May Day! Budget Crisis! What To Do

One of your top donors moves to be closer to their grandchildren. Another major donor gets a new job two states away. And then two or three of your oldest members pass away.

When your annual stewardship drive comes along, your finance folks discover that–in spite of an overall growth in membership–these losses in the top quartile of your pledge distribution can really affect your bottom line.

Here’s what you can do:

How to meet the budget in a time of distress

by Patricia Infante, UUA Congregational Life Consultant, Central East Region

 

  • Reduce variable and discretionary expenses
  • Raise income from within the congregation
    • Increase pledges, even incrementally
    • Increase pledge units, turn friends into members
    • Special “fill the gap” campaign
    • Large donor matching gift program
    • Legacy Gift program
  • Raise income from sources beyond the congregation
    • Facility rental: generate new
    • Facility rental: renegotiate tenant agreements
    • Sell gift cards (bought at a discount) from local grocers
    • Seek entrepreneurial opportunities
    • Grants, crowdfunding campaigns
  • Ensure you have technology to catch money from all sources
    • Online donation capacity on your website
    • Electronic Check capacity for recurring donations
    • Onsite electronic payment tool (such as Square) for one-time payments or  collections at special events
  • Renegotiate debt
  • Scale back ministries
  • Cut staff benefits
  • Cut staff hours
  • Layoff staff
  • Sell real property
  • Merge or close

Additional Resources:

 

Church Governance Should Serve, Not Rule

Rev. David Pyle
Rev. David Pyle

Congregations often look to the corporate and not-for-profit worlds for models of leadership, organizational development, fundraising and volunteer management. Unfortunately, they also look there for models of governance to the detriment of their core purpose.  Congregations are ground in covenant, not bound in contract, so the relationship between minister and governing boards should not copy the relationship between a CEO and a corporate board.

Rev. David Pyle, Congregational Life Consultant in the Central East Region, recently shared what congregational governance should look like on his Facebook Page:

1. The purpose of church is not governance.

The purpose of church is mission. The purpose of church is transforming lives to transform the world. Governance is important only as it helps you to live your mission in the world. If you are spending more time on governance than you are on mission, something is wrong. Governance should free your congregation for mission, not serve as a replacement for mission.

2. Corporate style governance systems were not designed for religious community.

Neither were traditional non-profit governance systems. Both import an adversarial mindset between the Governing Board and the Executive that is detrimental to religious mission. Both depend on the Board’s ability to terminate the Executive, which Congregational Boards often cannot do (called ministry). You can make corporate or traditional non-profit governance systems work in congregations, and it takes significant energy and effort, often detracting that effort and energy from mission.

3. There is no perfect governance system.

Governance is about providing some order to the power relationships amongst human beings working together for a common purpose… and human beings are endlessly creative, messy, and chaotic. Governance is far more art than science, because human beings are infinitely complex. Good governance is a creative compromise, and it takes leaders who keep their eye on mission. Good governance is about how can we best all build the “world made whole”.

4. There are many forms of good governance.

Almost as many as their are churches. I am not picky. If Policy Governance helps you best fulfill your mission, then Amen Hallelujah! If having an Operational Board works best for you, then Amen Hallelujah! I even know a Portfolio Board or two that achieve mission well, and a few Family Model congregations who kick serious mission butt. I am not a Governance Fundamentalist. Because it is your religious mission that is vital, not necessarily how you get there. Whatever you do, do what best leads you to mission.

5. Institutional structures come, and institutional structures go.

They are tools, not talismans. They must change as time and culture changes. It is religious mission that remains. Neither Jesus nor Buddha founded significant church structures or governance, they left that to their followers. They focused on religious mission. If your governance is supporting your religious mission, amen. If not, then change tools. But realize they are only tools (including Congregational polity). Letting governance or polity replace mission as the center of our religious focus is a form of idolatry. Our eyes must be on the mission of transformed lives that transform the world, and we must craft tools that best help us to achieve that.

Especially Congregational governance.

Finding Your Governance “Sweet Spot”

governance_and_ministryCongregational governance is an art. Church leaders need to learn how to navigate the line between governance and ministry.  In other non-profits, there are different parties to consider:

  • The Board sets mission & vision, makes policy and assures fiduciary responsibility
  • The CEO and staff carry out the mission
  • The Donors help support the mission with their financial gifts
  • The Beneficiaries are the “object” of the non-profit’s mission

In the congregational world, members of the board don’t just govern, they are also donors and beneficiaries and–at times–staff (when they are also serving as part of a ministry such as being a worship associate or being a pastoral visitor). In other words, church governance is a little bit messy.

