NOV / DEC • 2016
H E L P I N G L E A D E R S B E C O M E B E T T E R S T E WA R D S .
East Sunshine Church of Christ: Achieving true “sound” stewardship p6
PLUS 10 questions: evaluating your church’s generosity in 2017 p10 What’s new in streaming for the Christmas season? p14 Year-end financial checklist for pastors p28
FROM THE EDITOR
‘Tis the season … Christmas is upon us! But hey, we don’t have to tell you that, do we? Right now, you’re prepping sermons and planning a plethora of churchwide observances, celebrations and community outreach efforts. As a pastor, you’re also receiving quite a few personal invitations — parties, luncheons, maybe even a few weddings! (Which you might or might not be asked to officiate) They’re lovely and appreciated … but particularly numerous right about now, right? In the midst of all this, you’re also trying to spend quality time with your own family. With all that’s on your plate at the moment, we’re hoping the thought leader offerings in this issue of Church Executive can help. In particular: A giving gut-check : 10 questions to ask when evaluating your church’s generosity in 2017. As you consider the vision for your ministry in the coming year, how much of your “plan” is simply hoping things will work out? (Or, as authors Joel Mikell & Derek Hazelet refer to it — president and senior vice president at RSI Stewardship, respectively — how much of that plan is “going with your gut”?) Of course you know this isn’t the best approach … but what can you do about it? “If you really believe God has called you to accomplish the vision you have for your ministry next year, then you owe it to yourself, your staff, and the people who support you to make sure you appropriately steward the time, talent and treasure God has already brought to you,” the authors advise. To that end, they offer 10 tried-and-true questions you can use to evaluate your strategy for cultivating generosity next year, and even to make the adjustments needed to enhance those efforts. Just flip to pages 10-11 to read that informative piece. Maximizing year-end giving: a remote roundtable discussion. For churches across America, the days between Thanksgiving and New Year’s Eve are crucial from the standpoints of attendance and, in turn, generosity. Along with a noticeable increase in worshipers, it’s when families consider their holiday budgets, including any year-end charitable gifts. For all these reasons, we thought it wise to gather a handful of giving experts to answer six key questions about how you can maximize year-end giving at your church. Available for download now, Jordan Bar Am (DipJar Inc.), Carl Tierney (Vision2 Systems), Kevin Lee (Vanco Payment Solutions), Todd Baylis (Qgiv, Inc.), Eliot Crowther (echurch powered by Pushpay) & Becky Kopplin (easyTithe) discuss the most common challenges — and churchexecutive.com
opportunities! — related to year-end giving in churches, plus how technology can inspire greater giving now and all year long. Year-end financial checklist for pastors. Right now, so much of your time is (understandably) others-focused. Even so, as Colin Nass, CFP®, RICP® — Senior Wealth Manager in the Financial Planning Division at MMBB Financial Services — points out, the Christmas season is a prime time to reflect on your personal “year in review,” financially, and also look forward toward 2017. On page 22, he outlines a very helpful, practical year-end financial checklist especially for you. We hope these — and all the articles contained in this issue — help you and your teams navigate this busy, but blessed, time of year. Merry Christmas from the entire Church Executive staff!
churchexecutive.com Volume 15, No.6 4742 N. 24th St., Ste. 340 Phoenix, AZ 85016 • 800.541.2670 RaeAnn Slaybaugh Editor in Chief rslaybaugh@churchexecutive.com Stephen Gamble Art Director sgamble@churchexecutive.com Judi Victor CEO & Publisher / Director of Sales jvfly@churchexecutive.com Mitch Larson Business Manager mlarson@churchexecutive.com Blair McCarty Senior Sales & Marketing Coordinator bmccarty@churchexecutive.com Hannah Riley Marketing and Sales Associate hriley@churchexecutive.com
EDITORIAL ADVISORY PANEL Stephen Briggs Associate Pastor of Administration First Baptist Church | Hendersonville, NC Denise Craig Chief Financial Officer Abba’s House | Hixson, TN Mike Klockenbrink Chief of Staff Lakeside Church | Folsom, CA Dan Mikes Executive Vice President Bank of the West | San Ramon, CA John C. Mrazek III Executive Pastor Pathways Church | Denver, CO Sam S. Rainer III Senior Pastor West Bradenton Baptist Church | Bradenton, FL Mark Simmons Business Manager Christ Community Church | Milpitas, CA
LET’S CHAT: Email: rslaybaugh@churchexecutive.com Facebook: ChurchExecutiveMagazine Twitter: @churchexecutive.com
Eric Spacek Senior Manager GuideOne Insurance | West Des Moines, IA
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Church Executive™ Magazine is published bi-monthly by Power Trade Media, a division of The Producers, Inc., 4742 N. 24th Street, Ste. 340, Phoenix, AZ 85016. Subscription rates for non-qualified subscribers, single issue prices and pricing for reprints of 100 or more are available from: info@churchexecutive.com. All articles in Church Executive™ Magazine are copyrighted and may not be reproduced in whole or in part without the express written permission of the publisher. Copyright 2016 by Power Trade Media. No advertisement, sponsorship or description or reference to a product or service will be deemed an endorsement by Power Trade Media, and no warranty is made or implied. Information is obtained from sources the editors believe reliable, accurate and timely, but is not guaranteed, and Power Trade Media is not responsible for errors or omissions. Opinions expressed in Church Executive™ Magazine are not necessarily those of the publisher or sponsors or advertisers. Content addressing legal, tax and other technical issues is not intended as professional advice and cannot be relied on as such; readers should consult with their own professional advisors.
November / December 2016 • CHURCH EXECUTIVE
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November / December 2016
CONTENTS FINANCES & ADMINISTRATION FOR CHURCH LEADERS
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22
Year-end financial checklist for pastors By Colin Nass, CFP®, RICP®
LEGAL REALITIES
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What you should know before recruiting a church intern By David O. Middlebrook
CREATING A CULTURE OF GENEROSITY
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Mobile giving cuts time, heartache out of your staff’s week By the echurch content team
STEWARDSHIP OF SPACE
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Great dividers By Rich Maas
SCIENCE BEHIND THE SEAT
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The best of both worlds: it’s possible! By Amanda Opdycke
ON THE COVER
NEVER AGAIN: BEYOND INSURANCE
RANDY WRAY / WORSHIP PASTOR / EAST SUNSHINE CHURCH OF CHRIST / SPRINGFIELD, MO
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Managing misfortune in a ministerial fashion By Michael J. Bemi
DEPARTMENTS
ACHIEVING HARMONY THROUGH “SOUND” STEWARDSHIP
From the Editor
At East Sunshine Church of Christ in Springfield, MO, four-part acapella harmonies are a worship staple. It’s been that way for more than 180 years since the church was established. This approach to worship music is unique, beautiful — and challenging.
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Built in 2002, the sanctuary at East Sunshine is all those things, too. That meant, until recently, it was a source of disharmony with the church’s signature musical style.
By RaeAnn Slaybaugh
SERIES
INTELLIGENT CHURCH GIVING
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A giving gut-check: 10 questions to ask when evaluating your church’s generosity in 2017 By Joel Mikell & Derek Hazelet
CYBER EXPOSURES IN THE CHURCH
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Concerned about a cyber breach? There’s a plan for that By Charlie Cutler
CHURCH FINANCIAL PLANNING
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Financing projects — borrowing vs. capital campaign By Kari Boyce
STREAMING MADE SIMPLE
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14
What’s new in streaming for the Christmas season? By Andrew Ng
INSURANCE ESSENTIALS
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5 signs you might be due for an insurance checkup By Eric Spacek, JD, ARM
FINANCE & LENDING TRENDS
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Satellite expansion from the lender’s view By Dan Mikes
METRICS THAT DRIVE SUSTINABILITY
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Measuring ministry activities By Rebecca M. DaVee, CPA
ALTERNATIVE FACILITY OPTIONS
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Options are key to making building decisions By Jim Peckham
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CHURCH EXECUTIVE • November / December 2016
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ON THE COVER
RANDY WRAY / WORSHIP PASTOR / EAST SUNSHINE CHURCH OF CHRIST / SPRINGFIELD, MO
Achieving harmony through “sound ” stewardship How a uniquely shaped, acapellaloving worship space (finally!) struck the perfect audio balance At East Sunshine Church of Christ in Springfield, MO, four-part acapella harmonies are a worship staple. It’s been that way for more than 180 years since the church was established. This approach to worship music is unique, beautiful — and challenging. Built in 2002, the sanctuary at East Sunshine is all those things, too. That meant, until recently, it was a source of disharmony with the church’s signature musical style.
