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Church Financial Crisis? Problem?
oii:
payroll taxes aren’t being withheld andlor paid
•
quarterly payroll reports not submitted to IRS (941 reports)
•
pastor’s W-2 is wrong
•
FICA is being withheld on the pastor
•
employees are being treated as independent contractors
•
Accounting:
financial reports aren’t available for finance committee
•
records of designated funds not maintained
•
donors are not getting contribution statements
•
checks are bouncing
•
nobody knows how much money we have
bank statements not reconciled monthly
purpose
for
non-designated
used
designated
funds
•
---
Internal Controls:
financial records stored somewhere besides the church
•
the same person is responsible for writing checks, reconciling bank statement & making
•
deposits
only one person is authorized to sign checks
everyone is authorized to sign checks
jggeting:
budgeted expenditures exceed expected income
•
apportionments not paid
•
financial reports don’t show budgeted amounts
•
there is no budget!
Finance:
debt exceeds our ability to repay
o
investments are not receiving a reasonable return
•
investments are made in risky ventures
•
¶ 03400. Responsibilities and Duties of Elders and Licensed Pastors—
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(
C
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I. The responsibilities of elders are derived from the authority given in ordination. Elders have a
fourfold ministry of Word, Sacrament, Order, and Service and thus serve in the local church and in
extension ministries in witness and service of Christ’s love and justice. Elders are authorized to
preach and teach the Word, to provide pastoral care and counsel, to administer the sacraments, and
to order the life of the church for service in mission and ministry as pastors, superintendents, and
bishops.
2. Licensed pastors share with the elders the responsibilities and duties of a pastor for this fourfold
ministry, within the context of their appointment.
a) Word and ecciesial acts:
(1) To preach the Word of God, lead in worship, read and teach the Scriptures, and engage the
people in study and witness.
(a) To ensure faiththl transmission of the Christian faith.
(b) To lead people in discipleship and evangelistic outreach that others might come to know Christ
and to follow him.
(2) To counsel persons with personal, ethical, or spiritual
struggles.
(3) To perform the ecclesial acts of marriage and burial.
(a) To perform the marriage ceremony after due counsel with the parties involved and in
accordance with the laws of the state and the rules of The United Methodist Church. The decision
to perform the ceremony shall be the right and responsibility of the pastor.
(b) To conduct fUneral and memorial services and provide care and grief counseling.
(4) To visit in the homes of the church and the community, especially among the sick, aged,
imprisoned, and others in need.
(5) To maintain all confidences inviolate, including confessional confidences except in the cases of
suspected child abuse or neglect, or in cases where mandatory reporting is required by civil law.
b) Sacrament:
(I) To administer the sacraments of baptism and the Supper of the Lord according to Christ’s
ordinance.
(a) To prepare the parents and sponsors before baptizing infants or children, and instruct them
concerning the significance of baptism and their responsibilities for the Christian training of the
baptized child.
(b) To encourage reaffirmation of the baptismal covenant and renewal of baptismal vows at
different stages of life.
(c) To encourage people baptized in infancy or early childhood to make their profession of faith,
after instruction, so that they might become professing members of the church.
(d) To explain the meaning of the Lord’s Supper and to encourage regular participation as a means
of grace to grow in faith and holiness.
(e) To select and train deacons and lay members to serve the consecrated communion elements.
(2) To encourage the private and congregational use of the other means of grace.
c) Order:
(I) To be the administrative officer of the local church and to assure that the organizational
oncems of the congregation are adequately provided for.
(a) To give pastoral support, guidance, and training to the lay leadership, equipping them to fUlfill
the ministry to which they are called.
(b) To give oversight to the educational program of the church and encourage the use of United
Methodist literature and media.
(c) To be responsible for organizational faithfulness, goal setting, planning and evaluation.
(d) To search out and counsel men and women for the ministry of deacons, elders, local pastors an’
other church related
ministries.
(2) To administer the temporal affairs of the church in their appointment, the annual conference,
and the general church.
(a) To administer the provisions of the Discipline.
(b) To give an account of their pastoral ministries to the charge and annual conference according to
the prescribed forms.
(c) To provide leadership for the funding ministry of the congregation.
(d) To model and promote faithful financial stewardship and to encourage giving as a spiritual
discipline by teaching the biblical principles of giving.
(e) To lead the congregation in the fhlfillment of its mission through full and faithftil payment of all
apportioned ministerial support. administrative, and benevolent funds.
(f) To care for all church records and local church financial obligations, and certify the accuracy of
all financial, membership, and any other reports submitted by the local church to the annual
conference for use in apportioning costs back to the church.
(3) To participate in denominational and conference programs and training opportunities.
(a) To seek out opportunities for cooperative ministries with other United Methodist pastors and
churches.
(b) To be willing to assume supervisory responsibilities within the connection.
(4) To lead the congregation in racial and ethnic inclusiveness.
d) Service:
(1) To embody the teachings of Jesus in servant ministries and servant leadership.
(2) To give diligent pastoral leadership in ordering the life of the congregation for discipleship in
the world.
(3) To build the body of Christ as a caring and giving community, extending the ministry of Christ
to the world.
(4) To participate in community, ecumenical and inter-religious concerns and to encourage the
people to become so involved and to pray and labor for the unity of the Christian community.
C)
¶ 0249G. Election ofLeaders--The charge conference, or church conference
authorized by the district superintendent, shall elect upon recommendation by the
committee on nominations and leadership development of each local church on the
pastoral charge, or by nomination from the floor and by vote of each such local
church, at least the following leaders for the four basic responsibilities (I 244):
1. Chairperson of the church council.
2. The committee on nominations and leadership development.
3. The committee on pastor-parish relations and its chairperson.
4. A chairperson and additional members of the committee on fmance; the financial
secretary and the church treasurer(s) if not paid employees of the local church; and the
trustees as provided in ¶E 2525-2527, unless otherwise required by state law.
5. The lay member(s) of the annual conference and lay leader(s).
6. A recording secretary (see ¶ 247.4).
7. Special attention shall be given to the inclusion of women, men, youth, young
adults, persons over sixty-five years of age, persons with disabilities, and racial and
ethnic persons.
8. All local church offices and all chairs of organizations within the local church may
be shared between two persons, with the following exceptions: trustee, officers of the
board of trustees, treasurer, lay member of annual conference, member and
chairperson of the committee on staff- or pastor-parish relations. When two persons
jointly hold a position that entails membership on the church council, both may be
members of it.
CHECKLIST FOR PROTECTION OF CHURCH FINANCES
Following is Pastor’s checklist to help ensure adequate control over church finances.
CONTROL POINTS
Compliance?
1. Finance Committee is organized and has designated a Treasurer and
Financial Secretary.
2. The Finance Committee Chairperson, Treasurer and Financial Secretary
are not the same person, nor from the same family or household.
3. The church has a budget approved by the church Council.
4. Treasurer’s financial report is submitted at least quarterly. Results are
compared to the budget and inquiries made of variances at Finance
Committee meetings.
5. All checking and savings accounts are under control of the Treasurer.
Investment accounts are accounted for and activity reported monthly to
the Finance Committee.
6. At least two unrelated people count the weekly church offerings for
deposit, and prepare the deposit slip. The deposit slip and deposit are
placed_in_a_bank_deposit_bag_and_locked.
7. Deposit slip stamped by the bank is given to the Treasurer for recording
and comparison to the bank statement.
8. Annually the Administrative Board/Church Council approves the
signatories on all church bank accounts.
9. Bank account reconciliations are performed monthly and reviewed by the
Finance Committee Chairperson or designee at least quarterly. This
review includes examination of copies of cancelled checks to ensure
proper church purpose.
10. Quarterly, the Finance Chair asks the Treasurer at a committee meeting
for documentation of timely payment of state and federal payroll taxes.
1 1. Annual audit is completed by a qualified person and reported to the
Church Conference.
12. AlT financial records are retained in accordance with an appropriate
Record Retention provided by the Conference Treasurer.
