ECCU Blog

According to a new survey published by the Barna Group, 79% of evangelicals have donated money in the past year, compared to 53% of born again non –evangelicals. Of those evangelicals who give, 66% give to their churches and 28% give to other non-profit organizations.

 Evangelical Christians are also the faith group that donates the most: 26% donated $2,500 to $5,000, and 6% donated over $10,000. This compares with a national average of 7% and 1% respectively in these amount categories.

 So the survey says that evangelicals do in fact donate more than others. Does this surprise you? Would you expect this?

 If we follow Jesus’ teaching, we should be the giving the most, because we understand that we have the most to be thankful for in the gift of God’s forgiveness through Jesus’ sacrifice. Plus, we understand that we are to be shrewd stewards of the resources we’ve been given.

 A question we should all be asking: “Am I a generous giver regardless of what the survey says?”

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.

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.

“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.

 I was saddened to read some stats recently showing that fraud in the church costs more each year than what is given to missions. The numbers were $35 billion in fraud in 2012 and $23 billion given to global foreign missions. How can this be true and what can we do to combat fraud?

 According to the Center for the Study of Global Christianity at Gordon-Conwell Theological Seminary who published the 2012 Status of Global Mission, financial crime at churches is estimated to hit $60 billion in 2025 if the same trends continue.

  Here are two key things those of us who have been entrusted to steward ministry funds can do each day to combat fraud:

1.  Create an environment of “Trust, but Verify”.  We first heard this phrase from the President Ronald Reagan, who used it often when discussing U.S. relations with the Soviet Union. It suggests that we maintain an environment of trust while also verifying that information is accurate and procedures are followed. This involves accountability, dual custody, and separation of duties in the financial area of your ministry. By doing these things, you can literally eliminate opportunities to commit fraud.
2. Stay connected with your staff and volunteers.  The precursor to fraud is a motive that causes an individual to have an intense need for money. It could be a financial hardship, a gambling problem, a family financial crisis, or negative work-related feelings. Once there is a motive, the individual then just needs to rationalize that what they are contemplating is okay given the circumstances. Staying connected with your staff and volunteers and knowing what is going on in there lives will provide you not only with an opportunity to minister but also an indication of the need to monitor actions and behaviors more carefully.

 These two steps will help keep your ministry from becoming the next bad news story.

 What have you found to be helpful for combating fraud at your ministry?