Pictured, from left to right: Myron Mizell, Barbara Smith, Jeff Broussard, Randy Wray, Sophia Broussard, Josh Parnell, Toria Smith, Rick Schnake
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churchexecutive.com
ON THE COVER
W
ith a 60-foot-high peaked ceiling; a wide, 1,500-seat, fan-shaped was a speaker installed 60 feet in the air, at the peak of the roof. “That — worship space; and a very large — read: acoustically reverberant plus the fact that the side speakers bounced off the walls because there — rear wall, East Sunshine’s hard-to-achieve harmonies often was no control — meant that no matter where you sat, there was either fell on deaf ears. That’s a shame (not to mention, a big problem!) when a reflection issue, a coverage issue, or a sound pressure level (SPL) issue,” singing along is such a big part of the worship experience. Smith points out. “We rely on people in the congregation being able to hear their part,” It’s no surprise, then, that when a new, smaller line of digitally steerable explains Worship Pastor Randy Wray. “When it’s muddled and there’s no cluster-type line arrays hit his radar, Smith was eager to give them a try. distinction, it’s very hard to sing and appreciate the four-part harmony.” The product was the IC2 loudspeaker from Renkus-Heinz. This wasn’t news for church leaders. On Sundays, people had long had One IC2 can deliver as many as four individually controllable beams of difficulty hearing the music, as well as the spoken word. sound. Arraying multiple IC2 loudspeakers delivers a truly steerable line During special events featuring East Sunshine’s and several other local array — all suspended from a single point. churches’ music ministries, it was similarly difficult to make out the After trying so many different demos (primarily other line arrays) in acapella tunes and instrumentals. the space without achieving the coverage needed, it turns out the “magic “Our system wasn’t even close to capable,” recalls Darren Smith, a 36- combination” was a dual IC2 in the middle of the stage — cut into the year member of East Sunshine and consultant / installer for Springfield, proscenium overhead — and an IC Live Loudspeaker from Renkus-Heinz MO-based Sensory Integration. on either side of the wide worship space. For five years, Smith and his team sought a solution. In most large spaces, he says, a fix requires much larger-format speakers than what East Sunshine had in place. Though there were 10 speakers in a distributed audio system, none was large enough to truly deliver. “I think the largest driver in any of them was an 8-inch speaker,” Smith says. “They actually blew one of the speakers trying to deliver speech intelligibility and accommodate instrumentals.” Even so, larger-format speakers weren’t an option, aesthetically. “In that building, there was no place to hang anything,” he points out. “And they didn’t want line arrays; they didn’t want big J-hooks coming down.” Still, Smith and his team conducted a variety of demos with some well-known manufacturers’ products. Though they tried a variety of line arrays, they could never achieve the coverage they were looking for. Darren Smith, consultant / installer for Sensory Integration and a member of East Sunshine Church Suffice it to say, then, church leaders weren’t ignoring of Christ for 36 years, was instrumental in helping the church find just the right sound solution. the problem — but they had, effectively exhausted their audio system options. For a long time, they learned to live with decidedly less-than-stellar intelligibility ... until things reached Designed with high-output performance in mind, IC Live delivers a a breaking point. full-range musical performance while maintaining the beam control that As Wray recalls, it happened during a benefit for a local outreach group. keeps the sound off the room and only on the audience. Described by the A comedian was hired to entertain a crowd of 1,000. manufacturer as “the intelligent evolution of the small-format line array,” “The intelligibility was so awful!” he says. “He would tell a joke, and IC Live was ideally suited to delivering intelligible speech in a reverberant his voice would get quiet, and it was, like, ‘Uh…’ I mean, talk about a space, like East Sunshine. tough crowd!” Smith, for one, was thrilled. “We were finally able to cover the auditorium!” he recalls. “Before, we Cautiously optimistic: a (possible) solution emerges could never cover it properly without putting so much sound onto the Smith and his team went back to the drawing board, eager to rectify stage that it caused issues.” once and for all the intelligibility problems plaguing the worship space. It works, he says, because the center cluster is louder by a minute “If someone sat very close to the preacher, they would get the natural amount. “So, when you’re listening in that auditorium, your ear is drawn sound, and they could see his lips move. So, those people felt like they to the center of the stage, even though you’re listening to the speaker that’s heard him well,” Smith recalls. “But the speech intelligibility in the rest of to the far left,” Smith explains. “We didn’t take the audience and send them the space was really difficult, muffled — especially if you had any type of left or right. We wanted to draw them to the speaker and the singers in the hearing loss at all, even if it was minor. middle. Essentially, we ‘tricked’ the congregation to be looking at the stage For worshippers in the front several pews (but not close enough to the by using the line array, its steerability, time delays and phase shift across preacher to hear him naturally), the audio was often “too loud.” As Smith the auditorium.” explains, there was too much reflection from the monitors on the stage, It wasn’t the church’s first introduction to Renkus-Heinz’s loudspeakers. though they’re key to the four-part acapella harmony. Before, they’d tried out a 12-foot version of the same type of loudspeaker “It was loud because [worshipers] would hear more than one reflection,” technology in the challenging space. “But, we had no place to put that,” he says. “In my opinion, the loudness was more distortion. People can listen Smith says. “So, we tried to do an offset.” to loud music if it’s crystal clear; but, if it’s distorted, it’s annoying.” Though the team installed the unit upfront, there was so much feedback Overall, Smith estimates half the congregation was listening to on the stage that the singers couldn’t hear themselves. reflected sound; the other half was probably listening to direct sound. Amazingly, when IC2 was introduced, Smith and his team discovered it “Everything was an echo.” could deliver exactly the same level of control as the tall line array, but in A big part of the problem: The sound source for many parishioners a height of just 18 inches. churchexecutive.com
November / December 2016 • CHURCH EXECUTIVE
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ON THE COVER
Pictured here, a discrete dual IC2 loudspeaker in the middle of the stage — cut into the proscenium overhead — was part of the “magic solution” in this challenging space.
Practicing “sound” stewardship With a workable solution finally in hand, Smith and his team were excited to share it with the church leadership, including more than a dozen elders. The only problem? A healthy dose of hesitance. “Initially, they said, ‘Well, we’ve signed off on this kind of thing before,” Smith recalls. “’It sounds good when the room’s empty — but let’s see how it sounds on Sunday.’” He was happy to oblige. For two full Sundays, Smith and his team demoed the new setup at worship services. To demonstrate its versatility, they used it for a Sunday morning service and then turned around and used it in the evenings for community-wide services. “It did both perfectly,” Smith recalls. As the Worship Pastor, Randy Wray was, of course, involved in the decision. He and Senior Pastor Deron Smith had heard the results for themselves; now, they needed to get buy-in from a group of 12 church elders. They came to the church one night and were shown what the system could do. Their excitement was immediate. “[Smith] had a proposal ready,” Wray recalls. “We met that night, said yes, and put it into play.” A problem solved — and another created Months later, church leaders are still receiving praise for having solved the “mystery” of great sound in the challenging worship space at East Sunshine. Wray says the feedback has been “all positive.” 8
CHURCH EXECUTIVE • November / December 2016
And even though he doesn’t understand all the technical aspects behind why this particular combination delivers so well, Wray says the coverage in the room is “really something else.” “It doesn’t matter where you sit in the auditorium now, there’s no issue with intelligibility — especially the spoken word,” he says. “It’s been a world of difference.” The only drawback? Now, his acapella harmonies have to be spot-on. “With the previous system, we could actually get away with weaker singers onstage!” he laughs. “As soon as I heard the new system, my first thought was: We need to get better, because people are going to hear everything.” — Reporting by RaeAnn Slaybaugh
QUICK FACTS ABOUT EAST SUNSHINE CHURCH OF CHRIST Year Established: 1834 Location: Springfield, MO Number of full-time staff: 5 Combined weekend attendance: 450 2016 budget: $700,000 churchexecutive.com
Intelligent Church Giving
A giving gut-check By Joel Mikell & Derek Hazelet
10 questions to ask when evaluating your church’s generosity in 2017 Your ministry is too important to be left to “going with your gut” or hoping things will work out. If you really believe God has called you to accomplish the vision you have for your ministry next year, then you owe it to yourself, your staff, and the people who support you to make sure you appropriately steward the time, talent and treasure God has already brought to you. To help, we wanted to share 10 questions you can use to evaluate your strategy for cultivating generosity and make the adjustments needed to enhance your efforts next year.