Checked and certified by Pastor: Signed
Date
Checked and certified by Finance Chair:
Date
First United Methodist Church of Palo Alto
Financial Policies
Overview: The church has operated under policies that have been in various places, but
largely unwritten. Best practices call for financial and other business practices of an
organization to be written. The church audit reports for several past years have cited the
absence of written policies as a deficiency. During 2006, we have been working in the
financial area of the church and have been determining what policies the church has
been using and changing them, if generally accepted accounting policies or government
laws and regulations were at variance with the church’s policies. This document
includes all policies we can think of as of now, but since it is the first time all policies
have been brought together in one place, there may be others that are being used that
come to our attention which must be added later. Policies established by Church
Conference or Administrative Board for Bequests, the Centennial Endowment Fund, the
Children’s Fund, the First School, and the Personnel Policy Manual are policies of the
church and are incorporated by reference herein, as they relate to finances.
April, 2007 (updated September, 2007)
Janet Nicholls, Accounting Advisor & Fonuer CBA
Paula McGinnis, Accountant & Shelby System Consultant
Curtis Gleason, Financial Secretary
Art Hammar, Church Treasurer
Adopted by Finance Committee September Il, 2007
Adopted by Administrative Board September 25, 2007
Rev I
Added Policy (III.B.5) for limited delegation of signature authority
per Finance minutes of Dec. II, 2007
Approved by Ad Board in minutes of January 22, 2008
Rev 2
Added Policy (II. B. 12) for handling an estimate of giving when a member dies during
the year per Finance Minutes of May 13, 2008
Rev 3
Added Policy (1II.B) for Disbursement & Reporting of Discretionary Funds per Finance
Minutes of Dec. 9,2008
Rev 4
Updated Policy (IJI.B.5) for Check Request Approval per
Finance minutes of October 13, 2009
I. Church funds and accounting records
A. The Finance Committee and Treasurer set up departments and accounts in the
church accounting system to properly account for all funds of the church. The
Church Business Administrator (CBA) or designated financial administrator is
responsible to the Church Treasurer and Finance Committee for maintaining the
integrity of the accounting records for income, expenses, and other financial
transactions of the church. The current set of accounts with a description of each
and the authorized signatory for each is attached hereto as Attachment A.
B. The Operating Budget Fund is the main operating account for the church.
C. Special Purpose Fund departments with income and expense accounts are
established to account for restricted finds.
D. Balance Sheet accounts are established for assets, liabilities and equity, such
as deposits, checking account, investment accounts, receivables, paS’ables, etc.
E. Management of church funds
1. The Church Treasurer is responsible for banking arrangements and
investment of church flmds in accordance with the Investment Policy of
the Investment Committee. Sufficient funds are kept in the checking
account to pay the bills.
2. The Church Business Administrator or designated financial
administrator is responsible for making sure sufficient finds are in the
church checking account to cover disbursements made by check or
payroll service withdrawal and for notifying the Church Treasurer of the
need to transfer funds into the checking account in sufficient time that the
transfer can be made by the Church Treasurer before checks are mailed.
3. The Centennial Endowment Fund (CEF) Treasurer is responsible for
banking arrangements and investment of Centennial Endowment Funds
under the requirements of Centennial Endowment Bylaws approved by
the Church Conference. The CEF Treasurer is also responsible for
keeping track of the fund balance by area of restriction, for determining
the total amount available for grants for the year by category of
restriction, and for administering disbursement of finds under grants
approved by the Church Conference, on recommendation of the
“expanded” Centennial Endowment Committee and Administrative
Board.
II. Receipts and management of church funds
A. Handling of checks and cash
1. Checks and cash shall be placed in the church safe upon receipt. The
Sunday morning offering is brought to and placed in the vault
immediately after the service is over by two unrelated ushers. The head
usher shall have a key to the doors where the safe is located. Checks and
cash received during the week are immediately placed in the vault by the
office staff
2. The volunteer Counters shall have and keep confidential the
combination to the lock on the safe. The church locksmith shall be asked
to change the combination when there is change in Counters.
3. Each Monday the Counters remove the checks and cash from the safe,
separate it between contributions and non-contributions and Centennial
Endowment and prepare three deposits in accordance with the Counter
procedures. At least two unrelated persons will be present when cash and
checks are removed from the vault and processed for deposit.
4. A Counter takes the deposits to the bank upon completion of the
counting process, unless it is a bank holiday. In that case, the deposits are
placed back in the church safe and a Counter takes the deposits to the
bank the next banking morning.
5. Every check and cash envelope is copied for documentation purposes
and entry into the accounting system.
B. Gifts recorded by Financial Secretary
I. Member and non-member gifts of checks or cash shall be recorded in
timely fashion by the end of the week after the deposit is made.
2. Gifts shall be given the date of the Sunday prior to the Monday the
deposit is prepared. Stock gifts are dated the day the stock is transferred
into the church’s stock account.
3. Gifts shall be recorded to the estimate of giving income (formerly
called “pledge”) category, even if giving exceeds the estimate. If the gift
is in payment of a prior year estimate, the gift should be recorded to the
Prior Year Estimates of Giving income account.
4. Gifts from members and others who have not made an estimate of
giving shall be recorded in the Other Member Giving operating budget.
5. Cash gifts in an offering or other envelope, for whom we only know
the giver’s name and not also their address, are recorded to the Cash
Contributions contributor designation with their name on the entry. The
Cash Contribution contributor category shall be reviewed periodically to
determine whether we now know their address, in which case their
contributions to date will be transferred to person’s record aod will be
reported on their quarterly giving statement.
6. Restricted gifts shall be recorded as income to the designated fund for
which the gift was intended, unless the gift is small and the donor’s
intended purpose is funded in the operating budget in an amount
sufficiently larger than the gift to assure the church will speod at least the
amount of the gift on that purpose.
7. Restricted gifts for a ministry that is not currently active or being
contemplated as a new ministry shall be evaluated before accepting the
contribution. If it is for a ministry that is not likely to take place, the
donor shall be asked to consider making the contribution to an active
ministry. If this in not acceptable to the donor, the gift should be returned
to the donor with an explanation.
8. In kind gifts of stock or other marketable products will be recorded to
the donor’s record at the average of the high and low market value on the
day the church receives the gift in its brokerage account or at whatever
value is specified by IRS regulations at the date of the gift.
9. In kind gifts of tangible or real property shall be evaluated for its use
by the church or for its ease of sale by the church. A proposed gift may
be declined if determined by the Finance Committee to be either of no
immediate use by the church or too difficult to sell. If the gift is used by
the church, it will not be recorded with monetary value in the donor’s
giving record. If the gift is sold, it will be recorded in the donor’s giving
record at the sales price less all costs to sell the item.
10. Gifts from member’s or other person’s IRA, Charitable Giving Fund,
Foundation or other similar account will recorded as required by the
Internal Revenue Service.
11. Gifts received at the close of the calendar year shall be processed in
accordance with IRS regulations. Any check or donation received by the
church office by hand delivery or by US Mail delivery on or before the
close of business December 3 I or postmarked no later than December 3 1,
but received after December31, shall be recorded as a gift of that year.
Any check dated after December 31 or received or postmarked after
December 31, irrespective of the date on the check, shall be recorded as a
gift of the new year.
12. When an estimator passes away, the Financial Secretary will keep the
estimator’s name in the records for the year, but revise the total to the
amount actually paid. He will not send quarterly statementsto the family.
13. Contributions to the church are held strictly confidential. Records are
kept in a locked, secure location with only authorized confidential
persons having access, including the Financial Secretary, the Treasurer,
the Chair of the Finance Committee, the Stewardship campaign
leadership, and the Church Business Administrator.
C. Receipts by the church for other than donor contributions
1. Facility Use Income shall be collected from users of church facilities
and shall be recorded in the Facility Use Income account of the operating
budget. The Board of Trustees is charged with the responsibility to set
policies for use of church facilities by members for non-church purposes
and by outsiders for any use.
2. Concert, wedding, memorial service, and other event-related fees
shall be collected by the Wedding and Event Coordinator and the Concert
Coordinator and shall be deposited into their appropriate Special Purpose
accounts, pending payment of expenses of the events and transfer of the
Facility Use Income component into the Facility Use Income operating
budget account.
3. Contributions to the church from the Tongan congregation, the Fijian
Fellowship, and First School shall be recorded in their respective income
accounts in the operating budget.
4. Special seasonal offerings for Easter, Thanksgiving, and Christmas
shall be initially recorded in Special Purpose accounts designated for that
seasonal offering in order that the church can keep track of the total from
that offering. The income is transferred into the Operating Budget Other
Income account afier the season is over.