There is no one-size-fits-all kind of governance for congregations, but there are resources to help UU congregations navigate a governance change. One is the consultants at Unity Consulting, who have adapted John Carver’s Policy Governance® for congregations.

Another is Dan Hotchkiss, former Alban Institute consultant and UUA staff member, and the author of Governance and Ministry: Rethinking Board Leadership.  Rev. Hotchkiss has just released a second edition of Governance and Ministry.  I had the opportunity to interview him about what he learned since writing the first edition, and about the significant changes compared to the first edition:

 

-Rev. Renee Ruchotzke, UUA Congregational Life Consultant

Additional resources mentioned in this blog and interview:

Books:

Governance and Ministry: Rethinking Board Leadership, Second Edition by Dan Hotchkiss

Mobilizing Congregations: How Teams Can Motivate Members and Get Things Done by John W. Wimberly Jr.

When Moses Meets Aaron: Staffing and Supervision in Large Congregations by Rev. Susan Beaumont and Gil Rendle

Consultants:

Your UUA Regional Staff

Congregational Consulting Group

Unity Consulting

Are Your Church’s Retirement Benefits “Legal?”

January is always a good time for a church to take stock of its fiduciary responsibilities. Rev. Richard Nugent, the UUA Church Staff Finances Director, has some important advice for UU congregations, in particular about how congregations administer their retirement plans:


Congregations are legal entities required to comply with all sorts of legal requirements. While religious institutions

Rev. Richard Nugent, Church Staff Finances Director
Rev. Richard Nugent, Church Staff Finances Director

might be exempt from a FEW legal requirements, churches are NOT exempt from most. This includes many requirements stemming from being an employer.

Today’s post pertains to the UU Organizations Retirement Plan. Our plan is a 401(a)/401(k) non-electing church plan. It is governed by IRS and US Labor Department rules. It is also governed by a plan document that every participating congregation has adopted/re-adopted in 2014 or 2015. In adopting our plan, by motion of your governing board, your congregation committed to abide by the rules of the plan (and hopefully federal regulations).

What does this mean:

1) All employees (and all means all) must be offered enrollment in the plan for purposes of making their own employee contributions toward their retirement.

2) All new employees, who never worked for a UUA-related organization before, MUST receive employer contributions after meeting the requirement of 12 months of employment during which they worked 1,000 hours or more. If someone previously worked for a UUA-related organization and was enrolled in our plan, then they must receive employer contributions from day one of employment. New ministers who completed a UUA-related internship are also eligible immediately. After meeting the 1,000 hour/12 month requirement, if anyone’s hours are reduced, they still receive employer contributions. Essentially, once in our plan, always in our plan.

3) Personnel policies that limit eligibility for retirement benefits to certain employees DO NOT TRUMP THE UUA REQUIREMENTS. Our requirements rule, and congregations agreed to that when they signed on to our plan. .

4 All employees eligible for employer contributions must receive the SAME percentage contribution. THE MINISTER CAN NOT RECEIVE 10% OR MORE WHILE EVERYONE ELSE RECEIVES 5%. This is not allowed by our plan and in violation of IRS regulations. I am happy to discuss this with anyone who finds their congregation in this situation.

5) The minimum employer contribution is 5%. 86% of congregations contribute 10% or more. Fair Compensation requires an offer of 10% or more. People need to put away 14% of their salary to ensure the possibility of retirement.

6) If you believe your congregation might be in violation of these policies, please contact me to discuss how you can legally come into compliance.

7) For any questions about our plan, the very helpful and informative Linda Rose directs our retirement plan. As a spouse of a UU minister, Linda understands congregational dynamics. Linda can be reached at retirement@uua.org.

We at the UUA are appreciative of all the hard work you do, and the challenge of keeping up with administrative details.

Reverend Richard Nugent, UUA Church Staff Finances Director

 

Worst Case Scenarios…and How to Be Prepared

Operation_Upshot-Knothole_-_Badger_001The phone rings.  There is an anxious board president on the phone with a crisis on their hands.  Perhaps their minister has fallen seriously ill, or there is a member who is regularly disrupting the Sunday worship service, or a registered sex offender has expressed interest in attending the church.  Some situations cannot be anticipated or prevented.  But there are many situations where having the right policies, procedures and safeguards in place will help a congregation get through a crisis.

Here is a checklist for your board to use to determine your congregation’s preparedness:

1. Make sure your staff members have adequate insurance.

Having your minister fall ill and not be able to perform their duties would be hard on the congregation.  Having your minister not be able to perform their duties–with no financial safety net–would be devastating.  Make sure that, along with your health plan, you include group insurance plans that include term life and long-term disability insurance.  These are relatively inexpensive add-ons to insurance policies.

