Financial Supplement TO THE

2017 ANNUAL REPORT

TREASURER’S REPORT How thankful we are to be a part of such a generous community! 2017 saw completion of a successful capital campaign that raised over $2.7 million to allow Westminster to provide needed endowment for our building, pay for the cost of the campaign and provide approximately $500,000 in additional support for mission projects. During the year just completed, we saw continuing financial support of Westminster’s strong pastoral leadership and dedicated staff, core programs and mission outreach through our congregation’s annual giving and endowment income. Preliminary information for 2017 operating budget shows a $18,606 surplus of revenue over expenses due to staff vacancies during the first half of the year, savings in Christian Education, building occupancy/maintenance and administrative expenses. 2017 also benefited from 2015 and 2016 surpluses totaling $75,154. At the annual meeting in January 2017, we reported a significant surplus of revenue over expenses for 2016 due primarily to higher than expected giving, one-time staffing vacancies and lower facilities expenses. The accountant review

of the 2016 financial statements, completed in October 2017, confirmed a $129,397 surplus. The Joint Finance Committee recommended, and Session unanimously approved, to allocate the surplus:

$54,158 to balance the 2017 budget $20,000 to support personnel needs 10% ($12,940) to support benevolence Remainder ($42,299) to Property Fund for building capital projects

These amounts have been allocated as approved. Funds for personnel, benevolence and building capital projects have been distributed directly to each area without flowing through the operating budget. When creating the budget for 2018, the Joint Finance committee continued to use the guidance set forth by the Long-Range Planning Task Force:

Budgeting for capital expenses for our church building

Maintaining staff compensation at equitable and competitive levels

Utilizing a preset percentage of pledges and other contributed income for benevolences that are supported by the budget

Statement of Purpose The Joint Finance Committee is a committee of the Session responsible to manage the annual fiscal affairs of the church and to develop an understanding of the financial state of the church within the Session, the Trustees and the congregation.

Committee Members

Helen Zumsteg, Convener and Treasurer

Charles Babcock Jen Barrington

Ty Burns Fred Iobst

Mary Lu Pamm Margo Reign Bruce Weber

Staff Liaison

Colleen Falasco

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continued…

Joint Finance Committee

We are fortunate to have talented individuals, both volunteer and on staff, who have been inspired to find creative solutions to best utilize our finite resources to meet program and staffing needs. Also, continued increase in the value of Westminster’s endowment allows for greater support to the operating budget. (See page 6 for 2017 balance sheet.) Challenges that we see for 2018 include a 11.5% increase in the cost of medical benefits and, for the first time in several years, there is no surplus from a prior year included in the 2018 budget. The net result for the 2018 budget is a small deficit of $49,256. This represents only 3% of $1,642,554 total expenses budgeted for 2018. Pledges from our successful capital campaign will be fulfilled over the next 5 years. As a result, Westminster’s operating budget will continue to support our building’s capital projects until Trustees determine how best to allocate funds received through the campaign. These funds will first go toward the initial $2 million goal to support our building (net of campaign expenses). Thereafter, funds received will go to support mission. Once this allocation is accomplished, the Joint Finance Committee anticipates that the need to support capital projects within Westminster’s operating budget will be eliminated. As we go through the process of addressing Westminster’s long-term financial needs, the Session and the Joint Finance Committee are confident that we are on sound financial footing.

3

Members of the Joint Finance Committee express our sincere appreciation to Colleen Falasco, Director of Financial Operations, for her strong financial skills and dedication. 2017 was Colleen’s first full year in her new position and she has demonstrated the ability to learn quickly and be flexible; particularly as 2017 included administration of the capital campaign, in addition to her usual duties.

“OUR FAITH, OUR FOUNDATION, OUR FUTURE” CAPITAL CAMPAIGN One of the most exciting stories of 2017 was the marvelous success of our capital campaign. Thanks to the generous giving of our members, we burst through both our initial goal and our stretch goal!