5. Investment income shall be recorded to the applicable account.
Income from investment of excess operating funds is recorded to the
Operating Budget General Fund Interest account. Income from
specifically restricted endowment (e.g. Memorial Garden), funds
functioning as endowment (e.g. Dallas Wood, Crary, Salo hinds), or from
trust funds held by others (e.g. Welch Fund and Walker Trust) is recorded
in the corresponding special purpose account. Centennial Endowment
Funds are handled in a manner defined in its Bylaws.
D. Fundraisers
1. Church groups wanting to raise funds from church members for
restricted or unrestricted church purposes and non-church groups wanting
to raise funds from church members for non-church purposes shall follow
procedures for approval by the Finance Committee.
2. The Chair or person in charge of the group shall complete the
Fundraising Application form and submit it to the Finance Committee
Chairperson in advance of the meeting of the Coimittee. The person in
charge of the proposed fund raiser is encouraged be in attendance at the
meeting where the decision is to be made, especially if this is a new fund
raiser.
3, Fundraisers shall be approved by the Finance Committee in advance
of dissemination of any publicity materials and before Fundraising can
begin. After the Finance Committee has made its decision, the Finance
Committee Chairperson shall submit a written approval or denial to the
requesting group, with a copy to the CBA for office files.
4. Funds raised shall be placed in the church safe in accordance with the
policy for receipt of funds and shall be recorded in accordance with the
policy for recording gifts to the church.
E. Bequests
1. The Board of Trustees accepts bequests on behalf of the church.
2. The Board of Trustees recommends use of any unrestricted bequest.
By Church Conference policy, the Board of Trustees must bring
recommendations for use of large unrestricted bequests to Church
Conference for approval.
3. The Board of Trustees may recommend that the Church Conference
designate an unrestricted bequest for a restricted purpose or to be treated
as endowment, with only the income available for spending. Such action
of the Church Conference can be changed by a subsequent Church
Conference.
Ill. Expenditures
A. Authority to spend church general funds comes from approval of the church
operating budget recommended by the Finance Committee and approved by
Administrative Board. Other funds of the church are restricted and must follow
the specifications of the donor. Some unrestricted bequests may be designated as
restricted or as funds functioning as endowment by the Board of Trustees, with
approval of the Administrative Board or Church Conference.
B. Expenditure of church funds
1. Each account of the church is established to track income and expense
of the church as to its purpose and by whose authority it can be spent.
2. Expenditures charged to an account are limited to the purpose
authorized by the donor, designated by the Church Conference, or
approved by Administrative Board during the church budgeting process.
3. Service providers engaged by committees or staff of the church must
provide a signed W-9 and a certificate of liability naming the church as
“additional insured” and a certificate showing coverage by workers’
compensation insurance for employees, before providing services to the
church on any church property, either the Hamilton Avenue or Webster
Street properties or the two parsonages or other properties. For small
individual proprietors (providing services directly without use of other
employees), a W-9 and release of liability must be provided.
4. Payments to independent contractors providing services to the church
must be paid directly by the church. A volunteer or staff member may
not pay these individuals and then be reimbursed personally by the
church.
5. A Check Request Form must be completed with payee name, account
number, amount, and description and signed by the authorized signatory
of the particular account.
a) A person who is the Signer #1 on an account, shown in
Attachment A (SIGNATURE AUTHORITY FOR CHURCH
ACCOUNTS) can, during their term of office, designate in writing to the
Chair of the Finance Committee, with copies to the CBA and Church
Treasurer, that the Signer #2 will be the Signer #1 on specific accounts up
to their limits as Signer #2. This, however, does not relieve Signer #1
from responsibility for monitoring charges to that account.
b) A valid original invoice or original cash register receipt or
other evidence of the church’s obligation to pay must be attached to the
Check Request Form.
c) An individual may not sign a check request authorizing
reimbursement of him or her self another authorized signer must
approve that check request. (See Accountable Reimbursement Policy.)
d) Approval of a check request can be made via an email by the
authorized signer. In such cases, the email must include the payee name,
account number, amount and description. Although not required, it is
recommended that an electronic copy of the original Check Request
Form and supporting documentation (eg. invoice, receipt) be included in
such email as an attachment.
6. The signed Check Request Form is reviewed for correctness of
account, amount, purpose, authorized signature, and fund availability by
the Church Business Administrator, who evidences the correctness of the
transaction before preparation of a check.
7. The Staff Parish Relations Committee (SPRC) hires church staff and
sets their pay rates and benefits within the limits of church personnel
policies and budget. This includes pay increases and bonuses. Written
approval of salaries must be provided by the Chair of SPRC to authorize
payment of employees. Pastors’ salaries and benefits, recommended by
SPRC, must also be approved by Church Conference.
8. The Treasurer shall issue checks for payment just in time to meet the
deadline of the vendor. Interest and penalty payments should be avoided,
but payment must not be issued earlier than necessary to meet the
payment deadline.
9. Payment of obligations of the church can be made only by check, with
the exception of transactions by a payroll service, whose contract
authorizes them to thaw on the church checking account by issuing
payroll checks, authorized by the church for personal services rendered to
the church. The payroll service is also authorized to withdraw from the
church checking account their monthly service fee and amounts necessary
for payroll taxes calculated by their system on the church payroll for the
period.
10. All checks issued by the church, including those prepared by the
payroll service, must carry the signature of the Church Treasurer or
Assistant Treasurer. No other person is authorized to sign checks or
withdraw hinds from church accounts, except that the Centennial
Endowment Fund Treasurer performs Treasurer Functions for Centennial
Endowment Funds.
C. Accountable Reimbursement Policy
1. Individuals (pastors, staff, church members or others) may be
reimbursed for reasonable and necessary expenses incurred on behalf of
the church with the following conditions:
a) All reimbursements must meet the IRS requirements for
business purpose and timeliness in order to avoid personal
taxability issues.
b) Check Request Form must be submitted in timely fashion,
meeting requirements of the Internal Revenue Service for
submission of reimbursement request within 60 days of incurring
the expense.
c) The original paid invoice or cash register receipt, evidencing
payment, must accompany the Check Request. A copy of the
check issued by the person being reimbursed is not acceptable
backup documentation for reimbursement.
d) The Check Request Form must state the church business
purpose and business relationship of the expense and the account
to which the expense is suggested to be charged. If the
reimbursement is for mileage, the number of miles, starting point
and end point of the trip, and purpose of the trip must be indicated
in the request for reimbursement. Mileage will be reimbursed at
the IRS Standard Mileage Rate.
e) The Check Request Form must be approved by an authorized
signatory on the account, who is not the person being reimbursed.
Pastors and certain staff (Director of Music, Director of
Children and Youth Ministry, and Church Business
Administrator) have reimbursable accounts allocated during the
budget process. Pastors’ reimbursable accounts are set by Church
Conference. These budgeted accounts set a limit on the amount
that can be spent on church business-related expenses of their
positions and include mileage from the church to church
appointments or visits, business meals with members or other staff
or individuals, software or other computer-related expenses,
membership dues, conference fees, and other expenses associated
with their church business capacity.
g) If the church pays a staff member’s personal expense
(benevolence), the payment is taxable income and, therefore, must
be approved by SPRC, and will be included on the employee’s
IRS Form W-2. This includes any expense that the IRS does not
define as a reimbursable business expense.
D. Grants from Centennial Endowment Fund
I. Grants and financial operations of the Centetmial Endowment Fund
are established in the Centennial Endowment Fund Bylaws adopted by
Church Conference.
2. Grants from the Centennial Endowment Fund are authorized by vote
of a Church Conference upon recommendation by the Administrative
Board.
3. Recipients of a grant must submit a Check Request Form, as
described above, with all supporting documentation, which is signed by
the Treasurer of the Centennial Endowment Fund before the check is
written by the church.
4. Checks written on behalf of the CEF by the church from its checking
account, either for grants or for CEF expenses, will be reimbursed by
transfer from a CEF bank or investment account to the church checking
account by the end of the month in which the disbursement was made.
E. Grants from the Children’s Endowment Fund
1. Grants from and financial operations of the Children’s Endowment
fund are established in the Children’s Endowment Fund Bylaws adopted
by Church Conference. It is intentionally not truly an endowment fund.
as the balance will eventually be liquidated through use of a payout
formula that exceeds earnings.