2. Make sure your congregation has adequate insurance.

Call your insurance agent for an insurance check-up. Many UU congregations use Church Mutual, because they have an understanding of the needs of liberal religious communities.  Insurance can help your congregation recover financially after a fire, embezzlement or other harmful event.

3. Set up clear expectations about behaviors.

Even if you recite a traditional covenant on Sunday morning (i.e. Love is the Spirit of this church….) you will want to have a behavioral covenant or a covenant of right relations that spells out how members promise to treat one another.  In addition to this, you will want a disruptive behavior policy so that you give your leaders the authority to set limits on particularly damaging behaviors, and a process for restoring right relationship if the disruptive person is willing to abide by the limits.

4. Make sure your congregation has well-communicated “Safer Congregations” policies.

The Religious Institute has well-defined “best practices” for congregations to prevent sexual abuse, sexual harassment and professional sexual misconduct.  They also provide resources on how to include known sex offenders in your community while still protecting your other members and children. Your congregational commitment to sexual safety should be known to every member.

5. Establish and practice emergency evacuation procedures.

In case of a fire, tornado, live shooter or other immediate emergency, you will want to have your staff, greeters/ushers and teachers know what to do and where to go. It’s especially important to practice evacuating once or twice a year so that if — heaven forbid — the real thing happens, everyone knows what to do.  Also make sure your leaders are familiar with the post-trauma response resources from the UUA.

 

Other resources:

www.uua.org/safe/response/120488.shtml (video: 44:53)

www.buildingsguide.com/buildingsguidecom-presents-emergency-preparedness-guide

www.churchmutual.com/index.php/choice/risk/page/intro/id/21

www.cerguua.org/emergmanage.html

Committee, Team or Task Force?

many ways to participateAs we reimagine how to do the work of a congregation, we need to take into account that younger folks (and by “younger” I mean people under 50) are wary of making commitments without fully understanding the implications.  These people want to feel like they are making  a contribution that makes a difference.  Expecting members to attend meetings out of a sense of duty (with no pragmatic objectives) will repel the next generation of leaders.

How should we pragmatically organize the groups that do the work of the congregation? The Rev, Marian Stewart offers this framework:

Committee:

Long-term groups that have legal and structural responsibilities. In some models, these are referred to as Standing Committees.

For example: Endowment, Finance, Human Resources, Rentals.

Team:

Ongoing responsibilities but membership terms/commitments may be informal or formal and can vary from short to long-term. Mostly these  groups are responsible for the church programs and activities. In some  models, this group forms a Program Council that meets several times a year  to do calendaring, find partner groups to sponsor events, etc.

For example: Communications, Membership, Religious Education, Social Justice, Worship.

Task Force:

A group of people who gather around an identified need that  has a defined goal or time-limit.

For example: Bylaws revision, policy creation,  insurance coverage change.

Despite its name, a Search Committee might also  be defined as a Task Force, although it has a much longer impact and  involvement in the life of the congregation.

Event Organizers:

A group of people responsible for one-time or short series of activities.

For example: anniversary party, social gathering, ordination service.

All of these groups have a defined mission and purpose. Each fits into the overriding Long Range Plan, which has very distinct and accountable short, medium, and long term goals.

While the above structures and defined purposes are extremely useful, the real purpose of almost all groups is to learn to work together, build relationships, find meaning or experience spiritual growth, and do something to make this world a little better – even if that world is helping the church operate more smoothly as its fulfills its larger mission and vision.

The End of Strategic Planning

Smaller congregations in many denominations are struggling to survive. This doesn’t mean they are necessarily “doing church” badly. But it does mean they need to do dead endchurch differently. Intuiting this need, church leaders often begin gearing up for a strategic planning process.

Strategic plans have been viewed as the epitome of responsible church governance since the 1970s, however… That view is shifting. Experts now speak of the “death” of strategic planning so frequently we thought it fitting to summarize their views in the following obituary.  

Mr. Strategic Plan quietly passed away in the first decade of the 21st century. He was born many years ago in a military camp, later adopted by businesses, and then spent his last years among non-profits and churches. He flourished in a time marked by its slower pace and greater institutional resources. He believed that tomorrow would turn out to be much like today and that with enough data and a clear, sure sense of self he could chart the best path forward into the distant future. Upon exposure to social and cultural shifts, Mr. Strategic Plan took ill and went into isolation. He was neglected in his last years and his death is only now being noticed in some quarters.