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#1: What percentage of your attendees are actively contributing to your budget? A church can grow exponentially in attendance — and even participation — but not in givers. This is unsustainable. Measuring the percentage of people who are actively giving can ensure that you’re not setting yourself up for a crisis when your budget can’t keep up with the ministry expenses necessary to operate a fully functional and growing ministry. #2: How frequently are people giving? Churches have historically depended on consistent frequency of giving. As the way people are paid and give has shifted over time, it could create issues. Evaluating how frequently people give not only helps you allocate expenses, it can help you identify potential areas of improvement, such as encouraging people to give more frequently or intentionally reminding people about the impact their gifts make. #3: Do you know how many people have stopped giving — or decreased their giving — in the past year? Giving is a key indicator of engagement, just like attendance. When individuals suddenly stop giving, or give less, it often indicates circumstances that could reveal a ministry opportunity you might not have known about earlier. Does your church have a system in place that recognizes when someone stops giving? This isn’t about fleecing the flock; it’s about paying attention and enhancing your ability to minister to people in your church. churchexecutive.com
#4: How many faithful givers stopped giving this past year? Giving is also a way people can “speak” their commitment to your church’s vision and mission. This is especially true for people who have been faithful givers for multiple years. According to our research, it takes between eight and 12 new givers to replace one faithful, multi-year giver. Knowing that faithful givers have stopped giving can serve as an early indicator of negative trends that might compound over time if not addressed. #5: Did online giving make up a greater percentage of overall giving this year? Almost every church that has experienced an overall increase in giving is receiving it through online contributions, via a mobile app, website or kiosk. The more people who give consistently online, the more predictable cash flow will become. Growth in online giving indicates how well you’re communicating the various ways people can become part of the giving engine of your church. #6: How dependent are you on major gifts for annual budget giving? Being overly dependent on a handful of major contributions to fund your ministry budget can create significant issues or challenges down the road. At the same time, failing to develop financial leaders can limit your ministry potential. Having a healthy balance is critical for a sustainable ministry budget. #7: Do people feel like they’re a vital part of the impact your church is making through their gifts? The expectations and attitudes of church members is different than it was 20 years ago. People want to know the money they give is making a difference. At the same time, they’re constantly being asked for donations from dozens of other nonprofits that are sharing stories of impact. Retention is one way of measuring this idea. Another way is to survey people directly to determine if what you want the message to be is what’s being heard and embraced. #8: Do you have an intentional strategy for leading people from firsttime givers to faithful, multi-year givers? Our research shows that average retention rates for first-time givers is around 30 percent. However, if they give for three consecutive years, retention jumps to 75 percent. Having a strategy to intentionally churchexecutive.com
engage people from their first gift through their first three years as a giver is an important part of “closing the back door” of your church’s assimilation process. #9: How timely is your follow-up when someone takes a step toward your ministry? Timely follow-up is an important part of building relationships with first-time givers. It’s important to be proactive and intentional in engaging new givers by acknowledging their gift individually. Our research shows that following up with a first-time giver within the first week of their donation has meaningful impact. #10: What feedback mechanisms do you have in place to evaluate your efforts throughout the year? If you truly want to implement the ideas needed to increase generosity, it’s important to evaluate your efforts more than once a year during the budgeting season, or monitoring the same things year after year. Having an intentional process that helps you monitor your specific efforts throughout the year is important for reaching your goal. How to get beyond going with your gut Ministry is more than numbers. However, your church has limited time, energy, staff and money to accomplish the things God is calling you to do next year. Therefore, you need to make sure the effort and resources you are investing personally and through your staff are providing a worthy return. Taking the time to ask these questions, evaluate your efforts, and identify ways to improve not only helps you get beyond going with your gut, it provides more clarity and confidence than ever before when it comes to funding your vision for ministry. Joel Mikell is president at RSI Stewardship [ www.rsistewardship.com ]. Follow him on Twitter [ @joelmikell ] or find him on Facebook [ www.facebook. com/joel.mikell ]. Derek Hazelet is senior vice president at RSI Stewardship. Find him on Twitter [@dhazelet] or LinkedIn [www.linkedin.com/in/derekhazelet ]. Want to dig deeper into each of these questions? We created a free resource to help. Download it at: www.RSIstewardship.com/GivingGutCheck.
November / December 2016 • CHURCH EXECUTIVE
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CYBER CYBEREXPOSURES EXPOSURES IN INTHE THECHURCH CHURCH
Concerned about a cyber breach? There’s a plan for that By Charlie Cutler don’t handle that much financial data. In the event of a breach, the laws require you to respond. And, your response isn’t something you can leave up to volunteers, your computer geek or the church administrator. It isn’t something that can be handled on a work day. Although, by law, how you respond varies by state, the experts that need to be called in to assist your ministry are some of the C’mon, what real exposures does a church have? top computer experts in a very specialized field. Their fees will prove this — It’s the ‘big guys’ getting hacked, not the typical church on the corner. and it will likely break the church’s budget. Every nickel that comes through the church is a sacrificial gift. Why should we Cyberliability insurance pays these costs, hires the experts you need, go out and spend more money on insurance when budgets are already strained? and guides you through the process. But, don’t go out and buy the same cyberliability insurance policy that a financial institution or a for-profit Long story short, I really organization needs; you’ll want didn’t see the need for buying something that will help cover the cyberliability insurance … but costs to hire the experts for you. Yes, the pastor challenged me. As his In one case, a church’s HR director clicked on a link there is a chance attorneys might partner in ministry, he asked sue you for damages — but the that gave a hacker access to all her employee data. me to really get a good grasp on insurance that every church needs the topic. It cost $15,000 just to investigate the extent of the covers the cost to respond, research So, I committed that 2016 and repair the damage to your damage … [and] repairs and response will run would be the year that I would computer systems. get a better understanding of the According to the recent Cost of another $25,000, at least. risks, how churches can protect Data Breach Study by IBM Security themselves through training, and [www-03.ibm.com/security/datawhat church cyber insurance is breach], there are more than 91 all about. I sat through conferences on cyberliability, subscribed to cyber million security events every year. The likelihood that your ministry is theft alerts, read all the emails and blogs on the topic, and even traveled to next, isn’t too far-fetched. Lloyds of London (the birthplace of insurance) to really understand what A cyber breach is more likely than a terrorist attack … but most churches churches need. have security teams. It’s also more likely than a D&O lawsuit — but your When the editors at Church Executive asked me to write these three church probably has D&O coverage. articles, I thought: Here’s my chance to shout from the mountaintops and be a We are seeing more than one church cyber breach every month. In one church cyberliability ‘evangelist’! case, a church’s HR director clicked on a link that gave a hacker access to What it all comes down to is this … all her employee data. It cost $15,000 simply to investigate the extent of the damage — and that’s just the beginning. Repairs and response will run The threat is real — but not in the way you might think another $25,000, at least. In the event that your church suffers a breach, you probably aren’t going The biggest thing I’m learning about cyberliability is that it’s a to get hit with a major lawsuit from the congregants. This is what happens growing problem. You’ll need to keep up on the topic, train your ministry to the ‘big guys.’ There are attorneys out there who are setting up class teams on how to prevent it from happening, and have an insurance action lawsuits following a breach. Who wins in these situations? Most partner who will help you should it happen at your church. A good likely, the attorneys. place to start — with free resources for training your employees — is So, what is going to happen to your church? www.churchcyberliability.com. • You will be distracted from your ministry. (And yes, since I started writing this, I have found a virus on • You will spend hundreds of hours and thousands of dollars — that my computer.) should be spent on ministry! — doing damage control, conducting a forensic investigation, notifying everyone about what happened, paying Charlie Cutler is the Managing Partner of ChurchWest Insurance Services in Redlands, CA www.churchwest.com, an insurance agency for credit checks, and figuring out what went wrong.
Last December, I was meeting with an executive pastor when we discussed the issue of cyberliability. At the time, I was hearing all kinds of warnings in the media and in the insurance industry about the threat of cyberliability — but I didn’t really buy all the hype.
Responding to a cyber breach It doesn’t matter if you’ve outsourced financial processing or if you 12
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that specializes in insuring churches. ChurchWest currently insures more than 3,000 faith-based organizations.
churchexecutive.com
Financing projects — borrowing vs. capital campaign By Kari Boyce
Few topics elicit a stronger response than money — how we get it and how we use it. Understandably, it’s also a tough subject when it comes to a church or ministry project. If your ministry is considering putting a new wing on the church, or building a gym, or renovating the sanctuary, how do you finance the project? • Borrow? • Collect pledges through a capital campaign? • Set aside savings as part of regular Download our Lender Comparison Worksheet at thriventchurchloans.com/ChurchLoans/ expense allocation? ToolsResources.jsf
In many cases, the wise answer is a mix of all three. There isn’t a simple, one-size-fits-all answer to these questions. Each ministry will need to make this decision based on its unique situation and outlook. So, what considerations will help your team find the best answer for your own unique project? Borrowing to fund a project Most ministries will acquire some level of debt to complete a major project. The financial health and circumstances of your ministry will influence the amount of debt available, and at what cost. Your church’s perspectives on borrowing, governance, and ministry vision will also be key considerations when working with lenders. Other considerations include: •W ill debt be repaid through operating budget, savings or capital campaign? •H ow do you compare varying loan products, such as fixed interest versus resetting rates, balloon mortgage versus fully amortized or differing loan covenants? [ For details, read our previous series installment, Refinancing — decoding the process: churchexecutive.com/ archives/church-financial-planning] • A re there other parties that need to be aware of the process, such as your congregation, a governing body within your denomination, or a current lender? • How much would you qualify to borrow? • What monthly payment will you make on a loan? • How will the additional debt expense impact ministry budgets? • What percentage of equity do we want in the project? Will a lender require more equity? • What collateral will be used for the loan? Saving to fund a project Some level of saving to fund a project is always wise. You might decide to save some amount to fund the equity or down-payment portion of a project, or set aside operating funds over a long period of time to fund all or part of the project. While saving minimizes the amount of financing needed and the interest you pay on a loan, it might increase your cost over the long term. Labor, materials and expertise are variables that can churchexecutive.com
have significant swings in actual cost over time. • Do you have savings set aside that can be used for this purpose (designated for this specific project or unrestricted)? • Opportunity cost to ministry is also a factor. Is the time to raise or save the full amount an acceptable delay versus the ministry that could happen once the project is completed? • Should you plan specific fundraising activities or congregational appeals? Did you know one of Jesus’ many parables was about saving and planning for a project? Check out Luke 14:28 – 30. Capital campaign Conducting a capital campaign conjures a range of reactions. You might have had a negative experience with hard sell tactics in the past, or you might have seen a campaign bring in astounding resources for ministry and generously bless both the givers and the ministry. Again, the unique culture of your ministry needs to be considered as you plan a campaign. • Do you hire a consultant? • I f so, how do you find a consultant that resonates with the vibe of your ministry and has a history of successful campaigns? • Do you have internal expertise and experience to do a campaign well? • W hat ministries can you ask for a referral to a successful campaign consultant? Did you know the first recorded capital campaign was conducted by King David of the Bible? Check out 1Chronicles28 [http:// tinyurl.com/1Chronicles28] and 1Chronicles29 [http://tinyurl. com/1Chronicles29]. The Bible has more to say about money and possessions than any other topic — including heaven and hell, combined. There are more than 2,350 verses that reference how we handle this precious commodity. Kari Boyce leads Business Development at Thrivent Financial for Church & Institution Financing (Church Loans) [https://www.thriventchurchloans.com] in Minneapolis, MN. Church Loans currently serves more than 1,400 Christian churches across the United States.
