Update from Finance & Planning

July income helps catch up

By Ronald Kelly

As many of you noticed in the previous issue of the WN, June income was much lower than we expected. I explained, that at least in part, we had fallen behind in our mail processing. Our small staff just cannot process the volume of mail now as quickly as we could with more employees.

We expected that as we caught up in July, we would see better figures. Thankfully, that is what has happened. Mail income for the month was $1.79 million, just slightly over the $1.73 million we received during July 2000.

When we add in festival offerings (we still were counting some from the Pentecost season) and all other sources of income, the total for the month was just over $2.4 million. That compares to $3 million for the previous year. So our total income was still down.

As we compare all sources of income from January through July, we have received $15.9 million this year vs. $17.9 million last year. Consequently we are still running a negative 13 percent.

The Pasadena property sale is still progressing on a painfully slow process. While Legacy Partners hopes to conclude the sale by December, we have been advised that it could take well into the first quarter of next year. This is disappointing, but we are learning to exercise faith and patience. We appreciate your dedicated support through these difficult times.

As we look ahead to a new financial model that will be implemented once we have completed the property sale, let’s rehearse some of our plans. We have explained several times that two major expenses affect our financial picture. First is maintenance of this 50-plus acre property in Pasadena. And second is that we have more than 225 former employees in their elder years who are supported by what we call a Discretionary Assistance plan, which is currently funded out of our immediate cash flow. It is called "discretionary" because it is not vested in the legal sense of the word.

When the property sells, a considerable amount of the proceeds will be used to fund a retirement plan for the current Discretionary Assistance recipients and our current employees. This will mean that no future donations from our congregations will be used to maintain this expensive property or to fund retired employees.

The headquarters of the church will need an office facility. We have mentioned before that our office needs will be much less than in the past, or even currently for that matter.

At one time, more than 1,000 full-time employees worked in Pasadena and Big Sandy. We are down to about 100 and anticipate that the headquarters church staff will be about 40 employees after we relocate.

Our plan is to lease an office facility for two to five years. During that time we will evaluate our future needs and make plans to purchase or build a small office facility. By paying cash for a building, we will not need funds from local congregations to pay a mortgage for the facility. This will allow an even larger portion of member donations to be retained for local outreach and evangelism.

In addition to purchasing a building, we hope some funds from the sale can be invested to partially fund the operations of the headquarters staff. That will allow an even greater percentage of local church donations to be retained in the local area.

I would like to comment on a rumor we occasionally hear—that after the property sells, we will have millions of dollars to send to local churches. While we would rejoice if that were possible, in reality, when the sale is complete, we will not have sufficient funds for such distribution.

Bernie Schnippert, church treasurer, has often said that he has learned three things from the sale of our properties: 1) Real estate is not liquid, and its value is often less than a seller hopes because of the realities of the market; 2) Any sale of real estate usually takes far longer than you expect; and 3) The costs you experience in the sale of real estate usually are greater than you anticipate. How true these have all been.

It now looks as though the city planning commission will be ready to begin their deliberations and evaluation in September. When they are finished, they will turn their recommendations over to the city council, which will have their own items to evaluate. And when they have completed their work, if they grant city approval to Legacy Partners, we will enter the final stages of closing escrow. Please pray with us for favor with city officials that the process may reach a conclusion as soon as possible.

Statement of Income and Expenses for
WCG and PTM combined for July 2001

                                                                    For the Month         For the Year-to-Date

Income

    Mail Income                                                  $ 1,793,000                     $ 10,668,000

    Festival offerings                                                 138,000                         2,059,000

    Other income                                                      539,000                          3,185,000

            Total income                                             2,470,000                       15,912,000

Expenses                                                               2,899,000                       19,955,000

Net gain (loss) to bank reserves                             $ (429,000)                   $ (4,043,000)

Copyright © Worldwide Church of God, 2001