2. Grants from the Children’s Endowment Fund are authorized by vote
of a Church Conference, upon recommendation of the Children’s
Endowment Fund Committee.
3. The Chairperson of the Children’s Endowment Fund must submit a
Check Request Form to distribute granted hinds to the applicable school
in accordance with Church Conference approval.
F. Policy on Disbursement and Reporting of Pastoral Discretionary Funds
1. The General Pastor’s Discretionary Fund
a) The General Pastor’s Discretionary Fund is intended to allow
small confidential gifts of money or other financial assistance, as
determined at the discretion of the Senior Pastor, to: I) members
of the Church’s congregation in financial crisis or, 2) jobless,
homeless, or otherwise distressed citizens in our local community
who come to the church in need of financial assistance. This
hind is primarily generated from gifts, specified by the donor,
through the Joy of Giving program. As an example, the 2006
brochure stated: “This fund allows our pastors to confidentially
provide small gifts of money to congregation members in
financial crisis and to the increasing number ofjobless and
homeless people who come to our church for help. Our pastors
depend on this fund so that no one in need will be turned away
empty handed.”
b) To ensure that distributions are in keeping with the purpose of
this hind, further the church’s mission and ministry, and are
consistent with the church’s tax-exempt status as defined by the
Internal Revenue Service, the Administrative Board retains
administrative control over this fund,
c) Operating Procedures
(1) Requests for disbursements from tlus fund will be
accompanied with a brief description ensuring SLECh
request is consistent with this policy.
(2) Disbursements of small amounts made to members of
or visitors to our local community, as authorized by the
Senior Pastor, will be made in the form of either a voucher
or a payment made to a specific vendor of the goods or
services in need upon presentation of identification by the
needy person. Confidential records of amounts, dates, and
persons benefited will be maintained in the church office
with the intention of not providing repetitive help to the
same person. Direct payments to such individuals are
strongly discouraged.
(3) Small payments, as authorized by the Senior Pastor,
may be made directly to a member of the church
congregation in need of financial assistance.
d) No disbursement from this fund shall be made to benefit,
directly or indirectly, any pastor appointed to this church or
his/her family.
e) No disbursement from this hind shall be made to benefit any
paid staff member of the church without the prior authorization of
SPRC. Any such disbursement shall be treated as income and
made in accordance with applicable tax laws.
1) Disbursements from this fund will be summarized within the
monthly treasurer’s report including the total amount disbursed,
the number of requests fulfilled, and a brief descriptiorn Care shall
be taken by the Treasurer to preserve the confidentiality of those
assisted.
2. Restricted Bequests Left to the Church for Disbursement at the
Discretion of the Pastor
a) From time to time, the church may receive bequests that are
left to fund a specific purpose or purposes of the church at the
discretion of the pastor.
b) To ensure that distributions are in keeping with the
instructions of the bequest, further the church’s mission and
ministry, and are consistent with the church’s tax-exempt status as
defined by the Internal Revenue Service, the Administrative
Board retains administrative control over this fund.
c) Requests for disbursements from such a fund will be
accompanied with a brief description ensuring such request is
consistent with this policy and the specific instructions of the
bequest.
d) For large disbursements, especially those totaling 55,000 or
more whether requested in one disbursement or in multiple
disbursements for a similar purpose or program, the pastor is
strongly encouraged to build consensus with church leadership by
bringing the request to the Administrative Board for discussion
and approval.
e) No disbursement from such a fund shall be made to benefit,
directly or indirectly, any pastor appointed to this church or
his/her family.
Q No disbursement from this fund shall be made to benefit any
paid staff member of the church without the prior authorization of
SPRC. Any such disbursement shall be treated as income and
made in accordance with applicable tax laws.
g) Disbursements will be summarized within the monthly
Treasurer’s Report including the amount paid, the organization
receiving the payment, and a brief description.
Tips for Preventing and Catching Misuse of Church Funds for Pastors/Audit
Committees From a Church That Has Been There
FOLLOW THE MANDATES OF The Book of Discipline
THEY HAVE BEEN PUT THERE FOR A REASON
When you think of embezzlement, do you think of a high-powered thief stealing millions from a
multi-million dollar corporation? On the contrary, much embezzlement is done simply, and on a
small scale by trusted employees, and churches can be vulnerable because of the high level of
trust of all persons. It often happens because of inadequate internal controls in a church
organization’s accounting system.
Below you will find tips for preventing and catching the misuse of funds. If you maintain the
suggested controls, it is a good indicator that everything possible is being done to prevent
possible employee or volunteer fraud. An internal control system must, of course, be desigied to
fit the needs and size of a particular church organization. But these tips can serve as a starting
point for determining whether you need an internal control review. An internal control review
may help set up and maintain stronger controls. Please also consider reviewing the “Local
Church Audit Guide” available on the GCFA web site. Click here to go to “Local Church
Audit Guide.”
Note: There are no foolproof guarantees against embezzlement and fraud! Internal controls can
only help prevent them. Remember the Book of Discipline requirement of fidelity insurance or
bonding.
Many internal control procedures are strictly observed when they are first implemented; then,
because of job turnover, for the sake of convenience or because employees and volunteers are
trusted, they are no longer enforced. Thus, a periodic checkup for internal controls is a good idea.
GENERAL TIPS:
1)
Run a total for an account at random (for instance, altar flowers). Does the treasurer’s
figure come close to the amount you think it should be? Most churches have a set weekly
fee: simply multiply it by 52.
2)
Read the treasurer’s reports to your administrative council and to the charge
conference. Does one statement’s ending balance equal the next beginning balance? Are
there accounts (heat, etc.) that seem unreasonably high? If nothing else, you might bring
expenses under control. A “no secrets” and “hill disclosure” culture will also foster trust
and cooperation with members.
3)
Ask your auditor for suggestions to improve your accounting procedures and internal
controls and then take their suggestions to heart.
1
4)
If your treasurer is not an accountant or bookkeeper, provide training and consultation.
5)
Know the requirements of The Book ofDiscipline! There are provisions in place
designed to protect the local church from having these problems (annual audit, bonding,
regular and detailed reports from the treasurer to the Committee on Finance and Church
Council).
6)
Questions deserve answers. When questions are raised to the pastor (or chair of the
church council) that something is wrong, follow up! It may be difficult to imply that
something is wrong, but it is worse to have contributions made to God through the church
misused. Everyone may feel better if the treasurer is totally cleared and an explanation is
given.
7)
Make sure that there is adequate bonding on church officials who handle money. (See
Book ofDiscipline ¶ 262.4b)
8)
Rotate your treasurers (See Book ofDiscipline ¶ 249.7). Embezzlers will strike you as
the most dedicated of people. They cannot afford to take time off or be replaced, because
they will be found out.
9)
All employees should take annual vacations and their jobs reassigned to others in their
absence. Funds should not wait to be deposited until the usual depositor returns from an
absence.
10)
Dont get paranoid. Most treasurers are good, honest people. But embezzling is a
sickness that doesn’t go away or get better. hi fact, the activity and amount generally grow
to the point where the embezzlement becomes obvious and the person is caught.
Embezzlers were good, honest people at one time, and are able to make excuses for
themselves in their own minds. The United Methodist system does work when you use it.
We have budgets, audits, and rotations for reasons. Don’t let your local church down by
ignoring the safeguards. For additional information on local church audits, see “Local
Church Audit Guide” from GCFA (Financial Services Department, 847-869-3345, ext.
6706, or click here to go to the “Local Church Audit Guide”).
OFFICE SECURITY:
11)
Minimize the use of petty cash. Establish procedures for the permissible uses of petty
cash and the maximum account that may be removed at one time. Larger purchases
should be handled with a voucher system. Petty cash payments should be backed up by
vouchers that have proper approval.
12)
Vendor invoices should be approved by the proper party before payment and marked
paid after payment, with a notation for the date of payment and check number.
13)
Though distasteful to many, routine background criminal and/or financial checks can be
2
very helpful for anyone who will be handling money or accounts. The laws and
procedures differ from state to state. Written authorization and compliance with state and
federal law are required.