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Streaming Made Simple
What’s new in streaming for the Christmas season? By Andrew Ng If you want to extend the reach of your Christmas worship services, pageants, concerts — and even outreach efforts — then consider all the different ways video streaming can help. Here, Andrew Ng, Director of Marketing at Irvine, CA-based Teradek, explains the ins and outs … in plain English.
The Cube 655 is Teradek’s latest innovation for professional encoding, whether it be for live streaming or point to point applications.
Tip #1: Think outside the church walls — stream to multiple online platforms. “Something a lot of churches are really interested in doing (and seeing a lot of better engagement with) is streaming to Facebook Live, online campuses, YouTube Live, Periscope — all kinds of social media,” Ng says. “Church tech ministers want to go to multiple platforms at the same time so the congregation can see the live stream, or whatever is going on in the service, wherever they might be.” Facebook Live is, of course, viewable on smartphones and desktop. It promotes interactivity with a “live” comments feature, which basically acts as a chat function. YouTube Live is another popular live streaming destination that is not only viewable on smartphones and desktop, but also can be accessed via your Roku or Apple TV devices at home. Periscope — a live streaming app specializing in mass reach via smartphone — is now able to receive camera signals from third-party streaming devices rather than limited to an iPhone or Android device. “This goes to show the variety of ways people are consuming content and how important it is for an organization to be able to reach all these destinations,” Ng points out. Fortunately, products like Teradek’s VidiU Pro, Cube and Core have now made that content much more accessible. If streaming to multiple destinations and platforms seems like the way to go for your church, Teradek [ www.teradek.com ] offers a wide range of products to make it happen. As Ng explains, an encoder will be necessary. If your church doesn’t already have one, he says, the company’s Cube and VidiU Pro encoders are popular options. There’s also the Live:Air app, which a church can easily mobilize. Whether you’re using Live:Air with an iPad or transmitting a camera or switcher feed using a Teradek encoder, a product called Core [ http:// teradek.com/pages/core-home ], a subscription-supported, cloud-based encoder management and routing platform allows organizations to take their streaming game to the next level. “The thing about Core is, even though a lot of big, professional broadcasts use it, it’s really simple to use,” Ng points out. “And that’s the whole point, really: it’s drag-and-drop.” 14
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With this configuration in place, a church can stream content once and, using Teradek’s cloud service, distribute it everywhere it wants to. Tip #2: Gather people together, wherever: FIFA World Cup soccer fans are familiar with the power of being able to pipe the event into large gathering spaces — to giant screens in town squares across Europe. It builds fellowship. This same technology can be mobilized for a church’s big holiday events. For his part, Ng recalls a yearly Mass piped into the town center while he was attending UC Irvine. “It felt very special and created a unique communal experience.” In this vein, another idea came to Ng recently, after working with Jason Lee, Online Campus Pastor and IT Director of Northwoods Community Church in Peoria, IL. The church was conducting baptisms at a nearby lake, but it was able to send the live feed from the lake to the worship service, as well as to the online campus. A unique angle like this is great for a live audience as it has great potential for generating engagement and entertainment. Outreach efforts at Christmastime are another great opportunity. If a group is working at a community kitchen, or any other local outreach, streaming that experience to the rest of the church — whether they’re in the worship center, online or gathered elsewhere — is only an Internet connection away. International relief efforts (in Haiti, for instance) can also be shared from across the world, as long as the church group abroad has Web-enabled cellular service. “As long as you have internet and destinations for delivery, whether it be mobile, TV sets, on the web, or all of the above, our products have a way to make it happen,” Ng says. Tip #3: Consider new “perspectives” on streaming. One emerging trend Ng is seeing in the streaming market — and would be great for churches — is the 360-degree broadcast. It allows you to capture a 360-degree view of an event, creating an extremely immersive experience. Ng explains: “For example, the most popular streaming destination is YouTube 360. When you stream to YouTube Live, you can actually access it on your phone. And, if you have a Samsung Galaxy phone, with a Gear VR [virtual reality] wireless headset, you can put it on and just look around. It feels like you’re in the space.” This requires a 360-degree live-streaming device, which Teradek offers in its Sphere family of products. [http://teradek.com/collections/ sphere-family]. As an example of how this technology could be applied, Ng pictures a choir assembled around the camera. With this approach, viewers — using their phones — could feel like the choir is surrounding them, and they’re in the middle of the performance. “It’s a new, experiential way of engaging the audience,” he adds. “A different kind of medium.” Tip #4: Don’t forget to tell the church! Of course, the most innovative live-streaming efforts in the world won’t mean much if church members don’t know they’re happening. To this point, consider developing the equivalent of a broadcast schedule for the holiday season. (“Like a TV Guide, essentially.”) Even better, Ng encourages churches with apps to mobilize these masscommunication tools to spread the word. “Imagine if you were able to ping your audience and say, ‘Hey this event is going on right now!’” he says. “That’s super convenient, because it shows up on your phone. “Your email is one thing,” he adds. “But, you’ve got to go to your computer, open your email, and then click the link. With an app, you’re just once click away to your live stream.” Andrew Ng is Director of Marketing at Teradek in Irvine, CA. [ www.teradek.com ] churchexecutive.com
5 SIGNS YOU MIGHT BE DUE FOR AN INSURANCE CHECKUP By Eric Spacek, JD, ARM
If you filed a church insurance claim tomorrow, would your policy protect your church from loss and liability? If you’re not sure — or if the answer is “no” — it’s time to schedule a coverage review with your insurance agent or broker. “When churches find themselves paying for uncovered claims out of pocket, ministry suffers,” says David Lehmann, sales manager at Lutheran Trust / Church Asset Management, a subsidiary of GuideOne Insurance, in St. Charles, MO. “A church may have to make the difficult decision to not go on a certain mission trip or it may not be able to afford the additional youth pastor. That’s why it’s important to protect your ministry with proper insurance.” During an insurance checkup, you and your agent will assess the church’s needs, determine if your current limits are accurate and make necessary adjustments so you’re not underinsured — nor overpaying for coverage you don’t need. You should also revisit the church’s replacement cost value (the cost of repairing or rebuilding the facility today) and content value for everything inside the church so you are protected in the event of a fire, storm or other disaster. It’s a good idea to review your church’s policy annually, and you should also contact your agent in these instances: #1: Your leadership changes. “If your church has new board members, it may be a good time to look at your insurance policy because philosophies with such things as deductibles may change,” Lehmann says. #2: You move or renovate. Remodeling, adding space or building a brand-new facility can create coverage gaps because of the increase in property value. If a renovation or new construction is in your plans, contact your insurance agent or broker to secure proper coverage. Then, when the church improvement project is complete, visit with your agent to determine the updated structure’s replacement cost value. Be prepared to share square footage, the type of materials used, the building’s age, architectural features and other relevant facility details. #3: You make a big purchase. The items inside your church matter, too. If you buy new audiovisual or other high-value equipment, make sure the values of these items are factored into your building and business personal property coverage and that your limits are adjusted accordingly. You might also want to secure an appraisal for particularly high-value items to make sure that you are appropriately covered. churchexecutive.com
#4: You have added new ministries. New programs — like international mission trips, a fall festival or a community outreach project — can increase liability exposure and may require additional coverages, such as business auto or travel protection. “While there is coverage built in for these things, special attention is needed occasionally,” Lehmann says. #5: You are concerned about current events. It’s a good idea to stay updated on evolving risks, like cyber security and employment lawsuits, to determine if it makes financial sense to absorb them through deductibles or risk management. For instance, identity fraud and theft stemming from data breaches continues to be a growing concern to churches of all sizes. So, you might consider supplementing your policy with cyber liability coverage, which covers expenses you would incur if a privacy breach occurred, like credit monitoring services and notification costs. And, since employment disputes are more common than in the past, consider an employment coverage add-on to protect against allegations of discrimination, sexual harassment and wrongful termination. While you discuss your coverage questions and concerns with your church insurance specialist, also ask about the risk management resources offered by the insurance company — such as inspection checklists, fire-prevention pointers and background checks — so you can enhance your church’s safety ministry, too. A proactive approach toward risk management, paired with smart coverage and a dedicated agent, goes a long way in protecting your church and bringing peace of mind. Eric Spacek, JD, ARM is the Director of Risk Management and Loss Control at GuideOne Insurance [ www.guideone.com ] in West Des Moines, IA. Before joining GuideOne, he served as Minister of Operations for a large Methodist church in Raleigh, NC, and was a liability litigation trial attorney in Washington, D.C. November / December 2016 • CHURCH EXECUTIVE
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Finance & Lending Trends
Satellite expansion from the lender’s view By Dan Mikes
I
n recent years, the launching of congregational outposts — also known as satellite locations — has become a popular strategy for relieving the pressure of growing attendance on a “main site,” or for stretching the borders of the religious institution’s tent by expanding into a burgeoning suburban community.