When our members understood how vital our building is not only to our church family, but also to the Wilmington community, they gave generously. Currently, we are home to nearly 30 outside groups, including nine alcoholic and narcotic addiction groups, the UrbanPromise after school tutoring program which helps 40 low income children, Family Promise which houses temporarily homeless families in our building four weeks a year, Rainbow Chorale, Pacem in Terris, and Churches for Middle East Peace, just to name a few. For the past few years, our annual budget has been strained to meet the needs of our property inside and out. We spend approximately $200,000 a year to maintain our vast and

beautiful facilities that include 60 rooms, 24 distinct roofs, 19 individual air conditioning systems, 38 stained glass windows, and 50,000 square feet. Prior to the campaign we had approximately $2 million in our Property Endowment Fund. Taking a 5% draw each year produced $100,000, or half of what is needed. The Session decided that raising an additional $2 million for the Property Endowment would produce the $200,000 annual income and allow us to remove this expense from our annual budget. After CCS Fundraising conducted a feasibility study to determine that it was possible to raise $2 million in a five-year capital campaign, the Session voted to hire these consultants to conduct our campaign. In addition, the Session decided that the first money raised would be for the Property Endowment Fund and the cost of the fundraising consultants and related expenses. All money raised beyond the $2 million and the campaign costs would go to mission outreach. Jan Patrick, Bob and Patti Ridout, our Campaign Chairs, dedicated countless hours to the effort and, along with Dr. Jones, made numerous personal visits. The same was true of our Campaign Executive Committee, which consisted of the following members: Jen Barrington, Art Colbourn, Dick Jolly, Lynne Kielhorn, George Krupanski, Ed Morton, Christine Schiltz, and Craig Stabler. We set a fundraising goal of $2 million with a stretch goal of $2.3 million. The final tally stunned everyone – $2.7 million! This insures that our facilities will be maintained for decades to come and we will have half a million dollars for mission projects. Since pledges will be paid over a five year period, it will be a while before we have all of the money. However, the good news is that in the first year, we have already collected over 40 percent of the total. Everyone who is contributing should know that their faithful response to the campaign insures the future of Westminster for many years to come.

4 Capital Campaign

Campaign Chairs Jan Patrick, Bob Ridout, and Patti Ridout

UrbanPromise utlizing our lower level

5 Financial Statement

Westminster Presbyterian Church

Summary of Income and Expenses

2017

PRELIMINARY

INCOME 2017 BUDGET ACTUAL 2018 BUDGET

Current year pledge payments 1,071,989$       1,050,900$       1,056,682$      

Endowed pledges 19,000 19,068 18,000

Prior year pledge payments 32,617 15,941 31,790

Unpledged contributions 132,000 136,405 111,000

Other income 27,500 28,824 27,500

Prior year surplus 75,154 75,154 0

Transfer from Endowment Fund ‐ Unrestricted 307,755 307,752 319,843

Transfer from Endowment Fund ‐ Mission 27,530 27,529 28,483

TOTAL INCOME 1,693,545$       1,661,573$       1,593,298$      

EXPENSES

Salaries and benefits 781,646 758,556 794,266

Occupancy and maintenance 428,623 410,996 419,929

Benevolences 183,866 189,137 182,214

Programs 65,499 66,691 65,594

Christian education 22,355 14,873 21,655

Administrative, communication and other 81,425 72,583 81,810

PC(USA) assessment 30,131 30,131 27,086

Transfer to Ten‐Year Property Plan Fund 100,000 100,000 50,000

TOTAL EXPENSES 1,693,545$       1,642,967$       1,642,554$      

EXCESS OF INCOME OVER (UNDER)

EXPENSES 0$                        18,606$             (49,256)$           

Daughtry House, net expenses ‐$                         ‐$                         ‐$                        