14)
You don’t have to wait until the end of the year for an audit or to have your treasurer
complete the charge conference report. If you do choose to have the treasurer fill out this
report, do not simply file the report in last year’s charge conference file! Look it over and
compare with the previous year’s. Between December 31 and January 1, one church lost
as much as $15,000 on paper (the treasurer had already spent it, and this covered the
trail). The treasurer simply began the new report with a different balance from the end of
the last report. This way, there was $15,000 that did not have to be accounted for in the
new year. The committee on finance is to provide annual audits of records of financial
officers of the local church and report to the charge conference (Book of Discifrilne
¶
262.4 c).
15)
Sudden changes in apportionment payouts may be a sign of trouble. Can you make it
one year and not the next without really knowing why? The same can be true of general
expenses
if you don’t know how or why you sometimes make or miss your budget,
take a look at your finances and find out. It may or may not be the treasurer, but you need
to find out what forces are driving your church.
—
16)
If you find that groups or committees are setting up their own treasuries, you have a
problem. If they do it because the “church” cannot afford to pay its bills, why is it that all
of these separate groups can? These separate groups can “enable” the embezzler because
they confuse the financial situation. They also can prolong the embezzlement because
they put off the eventual financial crisis.
CHECKS & BALANCES:
17)
Mails should be opened by someone other than the treasurer (or his/her assistant).
18)
Be sure you are seeing the original checkbook, checks, and records. Do not take your
work for granted.
19)
Bank statements should be reviewed/reconciled by someone other than the treasurer
(or his/her assistant).
20)
A regular list of checks received shouLd be prepared by someone other than the
treasurer (or his/her assistant). The list should be reconciled to the cash-receipts journal.
4 Arrange with your bank for deposit on Sunday
5Do not remove cash to a home; many insurance policies will not cover the
loss of funds under these circumstances
4 Secure cash in a fireproof safe if it cannot be deposited immediately
4Counting teams should be rotated
4Money should be counted by at least two people (not family members) in a
secure area of the church
4The offering total should be documented in a consistent manner
3
(
21)
A duplicate deposit slip should be made out by the bank and retained.
22)
Pre-numbered checks should be used for all payments.
23)
Checks should not be signed until made out (not pre-signed). The check signer should
be given supporting documents such as invoices at the time she/he is given the check to
sign. If possible, consider requiring two signatures on all checks and withdrawals.
24)
Canceled checks or equivalent bank documentation should be stored at the church.
Yes, storage is a problem, but requesting bank copies of checks is extremely expensive
and time consuming. The audit committee should review checks/documentation to be
certain that the stubs match the checks/documentation. Get at least one bank statement.
Does it agree with the treasurer’s books?
25)
Sign the checkbook itself with the date and balance at the time of the audit. Next year,
begin at this point.
26)
Make sure your finance secretary and treasurer are two separate people. Funds can
quietly disappear when the same person deposits the money and writes the checks.
27)
Instruct your bank to notify the pastor or the church office of any overdrafts. Many
times, bank statements go only to the treasurer, who can then manage to cover misdeeds.
28)
Put the canceled checks in numerical order or have the treasurer tape them back into
the checkbook. Make sure all the checks are accounted for, even the voids. It is important
to mark the check and the stub “void” and tear the signature area. If other than checks are
provided as documentation from your bank, retain and verify with voided checks. These
tasks should be done by someone other than the treasurer.
29)
The committee on finance should designate two persons (preferably not related and not
the treasurer) to count the offering, giving a record of funds to both the financial secretary
and treasurer (Book ofDiscipline 262.4 a).
4
Church Management Software
by Nick B. Nicholaou
CHURCH MANAGEMENT software pro
viders continue to improve their ability to
help churches fulfill their mission! With
more abilities to track and communicate
with people, improved web and mobile
device interfaces, and powerful database
tools, this category of software is a big
help and useful asset for today’s ministries
in reaching many for the Gospel.
CHURCH SOFTWARE HISTORJCAL
PERSPECTIVE
In the mid-i 980s the number of these pro
grams grew to 262! Then some merged,
some consolidated, and some went out
of business, reducing the number to only
2G NACBALedger Winter2OlI
34. Then the Internet made it so easy for
those writing solutions to share them that
the number of solutions doubled! Our
research this year found just 40 focus-’
ing on the church and ministry market,
of which 28 qualified for this article (re
quirements include active marketing,
minimum growth, amid proven continued
development of their solution).
We always include new providers (those
less than three years old) to give them a
chance to compete with ‘the big guys It
also keeps all of the providers on their
toes’ as these up-and-comets sometimes
develop new technologies that benefit
many churches and ministries.
WHY CHURCH MANAGEMENT
SO FrWIRE?
The solution providers on the follow
ing pages meet the sophisticated needs
churches and ministries have. Track
ing more than just names, addresses,
and phone numbers, many of these also
track family relationships, spiritual gifts,
talents, inferests, attendance, nurser-v
securitç contributions, fundraisirig cam
paigns, volunteerism, and more.
Church and ministry offices can be stress
ful workplaces due to the many deadlines
that mustbe met by an administrative staff
typically smaller in number than what
would he found in a similar-sized secular
business. Church management software,
if well written, can be a soothing balm. If
its powerful, capable, fast, and stable, the
ministry team can rely on it to help them
get the most possible work done quickly
and with minima) stress. And if its abili
ties are broad enough, every ministry in
the church or parachurch organization
can focus on just one database, increasing
synergy and minimizing cost.
CHURCH MANAGEMENT SOFtWARE
DEFINED
Some time ago Steve Hewitt, Editor-inChief of Christian Computing Magazine,
labeled the software category tailored to
meet the needs of churches as Church
Management Software, or CMS. More
recently some began calling it ChMS to
help prevent confusion now that so many
software categories are called ‘(DM5’. Para
church ministries need to track similar
data, so we invited those solutions into
this same article too. Following is a wellresearched list of all (DbMS providers at
the time of this writing, with each stat
ing at the top of the feature chart whether
their focus is church, parachurch, or both.
NOT-FOR-PROFITACCOUNTING
Churches and ministries exist in a unique
accounting niche that most software (and
even CPAs!) can’t help with. But many
ChMS packages can help in this area.
One of a ministry’s most vulnerable areas
is ñnance. All too often we hear about
churches and ministries that have suf
fered embezzlement by a trusted team
member. One of the best protections is
an accounting system with a good audit
trail that tracks the detail of every trans
action and cannot be altered in any way.
For these reasons, some ChMS providers
have written their own fully-integrated ac
counting system.
Some churches and ministries want a
ChMS that has a fully-integrated account
ing system, and so we list the functions
they look for in the chart. Other churches
and ministries may not care whether the
ChMS provider has written its own ac
counting system, and for them it’s good to
know that most ChMSs can interface with
‘third-party’ accounting systems such as
those provided by Microsoft, Intuit, etc.
FEATURE CHART (Pages 28-29)
We’ve tried to give you the most compre
hensive and quickest format possible of
those ChMS database and accounting
functions ministry teams request most.
We removed common features that are
provided by all ChMS providers to help
focus on differences. We’ve also given
you information on how to reach each
provider like how long they’ve been mak
ing their solutions available, how many
organizations they currently serve, their
technical support hours, and how often
they update their software. All of the
information in this article was provided
by the software companies.
The chart uses two symbols:
The K symbol indicates features ChMS
companies currently provide directly, and
The A symbol indicates needs they meet
through an outside (third party) source.
-
Services
,) oucafl
—reach) ...i at nick@
rnb&ind.cornz
1W19.
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_.-
—
-
HAPPY HUNTING!
Shop wisely. We counsel all prospective
buyers to do their due diligence and check
with current users of the software. Ask
questions like:
•
Does the software do what was
promised?
• Is their technical support team capable
and available?
• If you were faced with the same
decision today, what would you do
differently?