retain ownership of the mortgaged facility. If a majority of contributions are collected at leased facilities, the lender might fear the borrower could easily walk away from the mortgaged property. In my experience, lenders will be more likely to support your satellite expansion plan if they know 70 percent or more of your contributions are being collected at owned facilities which are part of the lender’s collateral pool.
Historically, religious institutions tended to try to grow at a single location by implementing a multi-phase masterplan whereby early growth was housed in one or more structures in a single location which could later be converted to classrooms or offices after congregational growth leveled off and better defined the needed size of the final structure: the worship center. Lenders have grown comfortable, however, with the multi-location approach, due, in part, to its scalability. From a risk manager’s perspective, if the religious institutions were to face financial challenges due to either an economic downturn or a leadership transition, having one large mortgage payment presents fewer options than two smaller ones. A decline in contributions could be offset by the closure of a satellite location. Nevertheless, while lenders are generally comfortable with the satellite trend, there are several dos-and-don’ts which your religious institutions leadership team should be aware of in order to secure the long-term support of a financial partner.
Another recent trend is satellite expansion by way of merger. Since the economic downturn, many larger financially stable congregations have been approached by smaller faltering ministries in need of rescue. This can present a win-win opportunity. The merger is often effected by rolling the assets of one entity into the other and then dissolving the smaller corporate entity. In other instances, two corporate entities continue under a common name and pulpit leadership. In either case, if the ministry which you are taking under your wing has debt, be sure to discuss your plan with your lender prior to moving forward with the merger. Your attorney might tell you that retaining separate corporate entities will shield the parent organization from the liabilities of the smaller ministry. While this might be legally correct, your lender might have other concerns. Regardless of the corporate distinctions, the lender realizes that the surrounding communities will view the two organizations as one with a single spiritual leader. Consequently, if the smaller congregation struggles with its debt, the parent entity might be compelled to assume the burden of financial subsidy in order to avoid reputation risk. In a worst-case scenario, if the satellite church defaults and another lender forecloses on the building, the local media will likely associate your good name with the foreclosure. Should this occur, your lender will be concerned about your congregation’s perception of the event and a potential decline in your congregation’s confidence in your leadership, along with their financial contributions. In spite of your best efforts to explain the technical separation between the two legal entities, some percentage of your donors might not understand the nuances and might be reluctant to “throw good money after bad.”
When adding a new worship location, the most common and fiscally prudent approach is to begin by leasing a facility. Starting with a relatively smaller space enables the parent organization to limit its startup costs and potential impact to consolidated cash flow. The lease duration should also be short enough to accommodate a subsequent relocation if growth should warrant, yet long enough to justify the dollar cost of tenant improvements required for ministry use. There are no set rules in this regard; however, lenders are unlikely to be receptive to a plan to make a multimillion-dollar investment in tenant improvements to a facility with a short-term (12- to 24-month) lease. Depending upon the age and stability of the satellite congregation, the inclusion of an option to purchase might mitigate this concern. Once the satellite matures to a state of steady worship attendance and contributions, the lender will likely entertain a request to purchase or build a facility for the satellite congregation. Conversely, you can expect that your lender will be reluctant to make a $5 million loan to buy or build a facility for a startup satellite at a location where you have no track record of attendance. Operating multiple leased satellite locations in various stages of maturity is not uncommon; however, the ratio of attendance at leased locations versus owned sites can cause your lender concern. If your religious institution has one mortgaged location and five leased locations, and only 50 percent of your total institution’s revenue is being generated at the lender’s collateral site, the lender might feel that (depending upon the duration of the leases) the religious institution’s consolidated cash flow is excessively vulnerable to facilities which it does not control. Also, in a worst-case default and potential foreclosure scenario, the lender might wonder how hard the religious institution will work to 16
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Satellite ministry expansion is clearly a trend which is gathering momentum. Experienced lenders with a track record of funding religious institutions can sit down with your leadership team and define the dosand-don’ts of satellite expansion. Broaching this topic early with your lender can only be beneficial to your religious institution and help ensure a rewarding relationship with your financial partner. Dan Mikes is Executive Vice President and National Manager of the Religious Institution Division, Bank of the West, San Ramon, CA.[ bankofthewest.com ] The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Bank of the West. This article originally appeared in inSight, a professional journal of The Church Network. Reprinted with permission. ©2014 The Church Network (www.thechurchnetwork.com / (800) 898-8085).
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Measuring ministry activities By Rebecca M. DaVee, CPA Numbers tell the story, always. Whether you’re looking backwards (historical perspective or “what was”), or whether you can project operations forward, ministry leaders use data to analyze “what if.” Churches operate from one week to the next, resulting in 52 weekly cycles. Whether your weekend service begins on Friday, Saturday or Sunday, cash comes in (contributions) and cash goes out (ministry expenses). Trends develop over time, and ministry leaders can effectively navigate risks and opportunities by using and understanding Key Performance Indicators (KPIs). Common Scenario: Mega church has four locations with multiple services each weekend. Forward-thinking ministry leaders monitor donations: 1) Date week over week 2) Location month over month 3) Activity year over year We have created 6 operating metrics that result in effective: 1) Donor development 2) Fundraising efforts 3) Resource allocation 4) Personnel costs 5) Facility management 6) Short-term cash management KPI #1: Effective Donor Development By using the following formula, churches monitor donations and how certain criteria increase or decrease the average donation: Total Contributions / # of Donors = Average Donation by Donor This computation can be performed annually or by specific events (example: Easter), by date, by location, by service. Imagine how forwardthinking leaders could use the following data: KPI #2: Effective Fundraising Activities To evaluate fundraising activities compare the contributions raised with total fundraising costs using the following formula: Total contributions / Total Fundraising Expenses = Cost of raising $1 of donations The lower the cost of raising funds indicates effective fundraising activities (example: $8 versus $2.50). It is important to accumulate all fundraising costs (direct and indirect). Anytime a church asks for support (written or verbal ask) — solicitation occurs. Churches should capitalize and duplicate effective fundraising activities. KPI #3: Effective Resource Allocation Churches raise support for ministry activities and are grouped as follows: 1) Program Services = Church activities (examples: evangelism, worship, education, missions) 2) Member Development = Orientation, training 3) Support Services = General and administrative costs 4) Fundraising Activities = Direct and indirect costs used to raise funds Visualize your annual budget. How much of your resources are used to support church activities versus general and administrative costs? 18
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Program Services Evangelism Worship Education Missions and outreach Member Development General and Administrative Fundraising Activities Total Budgeted Expenses
$150,000 100,000 100,000 300,000 650,000 75,000 200,000 75,000 $1,000,000
(65%) (7.5%) (20%) (7.5%) (100%)
I encourage you to review your budget and see how resources are allocated between program and supporting services (examples: member development, general and administrative and fundraising activities). Should more resources be focused on program services? Should 80% be allocated to program activities versus 60%? Ask your donors. KPI #4: Effective Personnel Analysis How much of your resources are invested in personnel? Your personnel are responsible for fostering your church’s tax-exempt activities. Personnel are classified into three groups: paid staff, independent contractors, and volunteers. How much of your budget is invested in personnel? Analyze your costs based on the following formula: Total compensation costs / Total expenses = % of budget invested in personnel Total compensation costs / # of FTEs = average employee compensation KPI #5: Effective Facility Management How much of your budget is invested in your facilities? Total occupancy costs / Total expenses = % of Operations to maintain bricks and mortar What are your occupancy costs by square foot of common space? Total occupancy costs / Total square feet of common (usable) space = Cost per square foot How much of your resources are dedicated to replacing your property, plant and equipment? Replacement costs can be defined as the annual cost of depreciation (multiplied by the annual cost of inflation). Even though depreciation is a non-cash expense, it is the amortized cost of the asset. It’s important to use this expense to fund future replacement costs. As part of your year-end closing procedures, consider creating a board-designated replacement reserve as part of the church’s unrestricted net assets. KPI #6: Effective Short-Term Cash Management Our last operational metric calculates short-term cash flow requirements. Unrestricted cash / Annual cash disbursements = # of months available to fund operations Best practices indicate that churches should maintain three to six months of unrestricted cash to fund operating expenses. By tracking this metric, year over year, cash management trends are identified and can be effectively managed. This metric allows the church to create a reserve policy for short-term and long-term cash flow requirements. This article is the second in a four-part series that explores “10 Church Metrics that Drive Sustainability.” Our third article will explore metrics that define effective use of resources.
