Thursday, April 19, 2018

Is a Donation 'Thank You' Too Pushy?


Question: Hey Fletch… Do you encourage churches to acknowledge first time givers through a thank you letter?  I am considering starting this because I see this as a significant opportunity but do not want to come off pushy.

Answer: A first time donation is a big step. The person is saying, “Hey, I’m beginning to buy into the family and vision here. Let me help and support it.” I would strongly encourage you to send a letter to them. I have done that for years. When we printed a 10 page color end-of-year “ministry stories” publication, we printed enough extra to send to new donors throughout the year. People loved it.

You don’t need to thank the person for the amount of the donation. Some churches treat that information as confidential and only for the business office. People do want to know that the money was received and that it matters. Regardless of the size of the gift, say “thank you for being a part of this family. Every person matters here.” 

Will you come off as pushy? Not with a great note. When were you ever upset that someone said, “thank you!” I have asked Brad Leeper, Principal at Generis to respond:

Brad Leeper—Rather than pushy, think pastoral. This new giver, through this financial gift, has indicated a new, deeper engagement with your church. The step to acknowledge and to say thank you is a powerful pastoral step that reinforces the risk and courage to enter into a new relationship with their church. And consequently, a new relationship with you as their pastor. 

Taking this step and receiving a silent response sends an unintended message that they are not necessarily welcomed or embraced here. Another reason to graciously acknowledge the gift is to prompt and encourage a second gift that comes faster with a note than silence. It seems only 4 of 10 first time givers ever make a subsequent second gift. Those lost second gifts means less financial resources for your mission and a loss of spiritual connection with that person. The lack of a courteous response in a thank you might send the message that we really do not want your next gift and, as odd as this might sound, we really do not want you either. Sending a note establishes a personal relationship with the giver which is pastoral to the core. 

One more reason to send a thank you acknowledgement. Most every nonprofit will acknowledge that gift, and show appreciation. Why would we as church leaders seem less pastoral and caring than a non-church organization? 

Sample Thank You Letter

Dear Joe and Julie,

Thanks for being part of our Church! The finance team let me know of your initial financial investment to our church. Your gift is generous and will return a big impact in the lives of many. Your part in our church really matters. It is an honor to be your pastor and to have you as part of our community! 

Pastor Eutychus 

Wednesday, April 18, 2018

General Fund Robbed by Disaster Donations


Question: Hey Fletch… I have been a fan of your work and website for several years. I have a question and would love your insight. As a board member, let me say that our church has a history of taking special offerings whenever there is a disaster. Our congregation loves to give to emergency causes (wildfires, hurricanes, earthquakes, famine) and tends to give generously. However, our general fund often drops significantly during those weeks. People give to disaster relief and then our core offering diminishes. 

I have heard of some churches who build “disaster relief” into their budgets so that they can respond quickly when needs arise without draining regular income. Any thoughts on best practices around this?

Answer: Thank you for gracious words about XPastor. That is wonderful that your congregation gives so much to special needs. It sounds like your church has a huge heart for the hurting world - to the detriment of your general fund. It is truly a ‘steal from Peter to pay Paul’ issue!

There is no reason why you can’t have a line item in your General Fund—you can internally restrict it for disaster, compassion, mercies, or benevolence. When a disaster hits, you would say to the congregation, “Our General Fund has money for disaster relief. As needed for the relief, gifts above our regular weekly offering will go toward this current need.” You may even want to salt the food by saying, “and we have already given $25,000 this week to get help on the way.” 

The issue that I see is one of communication. If people are accustomed to giving to a special fund, they will feel like the rules have shifted. You are changing away from a donor restricted fund, one which the money can only be used for disaster relief. You are moving to an internally restricted fund, where the board can use the money as they see fit for the current disaster, future local needs, etc.

You should communicate the new style of giving well in advance of the next disaster. Share the reason for the change, in print and in person, with the Governing Board, Finance Team, staff, and key leaders. Once a month for six months, share a carefully worded statement with the congregation about the change. Ensure that any online giving reflects the wording that your church formally adopts, such as “Give at this link for disaster relief. This is a part of our General Fund and will be targeted for the current need. Unused funds will be used for other church ministry.” 

I would also position this as one of great potential vision areas for the church. “We want to do so much and celebrate God’s generosity among us. By having these donations in the General Fund, we have governing board approved methods to strongly continue our ministry and disaster relief.”

-DRF

Saturday, April 14, 2018

Is Deficit Budgeting an Act of Faith?