Mr. Strategic Plan is survived by many agile, shorter-term, best-guess strategic actions launched from a common ground, driven by individual or small group passions and coordinated just enough to reveal the congregation’s evolving understanding of its role in the world.

In this moment, the trend is away from massive, linear, comprehensive plans that define a specific future and the steps to get there, toward agile, bold actions plus reflection that move us now into our destinies. Direct those actions toward creating Beloved Community and practice a reflection that is spiritually centered, and you have the new way of framing congregational strategic planning.

This reframing eliminates the long search for a single set of all-inclusive goals perfectly balanced to achieve unanimous approval by the congregation. Instead, leadership creates a framework that supports groups of congregants passionately engaged in the community to give and receive gifts of service, hope, and love. For church leaders, this reframe is both a shift in thinking and a shift in behavior.

The Big Shifts in Strategic Planning

The biggest mind-shift may be giving up the idea that we can continue to do what we already do­, except more and better. Common expressions of this mindset include, “We just need” [more members, bigger pledges, the right minister, a revised governance structure or bylaws, or a larger draw on the endowment]. Good leaders are already squeezing benefits from doing the familiar. But if we meet only these kinds of needs the future will arrive, welcome or not, and tell us to close our doors for good.  Strategic thinking is a shift in stance from knowing to not knowing and from the familiar to the unknown and maybe even the risky.

With this reframe, the biggest shift in leadership behavior may be away from a top-down approach with the board gathering data and then determining goals. Instead the board equips its members to become instruments of strategic thinking and exploration as they minister out in the community. Shifts are not just top-down to bottom-up but also inward focused to outward engaged.  The most critical strategic information about a congregation’s future lies in active engagement outside of its walls.

This reframe of strategic planning also requires shifting from:

  • Slow and deliberative to nimble and experimental
  • Comprehensive and unanimous to targeted and personal
  • Knowing the “right” path to learning from success and failure

Doug Zelinski
Doug Zelinski

-Doug Zelinski, Leadership Development Director, New England Region

 

Resources:

These are a lot of shifts and the question of “How?” surfaces almost immediately. New England Regional staff will share what we are learning about this reframing and answering the question “How?” at our upcoming event “The Future of Small to Mid-Sized Congregations” happening April 18 in Reading, MA and again on May 2 in Springfield, MA . You can read more and register for either of these events on the New England Region website.  

 

 

 

Let Me Sleep on It…

The congregational meeting was held right after the Sunday service to guarantee a quorum.  There were a couple of important issues to discuss, including passing a deficit budget to help fund a part time membership coordinator in service of their desire for growth. Standard reports were given by the board, the minister, the religious educator and various committee chairs. Bellies were starting to feel hunger and eyes were starting to glaze over.  The last report was from the finance committee, presenting the deficit budget and opening up the discussion.

The first member to speak explained that she was retired, debt free, and on a fixed income and couldn’t possibly pledge any more.  TheWoman Sleeping next member accused the finance committee of “dropping this bomb” on the congregation at the last minute.  The next threatened to withhold their pledge if the congregation passed a deficit budget.  Tempers continued to flare until the budget was revised to take out the additional spending.  The leaders felt that the congregation’s vision was sabotaged, and that affected their ability to serve with joy for the rest of the year.

We know from brain science that when humans feel that they are threatened, the amygdala become engaged and the higher brain functions such as reason and creativity are overshadowed by flight or fight responses. When the brain has experienced this sort of amygdala hijack, it takes three or four hours to regain full cognitive functioning!

Some congregations understand this and have separated out the presentation and discussion parts from the voting parts of their congregational meetings so that the discussion can happen without the time-pressure of an immediate pending vote.  This way members can share their concerns, leaders can listen deeply and decisions can be made with our creative and rational neo-cortex and not our emotionally reactive cerebellum.  It turns out that “sleeping on it” does help us make better decisions!

-Rev. Renee Ruchotzke, Congregational Life Staff, Central East Regional Group

 

There’s a Hole in the Bucket…

bucketIt happens more often than you think it should.  The church seems to be vital, even growing, but the money in the collection plate doesn’t keep up with the growth, or there seems to be a shortfall every month.  There might be grumbling about how the new folks aren’t pulling their weight financially.  Then someone notices some irregularities, even though a trusted, long-time volunteer has been responsible for the money. And then it comes to light that hundreds, even thousands of dollars are unaccounted for.