Rebecca DaVee is a partner with Salmon Sims Thomas & Associates [ www.sstcpa.com ]. She has been working with churches, ministries, televangelists and other tax-exempt organizations for more than 30 years.
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Options are key to making building decisions By Jim Peckham Decisions concerning building new facilities — or expanding existing ones — are among the most important issue any church leader will have to consider. As experienced decision-makers at any church have learned, it is concern beyond funding; building decisions must consider questions such as: • Is the space large enough to handle some reasonable growth? • Is the long-term cost of ownership manageable? • Does the appearance of the building fit with the image that the church wants to project? Weighing the options and making informed choices is the key to building a facility that meets the needs of the church, both initially and for years to come.
Sizing up the decision Many factors can influence what size building will be needed. The usual starting points are proposed use of the new space, number of active members, and outlook for growth. Also, keep in mind that building codes can impact the amount of space needed to handle occupancy. Along with the space requirements, building codes will identify other essential issues that must be considered as building plans are being developed. Issues including lavatories required, emergency exits, or fire suppression systems needed are all important elements to include in the early stages of building planning and budgeting. Architects, interior designers and contractors can be helpful in making an analysis to determine needs more accurately.
As a starting point, this is one of the key decisions to be made. Generally speaking, traditional structures will typically include brick and stone wail facades, high roof slopes, and elements such as bell towers and steeples. Contemporary churches might use some traditional elements, but more frequently include wall options with glass and metal. Roof slopes are usually lower, but with more elevations. Traditional interior design will include more columns with more formal space layout, while contemporary churches will have more open floor plans, movable walls and auditorium-style seating. These differences can have a major impact on structural cost as well as heating and airconditioning design. Looking long-term Along with the important decisions about size, shape and appearance for a new building, decision-makers must consider long-term issues of ownership. These long-term issues include maintenance, cost of repair and remodel, and the ongoing cost for utilities. In today’s construction market, there are several approaches to addressing the long-term issues. Starting at “the top,” roofing is historically the most expensive maintenance feature on any building. Today, steel roof panels offer a combination of benefits, including excellent weather protection, long-term finish, low maintenance and a wide selection of architectural colors and shapes. Further, these roofs can be insulated to provide excellent thermal performance. Building solutions from a single source When sizing up the project to making decisions about the look, churches throughout the United States and Canada are finding many of the answers for their building concerns with providers that specialize in providing building solutions using optimized engineering and custom-manufactured steel framing. This enables that provider to meet the design requirements for any church building, whether traditional or contemporary. To that end, our company has vast experience in constructing energy-efficient worship facilities, family life centers or schools of varying sizes and scopes. Jim Peckham is Manager of Marketing for Memphis-based Varco Pruden Buildings [ www.vp.com ], a division of BlueScope Buildings North America, Inc. Varco Pruden markets its products through a network of more than 1,000 authorized builders within the United States and Canada.
Choosing the right look Churches are considered to be important assets in any community. Often, churches serve as landmarks for cities and neighborhoods. To church members, it’s even more personal. Churches are places where lifetime events take place — from baptisms, to weddings, to final memorials. Important holidays, such as Easter and Christmas, are celebrated and shared with family and friends, often for generations. The importance cannot be overlooked. When planning the look of a new facility, several aspects must be considered. For example: Is the look of the new facility going to be traditional or contemporary? 20
CHURCH EXECUTIVE • November / December 2016
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November / December 2016 • CHURCH EXECUTIVE 3/1/16 5:36 PM 21
Year-end financial checklist for pastors By Colin Nass, CFP®, RICP®
For most churches, the fall season means an increase in ministry projects with activities throughout the church in full swing. The calendar is packed with observances, celebrations and community outreach events. You might not be thinking about your financial plan, but now is the time to consider your goals for the coming year and reflect back on the past year. It’s the perfect opportunity to create a year-end financial “to-do” list. Here’s a list of some of the things that you should do before the end of 2016. ✔ Meet with your financial advisor. Make it a priority and prepare for the meeting by creating a list of topics to discuss such as spending, saving and investment goals. Ask questions, review your year-end strategies, and set goals for the coming year. ✔ Review and rebalance your portfolio. Take a look at how your portfolio assets are currently allocated. Are your asset allocations in line with your investment strategy, goals and risk tolerance? Changes in the market might cause assets to shift, and you want to ensure that your assets are allocated so that they will maximize your investment strategy and benefit your overall portfolio. Rebalancing your portfolio lets you keep your risk level in check. ✔ Review the housing allowance. This important tax benefit must be designated prior to the year in which it will apply. Be sure that your church or trustee board officially designates a housing allowance for 2017 before the year ends. Ordained ministers who own or rent their home are entitled to receive the housing allowance. The federal tax code provides clergy with a tax exemption on the portion of 22
CHURCH EXECUTIVE • November / December 2016
their compensation that is designated as a housing allowance. However, it is considered taxable income for Social Security and Medicare. Visit the MMBB website — www.mmbb.org/our-plans-services/housingallowance-advantage — for details regarding the Housing Allowance. ✔ Maximize your retirement contributions. You should take a look at your retirement accounts now. If you have not maximized your contribution to your retirement account, consider doing so to lower your taxable income. For the 2016 tax year, the IRS allows employees to contribute up to $18,000 to their 401K and 403(b) retirement plans. Those over age 50 can make an additional catch-up contribution of $6,000. Keep in mind that any contributions you make within IRS allowable amounts are tax deferred until after you retire or begin taking withdrawals. ✔ Review your yearly budget. The end of the year is the perfect time to review your budget. Are you on track? Did you overspend? Did you have to dip into your emergency fund? Reviewing your annual spending will help you make your new budget for the coming year.
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✔ Plan charitable donations. Charitable donations made to qualified organizations might help to lower your tax bill. You must make your charitable contributions by December 31, and they must be itemized if you are claiming these contributions as a tax deduction. ✔ Spend what’s left in your FSA. Many health insurance plans now include a Flexible Spending Account (FSA). If you have an FSA, it might be wise to check your insurance company’s policy as it might have changed in recent years. In the past, you had to spend everything before year-end. Otherwise, you would lose it. Now, employers can offer to rollover up to $500 or offer a grace period. Make sure that you understand your insurance company’s policy so that you don’t end up losing money you could have spent. ✔ Evaluate your insurance policies. Whether it’s auto, health or life insurance — review your policies annually to make sure that you are receiving the coverage and the service that you need. Year-end is also open enrollment period
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for employer insurance coverage. Pay close attention to changes in health insurance benefits. Many employers offer several plans that might have different costs and benefits, so it’s important to review all your options. ✔ Update your beneficiary information. Is your beneficiary information up to date and correct? Make sure that you update your beneficiary information following any major life events — such as a marriage, birth or death — and that you haven’t forgotten to name a beneficiary on any of your accounts. ✔ Prepare for 2017. Gather financial documents you’ll need, and make sure that everything is up to date, especially if you have had a change in 2016. Something as simple as making sure your address is updated can save you a lot of headaches later. Colin Nass, CFP ®, RICP ® is the Senior Wealth Manager in the Financial Planning Division at MMBB Financial Services [ www.mmbb.org ]. He uses his 20+ years of financial planning and investment experience to assist members in achieving their financial goals.
