expect, here’s what he said:

“We will summarize what to expect in 2013. Also, we expect several IRS clarifications this year. These include changes to the charitable contribution deduction, unrelated business income stipulations, and changes to Form 1023, the exempt application process.”

This webinar will be presented on Thursday, March 28, 2013, from 9:00 to 10:00 a.m. (PT). For more information or to register, visit www.eccu.org/cla-webinar.

According to the IRS, the recent sequestration which has gone into effect is imposing automatic cuts to the Small Business Health Care Tax Credit claimed by many small ministries. As a result, the portion of your claim will be reduced by 8.7%. The sequestration reduction rate will be applied until the end of the fiscal year (Sept. 30, 2013) or intervening Congressional action, at which time the sequestration rate is subject to change.  Check the IRS’s notice for more information.

“The new pastoral candidate says he’ll take the job if we buy him a Mac instead of a PC.”

This is a dangerous way to start a blog, but it’s worth the risk, because ministry leaders are continually required to weigh personal preference against organizational need.

Technology decision makers who are truly looking out for their organizations’ best interests sometimes have to say “no” to good ideas. It can happen when someone—often a higher ranking someone—wants new software or a technology gadget that is sure to make them more efficient. So they ask, “Why can’t I just use the technology tools that work best for me?”

I’m not suggesting that technology decision makers (like me) are always right when we deny one of these requests. Sometimes we’re guilty of saying no for the wrong reasons. When evaluating these requests, we have two responsibilities:

1.   Understand the need behind each request.

2.   Offer solutions that best meet the needs of the organization—which may or may not match the wants of the individual.

Sometimes the reasons to say no are hidden costs. What might your IT staff work on if they weren’t getting each person’s favorite screensaver working? When you consider the labor, lost productivity, and hard costs of installations, upgrades, testing, compatibility issues, troubleshooting problems, and training (even if it’s self-training), a typical software package will cost 10 to 20 times its purchase price over its useful life. So ask yourself whether you would buy that $100 package if it cost $1,000, because eventually, it will. Even “free” software adds another variable into an organization’s network, and every variable adds support costs. Here’s a rule of thumb that we try to live by:

If you want to keep your IT infrastructure cost-efficient and reliable, limit the variables you introduce into it.

Often the reason to say no is because allowing individual flexibility can constrain organizational flexibility. A simple example. If everyone gets to choose their own word processing program, they may have trouble sharing files, they won’t be able to share knowledge about how to do things, and your IT staff will have more licenses to manage, more patches and upgrades to install, and more compatibility problems to troubleshoot.

Being part of something bigger than ourselves (like our ministry) means we have to accept the individual constraints that are necessary for the good of the whole. We all need to look out not merely for our own interests, but also for the interests of others. Where have I read that before…?

I can’t tell you whether to get that new pastoral candidate his Mac. I can recommend that you recognize the very real and enduring, but often hidden, costs of adding variables to your IT environment. You can’t weigh those costs against their benefits and make a good decision without acknowledging the true costs and the true benefits.

When I visited the Rock Church in San Diego a few years ago, the first person I met was their receptionist. After she greeted me, I asked her to tell me what they were all about. “We’re a do something church,” she quickly replied. Are they ever! A year ago they invested the equivalent of 100 full-time people (235,000 volunteer hours) serving their city.

How do they do it? Next month, Senior Pastor Miles McPherson and his team will tell their story at the Do Something Church Summit on Friday, March 8. To see and hear more about the Summit, watch this video trailer:

To get more of an idea of what the Rock Church has learned by getting serious about serving, I emailed a few questions to Miles. Here’s what he said.

MBG: San Diego has experienced the love of Jesus through the Rock Church. How have people in the city responded to that love?

Miles: The volunteer work of the people of the Rock has fostered many relationships and partnerships with community-based organizations. Once they see that we are there to serve, ongoing partnerships are fostered that result in continued open doors for service.

MBG: What are some hurdles pastors typically face when presenting their congregations with the vision of becoming a Do Something Church?

Miles: Pastors will feel burdened to organize all of the ministries with their staff, feeling like it can get messy using volunteers to lead the efforts, but this is the beauty of the model. There are so many high capacity volunteers waiting for the chance to get in the game. If their efforts were unleashed, the amount of ministry they could accomplish would grow exponentially.

MBG: What’s one significant way that being a Do Something Church has changed the Rock Church?

Miles: It has created a culture of service among our congregation. People are now trained to look for and address practical problems facing the people of our community instead of just walking by and praying for them.

MBG: Besides a customized plan for their churches, what are a couple major takeaways people can expect by attending the Summit?

Miles: They can expect to take away a whole new philosophy on outreach. The Summit will provide them with a complete plan of action for how to launch dozens of volunteer-led ministries in their church. They’ll be equipped to plan church-wide community service events in partnership with community leaders—including their city’s mayor. And they’ll take away new resources and tips to expand their reach through technology. This is going to be an event you don’t want to miss!

To learn more or register for the Summit, visit dosomethingchurch.org/summit. Cost is $99 per person, which includes a Thursday-evening dinner reception.

Have you discovered that serving your community opens doors for the gospel? Please comment and let us know how.

Before the economic downturn, many churches thought that growing attendance translated into greater giving. And often, it did. So lenders were inclined to look at attendance growth when evaluating how much new debt a church could handle.

But what has the recession taught us? Is this a valid criterion for determining the loan size a church can handle today? To find out, I asked Jeremy Moore, one of ECCU’s regional directors, a couple questions.

First question: If a ministry is growing rapidly, it seems reasonable to expect a lender to consider their potential for greater giving when determining the amount of money that ministry qualifies to borrow. Is that how commercial lenders see it? Why or why not?

Jeremy: One thing we learned in the downturn was that relying on continued growth in attendance and giving is dangerous. Lots of ministries that struggled to meet obligations ended up there because of their expectation of continued growth. While it’s certainly good to hope and plan for growth, one must also be careful to build in margin and have contingency plans in place in the event that growth doesn’t materialize. In today’s market, lenders (including ECCU) rely almost exclusively on historical results when determining a ministry’s ability to service future debt.

Second question: Cash flow can become a problem for any ministry. Can it be a problem when a ministry is applying for a loan? Why?

Jeremy: Cash flow is important for all kinds of reasons. One is because a ministry that manages cash well has the ability to react to unexpected opportunities and challenges without unnecessarily jeopardizing their ongoing ministry. From a loan perspective, lenders are typically looking for borrowers who have built margin into their cash flow. This is why having the ability to comfortably make mortgage payments should be budgeted before the loan application process begins.                                

I asked Jeremy these questions because he and two of his fellow regional directors will present a webinar on February 21 titled How to Look Like a Healthy Borrower. All three of these men have a wealth of experience gained by working with ministries during the recession and helping them return to financial health.

To wrap up, I asked Jeremy what people can expect to learn by attending this webinar. He simply said, “They’ll learn how to look and act like a borrower before applying for a loan.”

If you’d like more information about this webinar, you’ll find it here.