I’m actually not a real big safety fan…but my wife is. I remember the first time driving with her in the mountains of Montana, and she was kind of freaking out because there are a lot of dangerous curves in the road without any guard rails. I didn’t see the big deal. After all, you only need guard rails if you’re planning on going off the road. Of course my thinking is flawed, if you drive long enough, chances are you’re going to go off the road and wish there was a guard rail.
It’s easy for churches to see personnel policies as unnecessary, too. If we only hire good church people, we should never have any issue with our employees, right? If you have employees long enough…even good church people…you’re going to have problems. Our whole ministry model assumes that people are broken and prone to hurting themselves and others. A church pay check doesn’t change that.
The two places were I see the most hurt happening are:
Different Expectations: You need something in writing that helps the employee or pastor and the church agree on what success looks like (aka Job Description). Otherwise the pastor will feel unappreciated and the church will feel like their pastor is a dud.
Different Rules: It can sometimes be difficult to stay in compliance with written rules. Well, most church policies are unwritten, and it’s impossible to stay in compliance with unwritten and often shifting rules.
The PPP Loans are back because of the recent stimulus bill passed. For churches that are struggling financially because of this pandemic, you should consider applying. You can apply starting on January 13, 2021…assuming your bank is setup to accept the applications.
If you never applied in 2020, but now you think you need to, there isn’t a real test to see if you are eligible. You just have to be concerned if the pandemic is going to make it difficult to pay all your bills without making cuts. Like most “free” money from the government, you will pay in paperwork. In this case, the stress comes mostly during the forgiveness process. I haven’t heard of a single church having their forgiveness application rejected, but it was stressful
If you are applying for a second PPP Loan, there is an actual test. You will have to see if gross receipts for a quarter (Jan – Mar, Apr – Jun, Jul – Sep, or Oct – Dec) dropped by 25% or more from 2019 to 2020. It sounds like you will have to provide some kind of proof. I’m guessing a Profit and Loss or Statement of Activities report should do the trick, but I haven’t seen what banks are asking for exactly.
I’m all for any way to encourage those not giving to give something or those who are giving very little to stepping up in their giving. Giving to the work of Jesus Christ is a life transforming action. I don’t understand it all the way, but I’ve experienced it myself and seen it in others. The CARES Act has given churches and other charities a little gift for encouraging these folks to donate or donate more. Here’s how:
Write off $300 of Charitable Contributions without itemizing: Only about 13% of tax payers itemize their taxes and can therefore claim a deduction for charitable contributions. The CARES act now allows the other 87% to claim this deduction…up to $300. How many of your households give less than $300/year?
For those that itemize, their giving limit was raised: Honestly I don’t know how many people are affected by this. The deduction for charitable giving used to capped at 60% of Adjusted Gross Income. The CARES Act raised that up to 100%.
Keep this in mind: People don’t give because of tax considerations. They give because they want to make the world a better place. People won’t give $300 just to save $66 on their tax bill, but that tax savings may be enough to encourage people who think well of your church to make that first gift.
I’m not a big fan of debt. I’ve been debt free since 2008 and can’t imagine living life any differently. Probably the only “good” debt would be a mortgage where you made at least a 20% down payment. What if you’re stuck in a difficult situation where you need to take out a loan? This video will show you exactly how to electronically apply for and receive a loan from a United Methodist retirement account.
The thing I like about taking a loan from your retirement account is that you’re paying yourself back…with interest. I’ve also played around with the math…which is more complicated than expected. Here’s what I suspect:
Retirement Loan vs Credit Card: Retirement wins. Your interest rate will be much less with the retirement loan. You should be able to pay off the debt quicker and for less. When calculating the effect on your retirement account, it’s not just the interest rate vs the investment returns because you’ll be earning investment returns on every loan payment you make. It looks like it’s a wash.
Retirement Loan to Buy Home: This was also complicated. If you are short on reaching the 20% down payment, the retirement loan could help you avoid PMI and possible get a lower mortgage rate. When I do the math, it looks like you’ll likely have a slightly lower combined monthly payment.
Because of the bankruptcy of the Boy Scouts of America and the rash of sexual abuse claims, I’m encouraging all churches that have ever been involved with Boy Scouts to file a Proof of Claim form with the bankruptcy court. The link is below. Filing this form will help provide resources in the event that a victim connected to your church ever comes forward. If the court doesn’t receive your form by November 16th, you will be barred from any support from the Boy Scouts of America.
The State of South Dakota recently announced that $40 million will be made available to Small Nonprofits that are seeing a large reduction in Cash Flow. If you’re a South Dakota church, AND your Net Operating Income is down, you should apply.This sounds like a great deal because there seem to be no strings attached (e.g. PPP Loan forgiveness).
They are talking about Net Operating Income so you’re going to have to exclude all the donor-restricted gifts and expenses (capital campaigns, mission of the month, memorials/bequests, youth fundraisers). Here’s the basic formula:
Net Operating Income (income – expenses) for March – August of 2019
LESS Net Operating Income from March – August of 2020
LESS PPP Loan Amount or similar Federal assistance
EQUALS Eligible Amount. Divide this amount by the Net Operating income from the first bullet. It should be more than 25%.
Even if it is not more than 25%, you are still encouraged to apply as leftover grant money will go to this second tier of nonprofits. Watch the video below for how to apply:
How many times have you been at a church meeting where you are discussing a great ministry opportunity, but there’s no money available for it…except for the money in that one fund? Most churches have that pot of money whose purpose is not written down but is actually embodied by the committee that has historically controlled the money. That’s not healthy. It becomes a control issue instead of a stewardship issue.
Sheri Meister, Barb Brower, and I talk about how to properly setup funds and how to work with the church to rediscover the purpose of old funds. We believe the donor gave the money to bless the church…not divide the church.We hope this helps you find new opportunities for some old money.