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What you should know before recruiting a church intern By David O. Middlebrook Many churches look to unpaid internships to provide muchdesired experience in ministry-related activities for students looking to obtain not only ministry skills and experience, but also suitable skills for a secular workforce. However, there have been recent concerns that some unpaid internships violate state and / or federal law. Employment law experts around the country agree that this is the new hot topic for the Department of Labor. In fact, some states have increased their investigation of this issue, and other states are looking to follow; therefore, it is appropriate to first consider when an intern must be paid and when it is permissible to classify and treat an intern as an unpaid intern. So, how do we know who qualifies as an unpaid intern, rather than an employee? A 1947 United States’ Supreme Court case, Walling v. Portland Terminal Co., 330 U.S. 148 (1947), and a subsequent U. S. Department of Labor issuance of a six-part test help to determine whether an individual is a trainee, or unpaid intern: 24
CHURCH EXECUTIVE • November / December 2016
• The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school; • The training is for the benefit of the interns; • The interns do not displace regular employees, but they do work under regular employees’ close supervision; • The employer that provides the training derives no immediate advantage from the activities of the interns and, on occasion, the employer’s operations may actually be impeded; • The interns are not necessarily entitled to a job at the conclusion of the training period; and • The employer and the interns understand that the interns are not entitled to wages for the time spent training. (Tuition assistance and nominal stipends for students are not considered wages.) This six-part test can be helpful guidance for determining if a worker is truly an unpaid intern. It is important to understand that in some cases, it might not be necessary for all six of the above factors to be satisfied for a worker to be classified as an unpaid intern. Any questions on this factorbased test should be directed to your legal counsel.
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The Department of Labor focuses on two main factors: training and education. Meaning, that the internship must be primarily for the benefit of the intern and not the employer. The more directly related an intern’s tasks are to those that might otherwise be performed by staff, the more likely that the intern will be considered an “employee” under the Fair Labor Standards Act and entitled to compensation. When is an intern not an intern? So, how do we know when an intern is not really an intern, but an employee? The Department of Labor has named some examples of when an intern will not be considered an intern; these are otherwise known as the “Unpaid Intern Prohibited Factors.” The presence of any one of these factors means the intern should be classified as an employee: •T he employer uses the intern as a substitute for regular workers or as a supplement to its current workforce; or • But-for the intern, the employer would have hired additional employees or asked its existing staff to work additional hours; or •T he intern is engaged in the employer’s routine operations and / or the employer is dependent upon the intern’s work. Note: If you use an intern for seasonal work — such as summer camps, or holiday services — they may be called interns, but they should be paid at least minimum wage as they are being used to augment your current workforce. Academic credit Internships that are part of a formal academic experience (for example, the intern receives formal academic credit from an educational institution for the internship) are usually considered Internship by the Department of Labor. This can be very helpful for those churches and ministries that have college and seminary students serving as interns and the students’ degree program requires internship experience. churchexecutive.com
Because the tests outlined above are very fact-specific, your church should always seek legal counsel when developing its unpaid internship program. David O. Middlebrook is a founding shareholder of Anthony & Middlebrook and the Church Law Group [ www.amlawteam.com ] in Grapevine, TX. His clients include high-profile charitable and religious organizations, both domestic and international. The materials in this article are provided for informational purposes only and do not constitute legal advice. This article is intended, but not promised or guaranteed to be current, complete or up-to-date and should in no way be taken as an indication of future results. Transmission of the information in this article is not intended to create — and the receipt does not constitute — an attorney-client relationship between sender and receiver. November / December 2016 • CHURCH EXECUTIVE
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How mobile giving cuts time, heartache out of your staff’s week The members of your church’s administrative staff have big jobs — impossibly big jobs. Few church staffers have enough time to do all that’s on their plates. There’s not enough hours in the week, not enough energy in their tanks. A few years back, Thom Rainer — now president of LifeWay Christian Resources — gave 12 deacons at a church he pastored a survey with a list of different pastoral duties and a spot for them to mark down what they thought the minimum time a pastor should spend on those tasks every week. When he tabulated all the results, it added up to 114 hours. That’s 19 hours a day for six days a week — enough to kill anyone. Your pastor can’t do everything on his plate. But let’s be clear: Your staff can’t either.
Here are six ways it does that. #1: All your giving in one place: While not everyone will give to your church digitally, you can expect the numbers of donations via mobile phone to steadily climb. Our virtual terminal [ http:// echurchgiving.com ] allows you to enter cash and check donations into the same ecosystem where your online gifts go. You can even enter a check by using a check scanner to scan it. #2: Weekly summary reports: Understanding your church’s givers can help you make the most of your relationship with them. Our own platform delivers advanced giving insights to your email inbox every Monday. You’ll find out when during the week your congregation gave, how many new givers came on board, the average gift, and more. You’ll also get charts to go along with these stats. No need to run your own reports; the data you need will be sent to you. #3: Annual giving statements: Few tasks are more cumbersome, time-consuming — and critical — for your staff at the end of the year than preparing giving statements. Our platform simplifies the process by putting everything you need in one place. One push of a button will generate IRS-compliant giving statements. All the giving processed through Pushpay or in the virtual terminal will be included on the statements. #4: Create-your-own giving funds: Most churches have a variety of funds where giving goes each week — from mission funds, to building funds, to miscellaneous funds. Using our dashboard, church administrators can create and manage these funds on their own. This gives your church the f lexibility of launching a new fund in minutes — just in time for your weekend services.
Frankly, that’s good news. If your team could do everything that comes its way, God’s help would be unnecessary. The Bible reminds us over and over again to rest in the reality that “The Lord is my Helper.” (Hebrews 13:6) God is willing and able to multiply our time and empower our ministry. It’s what He does. It’s what we need. God provides His help for overworked church leaders in a number of ways. Sometimes, it’s miraculous. He gives us a key volunteer (or volunteers) at just the right time. He gives us an important insight out of nowhere about how to be more efficient or productive. But sometimes, God provides through technology — and it’s just as miraculous. Take, as an example, all the time your church staff spends dealing with giving — from reconciling bank statements, to analyzing your giving, to preparing end-of-year giving statements. It adds up to many, many staff hours every week — more than those you can hire can do. But, it doesn’t have to be like that. A strong mobile giving solution can cut both hours and stress out of your staff’s week. It can feel like a miracle. 26
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#5: Smart features: To maximize generosity, when givers’ credit cards expire, they get notified to change their credit card info. When givers make the same gift several times in row, they are automatically introduced to recurring giving. Automatic built-in tracking means your staff can more easily discern changes in your church’s giving patterns. #6: Batch reconciliation: Your staff spends a lot of time each week ensuring that the donations / gifts that are made to your congregation are allocated correctly and directed to the correct source. It’s often tedious work of alternating between multiple systems. Your staff can do it in minutes through our proprietary software. With Pushpay, your giving platforms can “talk with each other.” So, no matter how people give, the info will converse seamlessly. Your staff’s time matters. Make the most of it. Written by the echurch content team [ http://echurchgiving.com ]. echurch is the principal supplier of Pushpay [ https://pushpay.com ] to churches.
churchexecutive.com
Great dividers By Rich Maas Of all the facility tools at a church’s disposal, portable room dividers are — by design — among the most adaptable. They can transform spaces without the expense and commitment of traditional renovation or construction.
(NOTE: We really appreciate this level of detail, provided right off the bat. It tells us the church has done its homework, and it lets us know exactly what they’re trying to accomplish. A plan might still go through several iterations before the ideal solution emerges, but it gives our team a head start.) In this case, we were able to meet the church’s needs with eight freestanding dividers, each at 6’ high and in various lengths. The total investment was about $11,000, and — as some churches prefer to do — they bought just a couple of dividers first to make sure they worked in the space. Three months later, the church purchased the rest. As you can see from the diagram, Allegheny really maximized the “spaces between” — those, too, function as classroom space.
Most of our customers order one to two dividers, which roughly equates to an investment of $1,400 or $2,800. As detailed herein, more complex needs require more complex solutions. Our planning team can provide 3-D sketches based on your specific needs. We’ve found that most churches have one of three larger goals, or uses, in mind when they invest in portable room dividers.
At New Hope Baptist Church in Fayetteville, GA, it took 24 dividers to divide a huge space into six classrooms.
St. Paulinus Parish in Dunbar, NE, wanted to divide its church basement into several classroom spaces.
USE #1: Turn lesser-used space into education space. St. Paulinus Parish in Dunbar, NE, discovered Screenflex with a Google search. With a phone call, church leaders said they needed to divide the church basement into four or five classrooms. Next, emails and phone calls were volleyed between the church and our company. The solution that emerged: seven divider units — six at 6’8” high x 24’ long, and one at 16’ long. Six of the units featured markerboards. In the end, leaders at St. Paulinus actually got even more than they bargained for: six classrooms. The total investment was just over $10,000. In addition (as referenced below under “Consider the possibilities”), the dividers will have several “bonus” uses over their lifespan of many years.
At Allegheny Center Alliance Church in Pittsburgh, the 74-foot-long x 45-foot-wide gym was divided up into six small group spaces, maximizing the “spaces between.”
