By Ronald Kelly
By Ronald Kelly
PASADENA—We are in the final accounting process for 2003, so figures I give this month will be near the actuals, but will be slightly different when we complete the fiscal year analysis. However, I would like to give you the 2003 overview this month, rather than wait a full month more.
Changes in allocations
As I have been explaining in the past few financial updates, we have made some significant changes in the way we allocate expenses. The primary change has been to allocate expenses for property sales and campus maintenance separate from everyday church expenses.
Because of a litigation settlement with the Philadelphia Church of God and because we have been able to sell three nearby properties that were not a part of the sale development plan, we were able to cover the total cost of (1) our sales expenses, (2) the entire campus maintenance costs and even were able to continue (3) our Discretionary Assistance Program for our deserving former employees now living in retirement. Thus, no member donations were used in 2003 for those expenses.
For 2004, through a line of credit we have arranged, along with other potential property sales income, we will be able to continue funding all three of these expenses during the coming calendar year. That means that this year as well, all member donations will be used only in the work of the church.
Balanced budget in 2004
With that in mind, we can have a more accurate view of what it actually takes to fund the work of the church. I have also mentioned in previous months that we have established a goal of presenting and maintaining a 2004 balanced budget on the church side of the ledger. That budget has been prepared, and we look forward to maintaining our expenses in balance with income.
Looking back on the calendar year 2003, we estimate our total church income will finally tabulate at $18.6 million. That figure, as noted above, will be finalized after this issue of The WCG News has gone to press. But our figures will be close to the income and expenses I cover this month.
Church expenses for the year totaled $21.1 million. Thus you can quickly see that it was necessary to take about $2.5 million from our reserve fund. This is right at the amount we targeted at the beginning of the year. Our reserves began the year in good shape because we had also sold selected properties during the 2002 calendar year, for example the Orr, Minnesota, summer camp campus. So, all in all, our church financial picture is stable and healthy.
That being said, I want to again emphasize the need to work with a balanced budget for 2004. That means we do not plan to tap into the reserve fund and must manage our expenses so they do not exceed income. If we project an income of $18 million for next year, we have to reduce our current level of expenses to that level. Our department managers have worked hard to pare down expenses and have requested budgets right at our target level.
2003 expense allocations
You might be interested to see how our 2003 expenses were allocated (keeping in mind that each department will be operating somewhere around 10 percent less in 2004).
Our single largest expense area is allocated to the local congregations. Pastoral salaries, bivocational pastoral honoraria, ministerial expenses, hall rental, local church equipment and other local church incidental expenses totaled just over $9 million for the year.
In addition we were able to return more than $1.2 million cash back to the local congregations in our Small-Step program. Thus, $10.2 million, or essentially 55 percent of the total donation income, was dedicated exclusively to the local churches.
While we move toward our new financial model, I think it is important to understand that congregations that had an excess of donations and allocated expenses have made it possible for us to maintain more than 420 local congregations in the United States. Were it not for the generosity of the financially more capable congregations, many of our less fortunate groups would not survive. But as we move through the next year, the majority of our congregations will have to become self-sufficient.
So on behalf of those congregations that receive financial assistance from the centralized denominational structure, I do thank the many who are making this all possible.
Insurance costs
After congregational expenses, would you care to guess what the next largest expense is? Would you believe insurance? Yes, insurance. If you have followed insurance industry costs, you can quickly grasp the importance of maintaining sound insurance programs for companies and employees. But these all come with costs.
Our insurance brokers, working carefully with our carriers, have helped keep our expenses below national average increases. But insurance is still a costly expense to any and all corporations, churches included. Our health care and life insurance costs totaled $3.6 million last year. Add to that nearly $1 million in risk management insurance for liability and property insurances, and we have a total of $4.6 million for our insurance packages.
While that will be necessary to maintain next year, insurance costs will be reduced dramatically after we fund our Discretionary Assistance Program and relocate to a much smaller facility for denominational headquarters. So there is light at the end of the insurance tunnel.
Church Administration
The cost to maintain our Church Administration Department at headquarters in Pasadena totaled less than $650,000. That is the total cost allocated to the Pastor General and CAD administrative staff. Last year we had 13 district superintendents serving our field ministers and churches at a cost of $990,000. The Worldwide Church of God Publications Department had total staffing and expenses of $529,000.
Last year we conducted eight regional conferences, a new pastors training conference and other pocket conferences at a total expense of $397,000. Other CAD expenses such as pastoral development, women’s ministry, reconciliation ministry and youth camps and programs totaled an additional $391,000.
International missions
In 2003 we allocated $1.2 million to the work of international missions. We have a staff of only two at the international headquarters, so the bulk of this funding goes to our five mission developers and the work they carry out in Africa, Asia, Latin America, the Caribbean and Europe.
Legal costs
Legal costs to the denomination came to just under $500,000 for the year.
Finance and Accounting
Finally, our Finance and Accounting costs totaled just under $1.6 million, which breaks down as follows: Financial administration and services, $365,000; Accounting, $329,000; Human Resources, $111,000; Mail Processing, $100,000; and Computer Information Systems, $677,000.
Keep in mind that I have presented rounded-off figures and approximations where appropriate. The bottom line, as mentioned above, was just over $21 million in church-related expenses compared against $18.6 million in income.
I also repeat that we have downsized our expense projections for 2004 to come in at about the $18 million mark.
So there you have it. Last year is now history and was a financial year that developed very much along the lines we had projected. This year is shaping up to be another exciting year as we anticipate continuing sale development plans with the hope of a successful sale before the year is out.
We’ll keep you up to date with the latest information on these matters every month. So, until next month….
Many members have requested information on how best to make a gift to the Worldwide Church of God, either during their lifetime or upon death through wills, trusts or other means.
If you want to receive information regarding such gifts, the Legal Department of the church is available to aid you in this regard without cost or obligation.
Copyright © Grace Communion International, 2004