Finance: Funding the Budget

Most Finance Committee’s focus nearly all their attention on controlling or shrinking expenses. If they do give any attention to income, it is usually just lamenting that there isn’t more of it. Finance Committees can and should play a big role in growing generous givers. That’s actually one of their duties. This is how the budget gets funded.

If you want to grow generous giving, you have to understand why people do and don’t give. We’ve asked dozens of church finance people, “Why do people give?” Almost every time, the top answers are 1)People give out of guilt; and 2)People give for tax purposes. That explains a lot. People do give out of guilt…but rarely generously. Pretty much no one gives for tax purposes because why would anyone spend $100 on charity so they can save $20 in taxes.

People give generously if:

  1. They believe in the mission of the church and trust that the leaders are capable to fulfill the mission.
  2. They understand that their giving benefits themselves most of all.
  3. They have money to give. It’s pretty difficult to give generously when you’re broke.
  4. We make it easy for them to give generously.

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Assessing your Church’s Financial Health

About eight months ago, I called into the Dave Ramsey Show and got through. After I quit gushing over Dave, I asked him, “What would be the Baby Steps for a church?” This was not just a passing fancy of mine. I’ve been thinking and reading and visiting with people about this subject for many years. In this quarter’s webinar, Sheri Meister and I discuss the seven areas that church’s need to give attention if they want financial freedom to follow Jesus Christ.

Here’s the short version of the areas. I encourage you to watch/listen to this webinar to get the long version. Plus, there is a link to the assessment below that you can take for your church:

  1. Invested Leaders: Church leaders should be raised up from the top 20% of givers. Leaders that don’t give worry about what others might think. Leaders that give worry about the mission.
  2. A Focused Team: Now that you have Invested Leaders, the next step is to help them take responsibility for Overseeing Spending, Growing Giving, and Managing Reserve Funds.
  3. Stewardship Teaching: Money can be either a great obstacle to living for Jesus or a great tool. If you help people manage their money and teach on the benefits of giving, church income will go up.
  4. Budget Accuracy: With a growing income, now is the time to be honest about your budget. How will you plan to spend the income…not what you wish the income was.
  5. Debt Aversion: Debt is a weight on the ministry of a church. It will affect how you lead and make decisions. The sooner you can rid yourself of the debt, the better.
  6. Capital Reserve: With the Debt gone, a Growing Income, and an Accurate Budget, it’s time to build up reserves to care for the property. This helps you avoid always raising funds for the building so that people begin to think the building IS the ministry.
  7. Operating Reserve: At the same time, building up an Emergency/Opportunity Fund will help you take risks and weather storms.

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Applying for Second Round of PPP Loans

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.

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Church Committees: It’s about Stewardship

Last month I re-watched the Lord of the Rings trilogy. If you read the books or watched the movies, you’ll remember the Stewards of Gondor. Long story short, when no rightful heir to the throne was found after the death of the king, the Stewards watched over and managed the kingdom of Gondor with the original intent that they would step aside as soon as a rightful heir was identified. The Stewards dared not even sit on the throne, but instead they sat on a chair at the foot of the throne. As time went on (nearly 1,000 years), the Stewards saw their position and power as something they were entitled to and actually tried to reject the true heir to the throne in order to hold onto it.

Does any of this sound eerily similar to how some church committees operate? If Jesus Christ showed up in the flesh and blood for a Finance Committee meeting or Trustees meeting, would we even want to listen to him…even though he’s the rightful owner of all the church property and money? When we are good stewards, we never forget who the owner is. We are mindful to carry out our work in a way that is hopefully pleasing to the LORD.

In the video, I talk about this, but then I give some practical advice for how to remind ourselves of this so that our Committees are truly a blessing to the Kingdom.

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How the CARES Act gives back to Givers

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.

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Taking a Loan from your Retirement

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.

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How to make a video in PowerPoint

I’m an accountant that makes videos on the side. I have very limited skills in the area of video editing, and I don’t want to spend the time to learn fancy new tools. Prior to PowerPoint, I would make about 3-4 videos per year. I didn’t mind the creating part, but the video editing was intimidating.

Since I learned I could just turn my PowerPoint into a video, I make 4-6 videos a month! No more editing! Everything is finished in the creating and recording process. Once I’m happy with the recording, you just click export. Plus, it seems like every other month I learn something new…almost like Microsoft had video-making accountants in mind when they update PowerPoint.

In this video, you are going to see a recording of me making this video. Behind the scenes-ish.

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