Question: Hey Fletch… Our church is barely keeping the payroll and bills paid and we enter the budget process in June. Our elders keep casting a vision that requires 10% or more of deficit budgeting. Historical data says we will not receive from donors the needed amount. They say we should budget by “faith.”  As a member of the finance team, I have a problem with continually asking the members to approve a deficit budget. We also have -0- reserves. Can you share some biblical principles that I can share with the finance team and leaders to show it is not a “lack of faith” to present a balanced budget? If giving doesn’t increase, we are either going to have to cut a position or sell a parsonage.

Answer: I’m a fan of balanced budgets. A budget that has a built-in deficit is a disaster waiting to happen. Jesus says in Luke 14:28-30, “For which of you, wanting to build a tower, doesn’t sit down first and compute the cost to see if he has enough money to complete it? Otherwise, when he has laid a foundation and is not able to finish the tower, all who see it will begin to make fun of him. They will say, ‘This man began to build and was not able to finish!’” (Net Bible®) Your church budget should adequately cover your existing obligations.

You can add to your church budget a special contingency budget. This can be a faith-based approach. You inform the congregation that with current giving, the church budget is balanced. Then lay out the contingency budget, “if we receive $50,000 more in the next six months, then we will do these projects.” It is not a good idea to put salaries in the contingency budget, but do include special projects or renovations. If the extra funds don’t come in, then those projects won’t happen.

As for cash reserves, my friends Dan Busby & Michael Martin at the Evangelical Council for Financial Accountability say on this page: “Cash reserves are the cushion that ensures: Operating expenses are paid on-time instead of incurring late fees, the church is in compliance with mortgage covenants, funds are available to replace worn-out HVAC, the church has the necessary funds ready to launch a new ministry.”  You can download the ECFA e-book, “Essentials of Church Cash Reserves.” Let me ask Dan Busby for his thoughts.

Response from Dan Busby, President of ECFA: 

Thanks for the opportunity to provide input in relation to this request. What you have written in response to the email is RIGHT ON!  Here are a few more thoughts:

    • 10% of more in annual deficit budgeting with zero reserves is TOTALLY incompatible. If a church has excess reserves—say beyond six months of operating reserves, then perhaps a deficit budget might be appropriate to use some of the excess reserves, but without proper reserves (let’s say at least three months of operating reserves), deficit budgeting indicates a lack of adequate responsibility by the governing board.
    • This church is on the verge of failing John Wesley’s test. He said, “Our responsibility is to give the world the right impression of God.” A church that is barely keeping payroll and bills paid is flirting with sending a very bad message to people inside and outside the church, as well as taking Jesus Christ off center stage and placing financial mismanagement on center stage.
    • Restoring sanity to the financial planning for this church will require a conservative estimate of the next year’s revenue. When the governing board chooses what I call the “Big Number” for the next year’s budget, that number should probably be less than last year’s revenues. Otherwise, it is unlikely the church can build reserves. It goes without saying (except for this church) that reserves are only built when cash in exceeds cash out.
    • If you need more scripture references, here are a few: “The wise store up choice food and olive oil, but fools gulp theirs down.” (Proverbs 21:20) “Go to the ant, you sluggard; consider the ways and be wise? It has no commander, no overseer or rules, yet it stores its provisions in summer and gathers its food at harvest.” (Proverbs 6:6-8)


Tuesday, April 10, 2018

Can Our Church Join ECFA?

Question: Hey Fletch … I’ve heard about the Evangelical Council of Finance Accountability. Is that something that a church can join and how could I find out if my church qualifies? Would they accept my church?

Answer: I’ve served in several churches that were a part of the ECFA. They enhance trust in churches with their Seven Standards of Responsible Stewardship™.  Those standards relate to Doctrinal Issues, Governance, Financial Oversight, Use of Resources and Compliance with Laws, Transparency, Compensation Setting and Related-Party Transactions, and Stewardship.

Over the past several years, I have served on one of their advisory groups. This allowed me to see them up close and work with Dan Busby (President) and Michael Martin (Vice President). They are all about honest and forthright standards for church finances and governance. I would strongly encourage your church to apply and be a part of ECFA—it will be a great help to your Board, Finance Team, and congregation. Let me ask Michael Martin to respond as well:

Response from Michael Martin, Vice President of ECFA—David, thanks for the chance to chime in here and for your kind words about ECFA. You’ve been such a blessing to the ministry over the years!

Churches are not only welcome to join ECFA – today, churches are the fastest growing membership segment of ECFA, including over 40 of the largest churches in America.

