By Bernie Schnippert
Since this is the first column of a regular monthly series, let me give you a little background of how it came to be, what it will contain and how we hope it will help you and the church.
Not long ago, Mr. Tkach, Mr. Feazell and some others of us here at headquarters were wondering how we might give the brethren greater insight into the church's finances, and how we might best address other questions about church governance and organization.
After discussing it among ourselves and with various field ministers, it was decided that the best way would be to provide monthly written updates. So, this column was born.
To begin this time, let me explain what information the column will contain so you can know what to expect every month. First, we will print a tabular report of the church's income and expenses over the last month and for the calendar year to date. This will show precisely how much money is coming into the church, and how the expenses compare to income.
Second, in order to make the tabular report more informative and understandable, I will write a brief report discussing the tabular report and explaining what it shows and why. In this section you will see what our income and expense trends are and what our needs are for the future. I think you will find this information valuable both for your own Christian giving goals and for your prayers about the church.
Finally, I will include a question and answer section that addresses at least one question relating to some financial or organizational matter. I especially look forward to this part of the column because it will allow me to answer the kind of questions you may have thought about but never had the opportunity to ask, or which, by their nature, don't tend to show up in regular financial reports.
It will also give you peace of mind, I believe, for you will confirm that the church conducts its financial and other affairs carefully and well within established legal and financial rules.
With this as a background, let me explain this month's financial update. The accompanying report lists income for the month and calendar year broken down by category (mail income, festival offering and other income) and compares this income with last year.
Also, it lists total expenses for the year and compares them with last year (we will show expenses by category from time to time in the question and answer section). In addition, the report shows what the budget is on a daily mail income basis and whether our mail income is running within budget.
Finally, it shows whether cash is being added to reserves or taken from reserves to fund the expenses. (Reserves are necessary to manage cash flow peaks and valleys, for special equipment purchases and for emergencies.)
I suggest you spend some time reading the tabular report. Here is a summary of what you will learn: Our income is down 43.6 percent from last year. Because of this, we have had to lower expenses as well or we could not maintain a balanced budget. Expenses last year were more than our income, not just equal to our income.
We have been able to cut expenses so that they are down more than the income is down. However, since we ran a deficit last year and had to take money from reserves to pay expenses, to have a balanced budget we must lower expenses more than income is lowered.
This large drop in income from last year, coupled with the need to reduce expenses, has caused us to first reduce drastically the size of our headquarters staff and operations, and secondarily, to a lesser extent, reduce field expenses.
Although our local ministers and churches have felt these reductions, I must point out that by far the greatest impact has been upon headquarters operations. We have in fact worked long and hard to maximize the cuts here and minimize cuts in the field.
Over the past 18 months we have terminated more than 630 employees from headquarters. This is more than twice the entire size of the paid field ministry. The most drastic cuts have been here in Pasadena.
Also, from the report you will notice one figure that is important to us--the average daily mail income. As the chart shows, we are budgeted for a mail income of $160,000 per day. We must of course meet at least this amount to spend equal to or less than we take in, so this is a critical number.
This budget number has had to be lowered three times since November of last year when we first set 1996 budgets. The figure was first set at $220,000 per day. But it was reduced to $200,000 per day, and then to $180,000 per day, and finally to its current $160,000 per day.
Although it has been difficult to cut expenses this fast, we needed to balance the budget and therefore had to make the cuts.
We are sorry that the cuts have had to impact such things as ministers' expense accounts, but, as I said, such cuts have come after larger cuts here, and there has been just no other way to trim.
For now, our income is running slightly higher than budget. This is good, because if it falls below $160,000 per day, another cut will be necessary. From experience we know the number can fall rather quickly.
Finally, the chart shows that although we are running a deficit at the moment, it is because of seasonal income and expense issues and severance payments (from the termination of employees as we reduced staff) and, if the budget projections hold, we will have a balanced budget.
The small amount we intend to add to reserves is not scheduled to come from our mail income, but from selling certain peripheral properties in Pasadena that are not part of the main campus and are not needed any more. The money will go to reserves to hold for an emergency and will not be otherwise spent, because it is poor financial policy to finance day-to-day operations by selling assets.
Incidentally, I have discussed this year's budget at length with our auditors (Coopers & Lybrand), our insurance carriers and our bankers (Wells Fargo). All three professional groups applauded our goals for a balanced budget, complimented us on our implementation of necessary and prudent cuts, and confirmed the wisdom of our financial plan in general.
Two of the bankers actually told me they were "impressed" and "very impressed" with our financial plans in light of reduced income. This was encouraging to me, for as the bankers said, "We don't often gush!"
The most important things you can learn from this financial report are: (1) Income is substantially down from last year, but (2) the church has prudently lowered expenses by making cuts to have a balanced budget, and (3) our daily income projection of $160,000 is our most important daily indicator and we must maintain income above this number to keep a balanced budget.
The two most important things you can do to help church finances and thus your local church are: (1) Pray for the stability of the income, and (2) set an amount aside that you intend to consistently give (whether a full tithe or not) and then keep to this internal, personal commitment so that we can keep our daily average stable and at the projected level or above.
Next time we will report the latest figures. Please watch and pray with me that the daily income figure holds and even grows.
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