ChMS PROVIDERS LIST (Pages 30—31)
Feel free to contact any of the providers
listed. They would love to help you in
your ministry. Happy hunting 9
Church management software providers continue
to improve their ability to help churches fulfill
their mission! With more abilities to track and
communicate with people, improved Web and
mobile device interfaces, and powerful database
tools, this category of software is a big help and
useful asset for today’s ministries in reaching
many for the Gospel.
winter2oli
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CanSetUpasAcowalorCash Basis
AccountPayablelSiitPay
Graphic Analysis
AulbrnaticallyTracks Multiple Fun
AomaUc.allyB2lancesFuntwti
GeneralLedger
Fixed Assets Tracking (Inventory, Depreciation, Maintenance)
Bookstore (lnvenoory/POS) Module
Facility/Equipment Calendar Scheduler
Calendar Scheduler Can Feed Pubiro Events to Wnistoys Web site
Retreat/Event Registrations with NR Tracking
Can Post Registmtldns Received via Web site without Manual Entry
Lbraiy Moiftie
Check-lnTrcksNlergs,AllowaNeCheck-OutPersons.etc.
Tracks Volunteer Involvements, Interests, etc.
Manages Small Groups
TracksAttendance
Security/Check-In CapabWty
TracbufiofGh1sinKffid
Gifts in lond Can Satis Pdge without Settng 61K Value
Can Post Gifts Received via Web she without Manual Entry
Can Store Check and Envelope Images
Congregants tDorrs Can \new Check Images Online
Can Reassign Envelope Numbers
Slatanierits Can BeAutematicah Sent via Email
Can Separately Tizk Multiple Congregations
Stores Individual and Family Photos
Pdnts Directodes—whi or without Ptotos
PrInts U.S. Postal Bar Codes
CertIlledPostalCASSandPAVt
National Change of Address COP Updates
meni
)onor Management
n Edttlons” Available
MuffiialVeiA Ne (Spa
Church and Donor
Management Systems (ChMS)
2011
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28 NAcHALedger WinLer2OIl
Church and Doilor Management Systems Providers 2011
AIlS Technologies
Phone. (800) 736-7425
Emali: solutions@acstechnologies.
corn
Web: wwi.acstechnoiogies,com
Company Founded in 1978
Years Marketing CMS 35
Ministries Currently Using: 50,000
Number on Team: 340
Support Hours: 9a—8p (-6p F) Eastern
Last Major Release: Sep. 2011
Updates per Year: Ongoing via Web
,.
-
Blackbaud
Phone: (800) 443-9441
Email: solutions©blackbaud.corn
Web: w.blackbaud.com
Company Founded in 1981
Years Marketing CMS: 27
Ministries Currentiy Using: 1,400
Nurnber on Team: 2,000
Support Hours: Online 24•7
Last Major Release: Cot, 2011
Updates per Year: 2
OVOMS
Phone: (901) 758-0791
Email: [email protected]
Web: wMv.bvcms,com
Company Founded in 2009
Years Marketing CMS. 2
Ministries Currently Using- 64
Number on Team: 4
Support Hours: Online 24’7
Last Major Release: Sep. 2011
Updates per Year: 24
Cahaba Creek Software
Phone: (205) 621-9649
Email; [email protected]
Web: w.cahabacreek.com
Company Founded in 1997
Years Marketing CMS: 6
Ministries Currently Using: 2,696
Number on Team: 13
Support Hours: 9a—5p Central
Last Major Release: Jul, 2011
Updates per Year: 3—4
Church Office Online
Phone: (800) 220-2402
Email: support@churchofficeonline.
cam
I Web: www.churchofticeonline.ccm
Company Founded in 2005
Years Marketing CMS: 6
Ministries Currently Using: 715
Number on Team: 4
Support Hours: 8a—5p Pacific
Last Major Release: Aug, 2011
Updates per Year: 7
tillS Church Software
Phone; (800) 295-7551
Email: [email protected]
Web:VAVW.ccissoftware.corn
Company Founded i 1981
Years Marketing CMS: 31
Ministries Currently Using: 6,510
Number on Team: 60
Support Hours: 8a—5p Eastern
Last Major Release: Mar, 2011
Updates per Year: 2
1
COM+
Phone: (877) 891-4236
Email: [email protected]
Web’ www.cdmplus.com
Compansi Founded in 1986
Years Marketing CMS: 26
Ministries Currently Using: 4,000
Numberon Team: 24
Support Hours: 8:306p Eastern
Last Major Release: Nov 2010
Updates perYear: Ongoing viaWeb
.
.
,
By The Book
Phone: (800) 554-9116
Email. [email protected]
Web: wAtbythebook.com
Company Founded in 1991
Years Marketing CMS: 20
Ministries Currently Using:2,175
Number on Team: 5
Support Hours: 8a—5p (-1 2p F) Central
Last Major Release:Aug, 2011
Updates per Year: Ongoing via Web
Church Windows
Phone: (800) 533-5227
Email: [email protected]
Web: .churchwindows.com
Company Founded in 1986
Years Marketing CMS 26
Ministnes Currently Using: 11,500
Number on Team: 35
Support Hours: 9a—Vp Eastern
Last Major Release: Apr, 2011
Updates per Year: 2
ChurchHelper TABS Online
Phone: (951) 398-5008
Email: [email protected]
Web: www churchhelper.com
Company Founded in 1985
Years Marketing CMS- 4
Ministries Currently Using: 250
Number an Team; S
Support Hours: 9a—5p Pacific
Last Major Release: Oct, 2011
Updates per Year: 4
.
.‘
-
-
‘
-
Phone- (866) 242-1199
Email:solutons@
chlffchcoilVflunitybuilder.com
Web: vshurchcommunitybuiider.
corn
Company Founded in 1999
Years Marketing CMS:12
Ministries Currently Using: 1,800
Number on Team: 39
SupportHours: 6a—p Mountain
Last Major Release: Jun, 2011
Updates per Year: Ongoing via Web
-
-.
.
-
,
-
30 NACHA Ledger Winter 2011
/
Elexto
Phone: (866) 737-9273
Email: [email protected]
Web:www.eexio corn
Company Founded in 2002
Years Marketing CMS: 10
Ministries Currently Using: 2,100
Number on Team: 25
Support Hours 9a—5p Eastern
Last Major Release Oct. 2011
Updates per Year: 12
,
Church Community Builder
,
Diakonia
Phone: (800) 325-6642
Email: [email protected]
Web:wv,church-software.com
Company Founded in 1992
Years Marketing CMS: 17
Ministries Currently Long- 1070
Number on Team: 3
Support Hours: 9a—5p Central
Last Major Release: Oct 2011
Updates per Year: Varies
‘
ChurchWac
Phone: (877) 704-0222
Email: [email protected]
Web: VAwJ.churchtrac.com
Company Founded in 2004
Years Marketing CMS: 7
Ministries Currently Using: 11700
Number on Team: 4
Support Hours: 9a—5p Eastern
Last Major Release: Jun, 2011
Updates per Year: 20
‘
‘
Faith Highway
Phone: (512) 608-1590
Email: kristen.parkhurst@faithhighway.