ECFA.church is our new website just for church leaders with tons of free resources (webinars, podcasts, sample policies and procedures, and more). You can also check out testimonials from current members and learn more about the new short form membership application at ECFA.church/Join

Read more "Hey Fletch" on XPastor.org.

Saturday, April 7, 2018

Percentage of Overall Budget for Worship

Question: Hey Fletch … I doubt you remember me but I was part of a group in 2011. I am currently an XP of Operations. I serve under two Co-Lead Pastors … two young guys who are great! I wanted to ask if you have any metrics/information on the percentage of an overall church budget that goes towards the entire Worship, Arts, Marketing, Media department? We are a church of 1000+ with an annual budget of $1.3 million. So, for example should the percentage be 5%, 10%, 15% or 20%?

Answer: Of course I remember you, beginning with the time that we met for coffee. Even lately, when I was doing some XPastor work, I saw your paper. It has helped thousands!

It can be challenging to answer your question because church budgets vary so much in what they include. My rule of thumb is to include the following budget areas: Communications, Welcome Team, Information Technology, Audio-Visual Technology Capital & Maintenance, and all Worship expenses. As I reviewed budgets from several churches, the number was 10% of General Fund expenses.

-DRF

Tuesday, April 3, 2018

I'm a Paid, Professional Christian

Question: Hey Fletch … I feel like I’m a paid, professional Christian. I work in a church as a pastor and it is feeling like a job. The joy is begging to fade away. Help!

Answer: You are a full-time, vocational Christian leader. Pastoral work can be grueling. Emails and texts come at all hours. Weekends can get eaten up in ministry activities. You are engaged in a spiritual battle of enormous proportions. Huge numbers of people rely on you for guidance, shepherding, leadership, and care.

Here’s a suggestion. Find some areas where you can be “John or Jane Doe.” Have some fun in areas where you can be with people who are not in your congregation. I like to do this with scuba diving. There is a tight camaraderie among scuba divers. You have to trust and rely on your diving partner. Underwater, no one talks to me! I get to enjoy the great world that God created. After the dive, we talk about the recent dive and past dives.

You are paid to be a Christian leader but you are not a professional Christian. Enjoy time with people who don’t see you in the church leadership role. It will help bring back “joie de vivre”—exuberant enjoyment of life.

-DRF

Saturday, March 24, 2018

Asset Replacement for Major Repairs

Question: Hey Fletch … Do you know of or have an Asset Replacement Policy that sets aside money for major repairs/replacement of systems like HVAC?  I have not been an XP in a place where I could actually establish such a practice, but am going to try it at my new church.

Answer: There are a couple of ways to go with this and I applaud you for doing it. This is great thinking for the future. One way is to do a complete list of all depreciable items on the campus; everything above $2,000. That includes computers, cameras, sound boards, routers, servers, vehicles, video projectors, roofs, HVAC units, and even entire buildings. Let’s say that list comes to $20 million. Then, you set aside the 3, 5, 10, 20, or 30 year depreciation amount on those items—that is what depreciation is really supposed to do. Let’s assume an average of a 20-year life on all those items. You would need to set aside $400,000 a year. That’s a big bite!

The “all items” option is time consuming and you will list many small items. In a church, major building refurbishments or construction are generally handled as capital campaigns. That skews your depreciation list.

My preference has been to establish two reserve funds. These are internally restricted by the governing board of your church. As internally restricted, the board can use the money for other purposes if there is an emergency or if an account gets overfunded. One fund is for information technology expenses—video projectors, computer servers, sound boards, etc. The other fund is for facility repair—new roofs, HVAC units, minor renovations, vehicle replacements, etc. Depending on the size of your budget, you can determine how much to put into these reserve accounts. If you save $100,000 a year, in four years you may have enough cash to pay for a new worship center roof.

The key to estimating how much to put into the reserves is to have a spreadsheet of the major items and the timeline of their probable life. For example: Worship Center roof, 5 years remaining; Children’s Building roof; 20 years remaining; video projectors in Worship Center, 3 years remaining; campus HVAC main unit, 10 years remaining. Then consider the replacement cost and divide by how many years you will most likely have of usable life of the items.

The great thing about this is that if you get an extra 5 years out of a roof, you keep the cash in the bank. My favorite illustration of this is the expensive video projectors in worship centers. You never know how long they will last and new technology is always just around the corner. By having the cash in the bank, you can wait until you are ready to replace them. Believe it or not, it is harder to spend cash than a loan—there is something about cash that says, ‘Wait, don’t spend it yet, it took us a while to save this much.’

-DRF

Read more "Hey Fletch" on XPastor.org.