USE #2: Transform your gym into educational space. Allegheny Center Alliance Church in Pittsburgh wanted to divide its gym into six small group rooms. When the church reached out to Screenflex via online contact form, leaders were specific — the gym itself measured 74’ x 45’. The church wanted each room to measure about 14’ x 9’, and the walls could be up to 6’ high, 28
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USE #3: Make big spaces smaller, more personal. New Hope Baptist Church in Fayetteville, GA, had a huge fellowship space that it needed to make far more intimate. Church leaders aimed to divide this large-scale space into six very large, very tall rooms. Amazingly, it took 24 dividers — each standing 8’ high — to make it happen. Two classrooms are extra-large (about 43’ long x 21’ wide), and the other four measure about 20’ x 20’. This gives church leaders the flexibility to host everything from large group gatherings, to smaller, more personal events (baby and bridal showers, for example) in their otherwise intimidatingly large space. The church’s overall investment: a little over $34,000. Consider the possibilities While these three uses are generally the impetus for a church making the investment in room dividers initially, there are quite a few “bonus” uses, as well. • Dividers purchased for Sunday School use very often are found to be useful in weekday child care ministries and evening youth and adult ministries. • Dividers also do double-duty as backdrops for school or church plays. • Many churches — often with schools — serve as polling places during elections. Dividers can be used to create voting booths. • One church I know of uses its dividers to create privacy for nursing mothers. • And, it’s worth noting that First Congregational Church of Rockport (Rockport, MA) — a 2014 Church Executive Good Steward Award winner for Innovative Outreach — has used its dividers to ensure families have a safe, warm place to sleep by creating four separate bedrooms in the fellowship hall. The program also uses the hall’s kitchen to serve its guests dinner and breakfast. Setup takes 60 to 90 minutes and happens after worship services on Sunday mornings. So, as you consider the best use of your church’s financial resources, keep these non-traditional, “outside-the-box” (but important) uses for your dividers in mind. Rich Maas is vice president at Screenflex Portable Room Dividers in Lake Zurich, IL. churchexecutive.com
The best of both worlds: it’s possible! By Amanda Opdycke It’s an exciting time for your church! You are part of a newly formed committee tasked with selecting a seating company to furnish the new church sanctuary. Everyone is eager to begin, but the multi-generational team has different ideas about what type of seating should be selected.
Do you want traditional wood pews or contemporary auditorium seating? How can you lead your church into the dawn of contemporary seating while maintaining the traditional appeal of pews?
On one hand, it is important to ensure everyone entering the sanctuary knows they are in a welcoming and holy space. Traditional wood pews help create this ambiance. On the other hand, you might want to provide opportunities for the community to use the sanctuary outside the worship service, which helps create a space for community events. Here, individual seating is critical. With that in mind, it’s crucial to be observant of how the sanctuary will be used. Will there be weekly or daily worship services, a children’s theatre event, or a concert for the community to enjoy, where tickets might be sold and the seating selection is of paramount importance? It’s essential to select a seating style that meets the unique demands of the worship facility, as well as satisfying the aesthetic needs of the congregation. One way to bridge the gap between traditional and contemporary seating preferences is a combination pew. A combination pew typically includes the wood or upholstered back of a traditional pew combined with the contemporary design appeal and efficiency of flipup auditorium seats. The combination of a traditional pew back with auditorium flip-up seat brings together the heritage of the classic wooden pew with the comfort and accessibility of modern design. To meet both modern standards and historic expectations, the flipup auditorium seat should be encased in the wooden structure of a traditional pew. Constructing the flip-up auditorium seat within the wooden framework provides a safeguard for quality and durability. The pew back is ergonomically contoured, allowing for additional comfort and lumbar support. The ergonomic contour can be achieved whether the back is made of wood or upholstered materials. Each flip-up seat quietly and consistently returns to its raised position, even after years of use. Fewer internal mechanisms within the seat significantly reduce the opportunity for wear-and-tear on the flip-up seat mechanism. The gravitylift auditorium seat protects the flip-up action of the auditorium seat from mechanical break-down. The beauty and simplicity of a combination pew back with flip-up auditorium seat is that it allows worshippers to blend multi-generational congregations. Looking down the aisle of the sanctuary, traditional pew backs and pew end panels are in the line of vision; but, when glancing down the rows, individual flip-up auditorium seats assure the worshipper his or her individual space. The combination pew with flip-up auditorium seat is designed to bring everyone in the congregation together — from Baby Boomers to Millennials. Each worshipper is entrusted with a sense of belonging and purpose while maintaining adherence to his or her individuality. churchexecutive.com
Combination upholstered pew back with flip-up auditorium seat
The combination pew is the perfect solution to providing a traditional sanctuary, where weekly and daily services are held, as well as creating a space for the entire community to enjoy. “Neither do people light a lamp and put it under a bowl. Instead they put it on its stand, and it gives light to everyone in the house. In the same way, let your light shine before others, that they may see your good deeds and glorify your Father in heaven,” Matthew 5:15-16 NIV. Amanda Opdycke is Worship Market Manager at Sauder Worship Seating in Archbold, OH. She holds a BFA, Art History, from Ohio University and has written and contributed to several articles about church seating. Opdycke presented her first class at WFX Reach in San Antonio, TX, recently: “Attentive Comfort: The Ergonomics of Worship.” Its content was based on an article in the “Science Behind the Seat” Series in Church Executive Magazine.
Combination wood pew back with flip-up auditorium seat November / December 2016 • CHURCH EXECUTIVE
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NEVER AGAIN: BEYOND INSURANCE
MANAGING MISFORTUNE IN A MINISTERIAL FASHION By Michael J. Bemi
Most recently in our series on moving “beyond insurance,” we examined Risk Control. Now, we undertake the next step in our journey: Claims Management.
We previously identified that Risk Retention — as opposed to simply buying insurance — can provide a number of very substantial and significant benefits that ultimately can enhance the provision of our ministries. However, it is axiomatic that these values of Risk Retention are diminished (and potentially destroyed) if an entity does not control and mitigate its losses. It is also axiomatic that in this imperfect world, you simply cannot prevent all losses and resultant claims. Our ministries will experience hurricanes, tornadoes, floods, fires and freezing pipes — and the interruption of ministerial income that follows; auto and bus accidents; claims of wrongful termination or discrimination; accidents on our premises that result in serious injury or even death; and so on. Responding to that negative impact of losses and resultant claims that our Risk Control could not prevent, is the province of Claims Management. Properly performed, Claims Management can further mitigate the damage associated with losses of any variety, thus enhancing stewardship, while simultaneously allowing us to behave in the pastoral fashion we are called to and should demand of ourselves. Claims Management can be performed entirely in-house by your own employed professionals, or outsourced to a third-party administrator (TPA) professional firm, or some combination of each. 30
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Also, while Claims Management appears to be simply reactive in nature and operation, in fact, some aspects of it are proactive. For example, you can reduce the number and extent of negatives associated with adjustment of any Property, Auto Physical Damage or Business Interruption loss, by creating, maintaining and regularly updating detailed inventories (including evolving valuations where applicable) of: • Your leased and owned buildings and premises • Your equipment, supplies, furniture and fixtures • Your fleet vehicles • Your employees and volunteers • Your specific ministry-related services • Your sources and amounts of ministry income and any regular cyclicality or variation in income (for example, as a function of an annual appeal done every September). Liability claims inject a different and very special element to Claims Management — namely, the tension and occasional conflict between pastoral care and concern for victims that we have created and the pressure to maximally defend ourselves. We know that we should “do the right thing” and whatever we can to optimally restore and rehabilitate the people, property or business / service activities that we have damaged during the course of performing our ministries. Yet, our attorneys or excess insurers, or even our own “gut,” might be telling us that something is questionable regarding the nature or extent of alleged damages. The good news is that you can manage a claim in a pastoral fashion, but still not “roll over and play dead” for some plaintiff counsel screaming at you. You do this via excellent investigation. What does the police report, the Department of Child and Family Services report, the medical records, the witness statements, the photos of the site where the incident occurred, the independent medical examination, the opinions of outside experts, etc., tell you about the validity of the claim or the accuracy of the alleged damages? All these things need to be considered to assess the nature and extent of loss. Then, once you have this information in hand — and the knowledge it conveys — you can suggest mediation, arbitration or other alternative dispute resolution mechanisms to hopefully prevent the waste that accompanies trials. If you are confident a claim is invalid, you need to fight it if you want to be a good steward. Finally, your attorney(s) should abide by a Litigation Management and Defense Cost Guidelines protocol of your selection. And always remember that while we highly value the advice and counsel of our great defense attorneys, they work for you – not vice versa. The ultimate decisions are yours! Michael J. Bemi is president & CEO of The National Catholic Risk Retention Group, Inc. (Lisle, IL) — a recognized leader in risk management. To learn more about available coverage — and to get valuable tools, facts and statistics — visit www.tncrrg.org.
churchexecutive.com
A COMFORTABLE RETIREMENT “OURIS EMPLOYEES SOMETHING EVERYONE SHOULD SINK INTO. ABSOLUTELY DESERVE
FINANCIAL BENEFITS. I wish we could afford them.”
We hear it all the time. “We’re a ministry, not a business. We just don’t have the money to offer financial benefits.” But the truth is, affordable financial benefits are not out of reach. MMBB Financial Services thoroughly understands the needs of faith-based organizations. And as benefits consultants, we will tailor an affordable plan so that everyone in your organization will enjoy retirement, disability and life insurance benefits that are sensible and secure. To find out more, visit us at MMBB.org/affordablebenefits. Or call 1-800-986-6222. We may just have some very good news for you and your employees.