6 Balance Sheet

  November 30, 2017 December 31, 2016

Reviewed by Auditors

ASSETS

   Cash and cash equivalents 427,508$                 652,277$                   

    Miscellaneous receivables 707                          ‐                                 

    Prepaid expenses 489                          5,031                         

    Investments 9,789,373                8,165,861                  

    Property and equipment,  net 4,565,048                4,362,280                  

              TOTAL ASSETS 14,783,125$            13,185,449$              

LIABILITIES

  Accounts payable and accrued expenses 66,143$                   3,735$                       

  Deferred income 59,944                     134,904                     

  Retiree annuity liability 16,715                     22,003                       

          TOTAL LIABILITIES 142,802                   160,642                     

NET ASSETS

 Unrestricted

    Undesignated 4,749,020$              4,510,791$                

    Endowment 5,926,096                5,403,659                  

    Speer II 1,583,186                1,405,316                  

    Property Fund 635,539                   606,831                     

    Capital Campaign 917,109                   ‐                                 

    Designated 441,780                   740,923                     

 Permanently restricted 387,593                   357,287                     

 

           TOTAL NET ASSETS 14,640,323              13,024,807                

             TOTAL LIABILITIES AND NET ASSETS 14,783,125$            13,185,449$              

Westminster Presbyterian Church

Statements of Financial Position

ASSETS

LIABILITIES AND NET ASSETS

For 2017, Westminster’s Internal Rate of Return (“IRR”) was 14.7%. Westminster continues to benefit from the much lower advisor fees (0.041% per year--or only $4.12 per $10,000 under management at the portfolio’s year end balance) and much lower fund level fees since changing advisers and investment strategy in 2003 and from consistently maintaining that strategy ever since. WPC’s returns have, per our strategy, mirrored the returns of the global equity and debt markets in which we invest with considerably smaller amounts being diverted from those returns to pay fund level and advisor level fees. WPC’s assets are invested in funds that mirror the average returns of asset classes our advisor has, with our input, selected; our IRR is, therefore, itself, for all intents and purposes, the “benchmark” return we are striving to achieve – net of our very low fees. In other words, if we were to calculate a proper benchmark keyed to a weighted average for the returns for each asset classes in which we invest, our IRR would always be equal to our benchmark (except for the negligible positive or negative tracking error of the funds we use and the unavoidable negative effect on our IRR of our very low fund level and management level fees). We are, therefore, in that sense, guaranteed to achieve approximately (i.e., except for tracking error) our true benchmark minus our low fees. WPC members sometimes ask how our return compares to the return on the S&P for the relevant period. One reason that comparison does not make sense for us is that we do not invest 100% in equities but rather 70% in equities and the balance in fixed income assets. (To invest solely in equities would involve too much risk, i.e., volatility, so we add fixed income to our portfolio to steady our returns somewhat.) A second reason is, of course, that, even ignoring the fixed income component of our portfolio, our equity investments are fully diversified beyond the large capitalization US stocks that make up the S&P. We invest globally in large, small and medium cap stocks and tilt our allocations somewhat toward small cap and value stocks. A third reason is that our successful 2017 Capital Campaign resulted in a deposit of $1,000,000 funds in the later half of the year and the timing of that large deposit would significantly impact a portfolio’s return vs. a benchmark, making a comparison difficult.

Starting Assets (1/1/17) 7,887,799$

Deposits to Fund from WPC other than Capital Campaign 143,390$ Withdrawals from Fund to WPC for expenses (483,920)$ Deposits to Fund from 2017 Capital Campaign 1,000,000$ Dividends & Interest earned in Fund 209,477$ Management Fees paid from Fund (4,000)$ Income Reinvested (77,655)$ Change in Value of Fund Investments 1,041,205$