com
Web: wvnN.faithhighway.com
Company FoLnded in 20Z0
Years Marketing CMS: 3
Mnistr:es Currently Usir:g: 25
Number on Team: 50
Support Hours: Ba—5p Central
Last Major Release: May, 2011
Updates per Year: Ongoing via Web
Fresh Vine
Phone: (612) 386-3442
Email: [email protected]
Web:vnv’w.treshvne.co
Company Founded in 2008
Years Marketing CMS: 1
Ministries Currently Using: 30
Number on Team: 4
Support Hours: 8a—5p Central
Last Major Release: Jul. 2011
Updates per Year 3—4
Helpmate Technology Solutions
Phone: (888) 658-3247
Email: [email protected]
Web: .helpmate.com
Company Founded n 1996
Years Marketing CMS: 15
Ministries Currently Using: 2150
Number on Team: 5
Support Hours: 9.30a—5p Eastern
Last Major Release: Sep, 2011
Updates per Year: 2
My$lockcom
Phone: (866) 852-6648
Email: nfomyfIockcom
Web: www.myflock corn
Company Founded in 2001
Years Markebng CMS: 10
Ministries Currently Using: 500
Number on Team: 4
Support Hours: 8a—Sp Eastern
Last Major Release: Sep, 2011
Updates perYear: 20
Powezthurch Software
Phone: (800) 486-1800
Email: [email protected]
Web: w.powerchurch.com
Company Founded in 1984
Years Marketing CMS: 27
Ministries Currently Using: 33003
Number on Team: 14
Support Hours: 9a—Op Eastern
Last Major Release: Nov
1 2010
Updates perYear: Varies
Shelby Systems
Phone:(800)877-0222
EmaJi: [email protected]
Web: vwvw4shelbysystems.com
Company Founded in 1976
Years Marketing CMS: 38
Ministries Currently Using: 8,500
Numberon Team: 100
Support Hours: 7a—Sp Central
Last Major Release: Aug, 2011
Updates par Year: Ongoing via Web
Icon Systems
Phone: (800) 596-4266
Email: [email protected]
Web: w,iconcmo.com
Company Founded in 1992
Years Marketing CMS: 20
MinIstries Currently Using: 3450
Number on Team: 8
Support Hours: 8a—5p Central
Last Major Release: Sep, 2011
Updates per Year Varies
Nuverb Systems
Phone: (888) 479-4636
Email [email protected]
Web: donarius.com
Company Founded in 1993
Years Marketing CMS: 13
Ministries Currently Using: 1,680
Number on Team: 1
Support Hours: 9a—5p Eastem
Last Major Release: Sep. 2011
Updates per Year. 20
QuickSooks Nonprofit Edition
Phone: (888) 729-1 996
Email: .quickbookscomfcalIme
Web: w.quickbooks com
Company Founded in 1983
Years Marketing CMS: 9
Ministnes Currently Using: 13)500
Number on Team- 95
Support Hours: 6a-6p Pacific
Last Major Release: Sep, 2011
Updates per Year: 1
Software4Nonprofits.com
Phone: (416) 423-7722
Email: [email protected]
Web: software4nonprotits.com
Company Founded in 1999
Years Marketing CMS: 12
Ministhes Currently Using: 4,500
Number on Team: 1
Support Hours: 9a—9p Eastern
Last Major Release: Sep, 2011
Updates per Year: 4—6
RCL Software
Phone: (757) 809-3030
Email: [email protected]
Web; w.rclsoftware,com
Company Founded in 2002
Years Marketing CMS: 5
Ministries Currently Using: 545
Number on Team: 1
Support Hours: 9a—5p Eastern
Last Major Release: May, 2011
Updates perYear: 1
Specialty Software
Phone: (800) 568-6350
Email: [email protected]
Web: specialtysoftware.com
Company Founded in 1983
Years Marketing CMS: 30
Ministries Currently Using: 6,500
Number on Team: 5
Support Hours: 9a—5p Eastern
Last Major Release: Dot, 2011
Updates per Year: 4 PY
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Ministry Platform
Phone. (678) 404-2467
Email: [email protected]
Web: v.thinkministry.com
Company Founded in 2007
Years Marketing CMS: 2
Ministries Currently Using: 25
NLmber on Team: 8
Support Hours: 9a—5p Eastem
Last Major Release: Jul, 2011
Updates per Year: 4—5
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ParIshSOFTIL060S
Phone: (866) 930-4774
Email. [email protected]
Web: Www.parishsoff.com
Company Founded in 1998
,Years Marketing CMS: 14
Ministries Currently Using: 12,000
Number on Team: 90
Support Hours: 9a—7p Eastem
Last Major Release: Aug, 2011
Updates per Year: 3
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Good Samaritan/Benevolence Fund Policy
Take care of him, and when I come back, I will repay you whatever more you spend..
Jesus said, “Go and do likewise.” Luke 10:36-37
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Many churches seek to provide funds to held needy persons. If funds are raised on a caseby-case basis, it is likely that any donations made will not be tax deductible. The better
way to handle the desire to help those in need is for the church to adopt a Good
Samaritan/Benevolence Fund policy, such as the sample policy below. A Good
Samaritan/Benevolence committee should be set up or, in the alternative, the function of
selecting needy donees can be assigned to another existing committee of the church. It is
important that all of the decisions be made totally independently of donor’s suggestions and
on the basis of need and other objective criteria. (See also IRS Publication 526
Charitable Contributions)
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(Sample)
Benevolence Fund Policy
United Methodist Church, in keeping with its Biblical and charitable goals, has
established a Good Samaritan/Benevolence Fund (‘Fund”) to assist persons in our
community in financial need. Donors may suggest beneficiaries of the Fund. However, such
suggestions shall be deemed advisory rather than mandatory in nature. The administration
of the Fund, including all disbursements, is subject to the exclusive control and discretion of
the Church. All gifts to the fund are gifts to the Church and while the committee may
consider suggested designations, in no event is it bound to follow them.
Checks should be made payable to the Church, with a notation that the funds are to be
placed in the Church’s Good Samaritan/Benevolence Fund.
A MAflER OF GOOD STEWARDSHIP;
TIPS FOR RESPONSIBLE HANDLiNG
OF A PASTOR’S DISCRETIONARY FUND
By the GCFA Legal Department
United Methodist churches commonly have a hind called the pastor’s discretionary fund,
which is intended to give the pastor complete discretion and authority to provide
confidential financial support to persons in need. In some local churches, the pastor is
given free reign, with no guidelines or instructions on how the church intended for the
pastor to handle these monies. In other local churches, the pastor is given some guidance,
but it may be very general or unclear, given orally or understood culturally. In addition,
in some churches pastors understand that they can use these hinds to pay for program or
other expenses that are not totally covered by the budget. All of these churches and their
pastors no doubt are unaware of the potential for misuse of funds and the income tax
consequences to these arrangements.
Regardless of the level of trust between the congregation and its pastor (or between the
pastor and the finance committee, treasurer and financial secretary) written policies for
the responsible handling of the pastor’s discretionary hind are beneficial for everyone and
should minimize misuse of hinds and negative income tax consequences. If the pastor
has complete discretion, without clear guidelines or financial policies, there is a risk that
the entire hind could be construed as income to the pastor, simply because the pastor
ultimately has the discretion to pay the hinds to himself.
Tips
Set forth below are some tips for local churches on the responsible handling of a pastor’s
discretionary hind.
•
Establish a written policy that: 1) sets forth the exclusive purpose(s) of the fund
with specificity and clarity (Is it to be used only for providing assistance to the
needy? May the pastor use it for any other purposes and, if so, for what specific
purposes, consistent with the program and budget of the church); 2) equires the
pastor to document and record distributions from the fund (and authorizes the
church to request additional documentation) showing the types of assistance
provided during any given year (for example: $100 gift card from a local grocery
was given to a needy family to purchase groceries; $500 was paid to the hospital
for a needy family to pay for hospital emergency room treatment for a seriously ill
child; $150 was paid to a transportation company for a needy elderly woman to
provide her with transportation to and from a kidney dialysis center for a year; bus
tickets and a new pair of shoes and slacks were purchased for a homeless person
who had ajob interview); 3) encourages the pastor to use the monies for goods
and services rather than cash assistance (examples: taxi fare, bus ticket, a bag of
groceries, a pair of shoes, a doctor bill), which helps to protect the pastor, the
church and the persons receiving assistance from accusations of irregularity or
private inurement; 4) requires the pastor to request the funds from the treasurer on
Discretionary Fund Tips
Page 2
some type of request voucher form, as an internal control mechanism over access
to the fund (note: this can be done and still maintain confidentiality for the
specific needy persons who will be beneficiaries); 5) requires the fund to be
audited with the other church funds; 6) states that the fund may not ever be used
by the pastor for himself or his family, and 7) limits the dollar amount that may
be expended at any one time without advance written permission from the church
council or finance committee.
•
Educate new pastors, finance secretaries, treasurers, finance committee chairs and
church council chairs on the existence and purpose of the fund and the internal
controls and policy that have been established to protect the church and all
persons from accusations of irregularity or private inurement;
•
Give the pastor authority to distribute the fund only for the specified purpose and
consistently enforce the limits on this authority;
•
Educate all new pastors about the policy, and ensure that they understand the
church’s protocols (for example, make sure the pastor knows that the funds can
never be used personally or for any family member, for any purpose, including
but not limited to college tuition for the pastor’s children or other family
members; health care expenses for the pastor and his family; emergency cash for
the pastor or famiLy members; etc.)
•
Educate all new pastors, treasurers and financial secretaries about these matters,
and ensure that they understand the potential income tax implications if the
church’s policy is not followed carefully
•
Ensure that the pastor does not keep a stash of emergency cash in his/her desk for
quick disbursement, because security and internal controls for cash in a desk
drawer are inadequate;
•
Account for all expenditures on church financial statements and reports, including
the Local Church Statistical Table II
•
Retain administrative control over the fUnd to ensure that all distributions further
the church’s mission and ministry, and are in keeping with its tax exempt status.