Churches are especially susceptible to theft, embezzlement and fraud.  We foster an environment that encourages trust and vulnerability in other aspects of congregational life.  We are often so desperate for volunteers we don’t ask for the kind of skills or accountability that we should to meet our fiduciary responsibilities.  And we often inherit systems, habits and volunteers that would be hard to change without a good reason.

Here are some basic practices and policies that every congregation should have in place:

Finance Policies

  • Two signers for checks
  • Separate duties of income, check writing, check signing and reconciling accounts to provide checks and balances  (e.g. the person who makes the deposits should not write checks)
  • Reimbursements must have receipts and proper paperwork and signatures
  • Duplicate Bank Statements that go to non-signers
  • Mandatory vacations for employees who have financial duties
  • Have the finance committee or other appointed committee review church financial records annually
  • Have the finance committee track patterns of giving over time
  • Permanent financial records should be kept at the church, not in someone’s home

The Collection Plate

  • Have two unrelated counters of every offering
  • Rotate count teams
  • Have 2 copies of the deposit slip. One goes with the money to be deposited, the second goes to another person that can provide a financial check and balance
  • Immediately deposit the money after the service using a sealed bank security bag.  NEVER allow anyone to take the offering home.

Uh-Oh…We Might Have a Problem

If you think that your congregation might be a victim of theft, embezzlement or fraud:

  • contact your attorney immediately
  • contact your District or Regional Congregational Life staff person.
  • consider engaging a Certified Fraud Examiner to assist you with the formal investigation

  • DO NOT confront the person

  • keep the investigation confidential
  • don’t be afraid to press charges
  • Once the investigation is complete and charges have been files, be as transparent as possible with the congregation.  Let them know the amount of the theft and what changes in policy and procedure have been put in place to prevent such occurrences in the future. Your members need to know that their financial gifts are being well-stewarded.

Additional Resources:

Financial Management for Congregations  UUA Website

Subscribe to the UU-Money Email List A forum for congregational money leaders.

A financial pandemic is sweeping the country article from Church Mutual

We’ve Been Embezzled! from Church Law & Tax

-Rev. Renee Ruchotzke, CERG Congregational Life Staff

Do you have “Committee Alphabet Soup?”

one brainI often use General Motors as an example of the top-down model of organization and leadership that is the opposite of what our congregations need to be nimble and vital (and I might add, attractive to Gen-Xers and Millennials). Today’s story from Bloomberg “GM Recalls Stalled in 10 Years of Committee Alphabet Soup” exemplifies how–even though GM has rallied since the bailout back in 2009–GM still has a culture that stifles communication and slows response time.

Inherent in the GM culture is the foundational notion that the brains are in the boardroom, and the rest of the organization’s role is to receive commands and send back reports.

Brian Johnson, an auto analyst for Barclay’s states some of the results of this model:  “The committee culture of the old GM was rooted in organizational paralysis and characterized by a lack of accountability.”  “I’m amazed that even the government bureaucrats couldn’t understand GM’s plodding processes.”

Tom Stallkamp, a former president of Chrysler, adds that top executives often don’t hear about internal recall investigations, especially since there is inherent tension between engineers and safety/quality folks as they chase reports back and forth.   Speaking as an executive he says: “If you tried to react to every single issue coming in, or every dozen issues spread over a dozen cars, you’d go crazy.”

My short hand for this style of organization is “one brain, many hands.”  It’s also been described as a “spider” organization in the book The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations by Ori Brafman et al.

“Spider” organizations are very structured and invest most of the power and authority in the “brain” or top leadership. Congregations organized on this model have:

  • lots of committees with no one willing to staff them
  • committees that have people willing to staff them, but there is no energy at the meetings
  • a requirement for committees to send reports to the board, but they seldom do
  • committees that have had the same chair for over 5 years
  • turf wars
  • silos between ministries
  • annual reports from committees that show little difference from year to year
  • understanding of the mission is held only by a few people in leadership

“Starfish” organizations look to share power and authority (with accountability) throughout the organization. Congregations organized on this model have:

  • A clear sense of mission throughout all of the leadership, including those on committees and task forces
  • Attention to alignment with the mission as well as accountability structures
  • leaders who reinforce that sense of mission through annual goals based on strategic planning
  • committees where some people plan, and task forces where other people can just “do” without showing up to a committee meeting
  • a permission-giving culture that encourages and supports new ministries that are in alignment with the mission
  • good communication between leaders of various ministries that don’t need to go through the board

Another handy checklist for your congregation might be this list of qualities of growing and stalled congregations developed by http://waytolead.files.wordpress.com/

-Rev. Renee Ruchotzke, Leadership Development Consultant, CERG