ECCU Blog

The list of reasons for churches and other ministries to become members of the Evangelical Council for Financial Accountability (ECFA) just got longer. While tithing is at a 40-year low in mainline churches, giving to ECFA member churches is up four percent from the 2009 level. And contributions to all members are up 5.8 percent.

ECFA presents a full account of members’ giving in its second Annual State of Giving report. To learn more about the benefits of ECFA membership, follow this link.

How does your ministry’s giving compare to the ECFA averages?

To help you know what to expect if you attend the upcoming 2011 Financial Forum for Ministries, I’ve asked each of the presenters what they’ll be covering. Next up is George Martin, CLU with HUB International Insurance Services. His session is titled, “Slaying the Cost Dragon.” 

MBG: How will your presentation help attendees better serve their ministries?

George: My presentation will give information and ideas to those responsible for their ministries’ benefits programs so that their benefits costs might be more predictable, reasonable, and easier to budget for. 

MBG: What are three important takeaways attendees will learn during your presentation?

George: First will be to think differently about the design of medical plans. Second, we will talk about selling the “We’re all in this together” mindset and teaching employees how to be better consumers of healthcare. Finally, people will learn how to use the new benefit plans to project future costs to their ministries.                                                                                                      

MBG: What is one suggestion you’d offer to help attendees gain the most from this learning experience?

George: Come with an open mind. The plan designs are different, but they have worked very well for many organizations. 

MBG: What do you think are the biggest challenges facing ministries today?

George: Ministries, like all non-profit organizations, typically pay lower wages than other businesses with which they compete for employees. Therefore, most of the secular and non-secular non-profit organizations we work with want to be sure that their benefits packages are as strong as possible. The struggle is how to keep the benefits strong but still affordable to both the ministry and the employees in any economic situation, especially the current one. 

What is the biggest challenge you face regarding benefits packages for your ministry staff?

Yes, this is a blog post about the IRS. So, understandably, I’m afraid I might lose you before we even begin. Please don’t check out too soon, though, because here’s the bottom line: The IRS actually has a new program designed to save you hassle and money. 

Good, you’re still reading. Now let’s talk about why this program might be important to your ministry. 

In the nonprofit world, especially in churches, it isn’t uncommon to find misclassification of workers—usually meaning an employee is mistakenly classified as an independent contractor. Why is it a problem? According to the IRS, “Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.” 

The new IRS program allows employers to resolve past worker classification mix-ups. By making a minimal payment to cover past payroll tax obligations, employers can come back into compliance rather than waiting for a dreaded and painful IRS audit. 

If your ministry is eligible for this new program, you can obtain substantial relief from past-due federal payroll taxes. Once accepted into the program, you will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties are due, and you will not be audited on payroll taxes related to these workers for prior years. 

(Need help determining if you have classification mix-ups? In a blog post I wrote addressing the issue last year, I included a resource from the IRS to help distinguish employees from independent contractors.) 

There you have it. If you discover your ministry has employees who are classified as independent contractors, take advantage of this program to avoid hassle and expense and get into compliance. After all, how often does the IRS try to make things easier for you?

This is the fourth blog in our series of interviews with presenters at the upcoming 2011 Financial Forum for Ministries. This time I spoke with Bryan Taylor, CFA and principal with Cornerstone Management, Inc. His session is titled, “Survival Mode: Piloting Your Ministry’s Finances through the Waters of Economic Uncertainty.” 

MBG: How will your presentation help attendees better serve their ministries?

Bryan: A general understanding of the current global economic environment is critical for those in ministry leadership. It provides the canvas upon which daily ministry financial decisions must be sketched. An understanding of the current state of the domestic and global economy also helps provide a contextual framework for understanding the current fundraising environment and the hopes and fears of your ministry’s constituency.   

MBG: What are three important takeaways attendees will learn during your presentation?

Bryan:  One will be insight into the current state of the U.S. and global economy. Second is the effect of the current economic environment on debt and equity markets around the world. Finally, people will learn about the current implications for their investment portfolios. 

MBG: What is one suggestion you’d offer to help attendees gain the most from this learning experience?

Bryan: Attendees may want to scan the front page of The Wall Street Journal or Barron’s. They may also find it helpful to review the first couple pages of The Economist in the airport. This information will help provide context for my presentation. 

MBG: What do you think are the biggest challenges facing ministries today?

Bryan: Remaining relevant in a post-modern world is one significant challenge. Another is vision casting—the ability to differentiate the role of your ministry from others in the marketplace and to help others clearly see its value. Finally, financial stewardship and compliance are major areas of importance that ministries must master to remain worthy of the gifts they receive. 

How has economic uncertainty changed the way you manage your ministry’s finances?

With political candidates now campaigning in earnest and ballot propositions being developed, churches once again face the tension of whether or how to address political issues. In this context, Richard Hammar’s recent brief article titled “The Value of Tax-Exempt Status” in online ChurchLawandTax.com is worth reading. 

Hammar, a leading specialist in legal and tax issues affecting churches, lists 13 consequences of churches that lose their tax-exempt status. Among them: “Donors no longer could deduct charitable contributions they make to the church.” 

How does your church work through questions of whether or how to become politically active?