•
The church should make provisions for an annual audit of this fund according to
The Book of Discipline ¶ 617.
Examples of Inappropriate Use of Pastor’s Discretionary Fund
I)
Appropriate: Pastor Dave’s church has a written discretionary fund policy
with careful internal controls. The annual budget for the fund is $2,500, and
Pastor Dave is allowed to spend no more than $300 at any one time. The
Discretionary Fund Tips
Page 3
written policy specifies that the discretionary fund may be used only to
provide care for the needy. During the year, Pastor Dave submits appropriate
documentation for the following expenditures under this fund: 1/5/01 $100
for grocery coupons for needy family in church community; 2/14/01 $200 to
Meadows Community Center, Inc. for winter boots for children of needy
families; 2/20/01 -$100 paid directly to utility company for heat bill for needy
family; 4/10/01 $172 for groceries for homeless famiLy in church
community; 4/3/01 —$100 for 5 bus passes for men at homeless shelter;
8/1/01 -$300 for Wesley House for school supplies for needy children;
8/20/01 additional $300 for Wesley House for school supplies for needy
children (approval of church council obtained for additional expenditure);
10/15/01 -$275 for groceries for food pantry for Thanksgiving baskets for
needy families; 11/2/01 $200 for winter coats for children at Meadows
Community Center; 11/30/0 1 -$50 for cab fare coupons for elderly woman in
need of transportation for kidney dialysis until regular volunteer driver’s car is
repaired.
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2)
Appropriate expense but troublesome procedures: Pastor Bob is given a
$5,000 discretionan’ fund each year. The church does not have a written
policy about how the funds are to be used. The funds are kept in a separate
checking account, for which Pastor Bob is the sole authorized signer on the
account. Pastor Bob always uses the funds for the same purposes each year:
to purchase school supplies and winter coats for needy children in the area; to
provide homeless persons with a Thanksgiving and Christmas dinner at a local
restaurant; to purchase food and bus passes for the church’s most needy
families. While the use of the funds in this example is fine, the scenario is
troublesome because of: a) the lack of internal controls (two signers on the
account; documentation of the expenses for the church treasurer or financial
secretary; b) the absence of a written policy stating that Pastor Bob may not
use the funds for anything other than assistance to needy persons and families;
and c) the absence of any protocols to prohibit Pastor Bob from using the
funds for any personal purposes may make the entire $5,000 taxable income
to him.
3)
Might be inappropriate: Pastor Nancy used the discretionary fund to buy a
bag of groceries for all new members of the church. While it is certainly
appropriate for the church to give a small gift of hospitality to all new
members of the church, the pastor’s discretionary hind should not be used for
this purpose unless the written church policy specifically states that this is one
of the authorized purposes for the discretionary fund. It would be more
appropriate for the hospitality gifts for new members to come from the budget
of the evangelism committee. It would be especially inappropriate to use the
discretionary fund for hospitality gifts to all new members ifthe church’s
policy intends for the discretionary fund to be used for needy families, unless
all new members of the church qualified as needy.
Discretionary Fund Tips
Page 4
4)
Unwise under most circumstances: Pastor Tom distributed $1,000 out of
the discretionary fund to pay for Christmas gifts to his staff. It is appropriate
for a church to authorize its pastor to use church funds to take staff out for a
Christmas lunch, at the church’s expense, and it is appropriate for the church
to buy small gifts of appreciation to staff for special occasions. It is best for
these expenses to come from a specific line item in the budget where other
staff support expenses are borne; also it might be more appropriate for these
types of expenses to come from the budget of the pastor parish relations
committee, where there may be greater accountability and control over the
expenditure.
5)
Probably inappropriate: Pastor Frank used $2,000 of the discretionary fund
to pay for new appliances in the kitchen of the parsonage. While new
appliances might have been needed and would be an expense appropriate for
the local church to make, if it chose to do so, this scenario is troublesome
because: a) the church should make the decision about what to upgrade in the
parsonage, if the church is going to pay for that expense; b) the expenses of
upgrading the parsonage should come from the budget for church property, or
out of the pastor’s housing allowance, depending on the circumstances and the
arrangements between the church and the pastor regarding parsonage
expenses; c) the discretionary fund should not be used for anything that
appears to be for the benefit of the pastor or his family.
6)
Always inappropriate: Pastor Alice borrowed $5,000 from the’discretionary
fund to pay for her son’s college tuition expense.
7)
Always inappropriate: Pastor Sally distributed $5,000 out of the
discretionary fund to assist her daughter with the down payment for the
purchase of a first home. Her daughter otherwise would not have been able to
purchase the home.
8)
Always inappropriate: Pastor Sue’s church has a written discretionary fund
policy with carefUl internal controls. The annual budget for the fund is
$5,000, and Pastor Sue is allowed to spend no more than $500 at any one
time. The written policy specifies that the discretionary fund may be used for
any of the following purposes: 1) providing care for the needy; 2) for special
church projects that come up during the year without other budget dollars for
support, provided that the pastor seeks approval of the church council before
spending the money for any such project. The youth group approaches Pastor
Sue to ask for help with a mission project that the church council will not
agree to fund. Pastor Sue agrees to provide $400 for the project. While the
project might qualify for support under the discretionary fund policy (purpose
#2), Pastor Sue should have gone to the church council for approval before
agreeing to support the project.
Discretionary Fund Tips
Page 5
In summary, regardless of how a church decides to fund a pastor’s discretionary account
(through the annual budget, special offerings, etc.), a written policy on usage with
specificity and clarity, together with sound internal controls, are important protections for
the pastor, the church, and those who are recipients of the funds. Confidentiality for
recipients can be maintained even with these sound internal controls. Protecting the
church’s assets is a matter of good stewardship of the gifts that have been entrusted to the
church to do God’s work in the community and world.
RECORD RETENTION
Document
How Long to Keep (Minimum)
Articles of Incorporation, amendments, bylaws
permanently
Certificate of incorporation and corporate records to the state
permanently
Tax returns
permanently
Work sheets and related backup documents for tax returns
7 years
Minutes
permanently
Annual corporate reports
permanently
Property records
permanently
Contracts and leases in effect
permanently
Insurance policies (including expired policies)
permanently
Insurance letters/correspondence
permanently
Audit reports of CPAs and financial statements
permanently
Employment applications (for current employees)
permanently
Bank statements and reconciliations
7 years
Canceled checks for standard transactions
7 years
Invoices from vendors
7 years
W-2 or 1099 forms
7 years
Housing allowance forms
7 years
Business correspondence
3 years
Employee personnel records (after termination)
3 years
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Some of the suggested retention periods are for legal reasons, while others are based on practical considerations. You may want to keep some
records longer than the table suggests.
I.
It is an excellent idea for your organization to discuss and adopt a record retention policy. The above table gives you some suggestions
on items to be included in the policy and time periods to be used.
2.
When developing a record retention policy, it is important to think about where those files will be kept, how secure those files will be,
and the conditions under which files will need to be stored (heat and particularly dampness can be very destructive to files).
3.
Some of the reasons Co keep tiles and records include legal requirements. potential relevance in future litigation, and the needs of the
organization, as well as historic importance. It goes without saying that should there be threatened litigation or an investigation on a
certain subject matter, particular care should be given that no file or document relating to that matter be destroyed.
4.
Tax returns and governmental reports affecting tax liability should be kept permanently. However, most backup records, such as receipts
documenting income deductions need only be kept for seven years. The Internal Revenue Service calls for a six-year statute of
limitations. The IRS has three years from the date of when the income tax return is filed to question or audit it. If the IRS can prove
an omission of at leasE 25% of income, the time period doubles to six years. Therefore, the seven-year period gives a one-year cushion
beyond that time limit. While mosi churches are not required to file tax returns, these periods apply to any entity that musi file, as well
as individual filers.
Ofparticular importance is the retention ofinsurance policies and related documents. From time to time, lawsuits are brought which
reach back many years. Therefore, it is important to determine the policy in effect at the time that a claim arose. Should those policies
be missing, they can often be recreated by contacting your broker or insurance company to establish coverage.