Ending Assets (12/31/17) 9,716,296$

Total Change in Account Value (Includes all deposits & withdrawals) 1,828,496$

7 2017 Investment Performance PORTFOLIO PERFORMANCE ANALYSIS FOR YEAR 2017

continued…

For this report, we have, notwithstanding these three reasons for not comparing our returns to a traditional benchmark, calculated the return on a 70/30 portfolio having its equities (70% of the portfolio) invested solely in the S&P and its fixed income (30% of the Portfolio) invested in the assets that make up the Bloomberg Barclays U.S. Aggregate Float Adjusted Index, the most often used index for benchmarking a fixed income portfolio. Because we rebalance the portfolio to 70% equities and 30% fixed income, we weighted the comparison return for those indexes at those percentages. That resulted in an estimated return of 16.31% (i.e., 0.7 x 21.8%--the return on the S&P with dividends reinvested--plus 0.3 x 3.5%--the return on the Barclays/Bloomberg index for the year). Although we were slightly below such an S&P/Barclays-Bloomberg based benchmark for this year, we expect to outperform such a benchmark over the long run – for reasons we have discussed with our advisor and can share with church members with an interest in knowing why we invest as we do. (Even several years of underperforming that benchmark would not undermine our confidence that our approach will produce a better long term return – again, for reasons we would be happy to discuss with any curious church member.*) *As noted above, WPC’s strategy has worked very well since it was begun in 2003 (a period that, of course, included the “great recession” that began in 2008). We are confident that our portfolio significantly outperformed an S&P/Barclays-Bloomberg based benchmark of the type discussed above over that 14 year period, although we cannot easily calculate the over-performance because of a change in advisors several years ago that prevents us from having a “seamless” data base for the entire period.

8 2017 Investment Performance

9 Outgoing Benevolences Westminster Presbyterian Church Financial Benevolences

This report reflects the total amount of benevolence (Mission) dollars distributed from Westminster during 2017, reflecting funds expended from the annual operating budget and from designated gifts received.

2017 Operating

Funds Budgeted

2017 Operating

Funds Spent

2017 Additional Funds

Spent from Designated Gifts

2017 Total Amount

Distributed

2018 Operating

Funds Budget

NOTE

Backpacks Project -$ -$ 4,692$ 4,692$ -$

Burton House 12,000$ 12,000$ -$ 12,000$ 12,000$

Christmas Boxes Project (WPC) 1,500$ 2,773$ 1,075$ 3,849$ 3,270$

Church In The World 17,930$ 18,119$ 29,406$ 47,525$ 25,706$ 1

Covenant Network 500$ -$ -$ -$ 500$ 2

Delaware Futures 4,562$ 4,562$ 4,524$ 9,086$ 4,663$

Earth Care Congregation 850$ 918$ -$ 918$ 850$

Emmanuel Dining Room 4,000$ 4,000$ 6,242$ 10,242$ 4,000$ 1

Family Promise 5,000$ 5,000$ 496$ 5,496$ 5,000$

Food Bank Of Delaware 1,000$ 1,000$ 50$ 1,050$ 1,000$

Friendship House 16,000$ 16,000$ 13,172$ 29,172$ 20,000$ 1

General Assembly 1,500$ 1,500$ -$ 1,500$ 1,500$

Habitat For Humanity 10,000$ 10,000$ 445$ 10,445$ 10,000$

Hanover Food Closet 4,000$ 4,000$ 703$ 4,703$ 4,000$

Homeless Security 2,700$ 3,300$ -$ 3,300$ 2,700$

LCS FAITH Center 30,000$ 30,000$ -$ 30,000$ 30,000$

LCS Food Pantry 4,000$ 4,000$ 393$ 4,393$ 5,000$

Meeting Ground 6,000$ 6,000$ -$ 6,000$ -$

Mission Trips -$ -$ 37,540$ 37,540$ -$

Neighborhood Assistance 2,400$ 3,779$ -$ 3,779$ 2,400$ 3

New Life Furnishings 1,500$ 1,464$ -$ 1,464$ 500$

One Great Hour of Sharing (OGHS) -$ -$ 16,219$ 16,219$ -$

Presbytery 33,000$ 33,000$ -$ 33,000$ 23,200$

Saturday Breakfast Club 9,250$ 11,341$ -$ 11,341$ 7,000$ 3

Urban Promise Scholarship Fund 5,000$ 5,000$ -$ 5,000$ 5,000$

Sojourners Place 3,500$ 3,500$ 325$ 3,825$ 3,500$

Urban Mission Committee 424$ 630$ 500$ 1,130$ 425$

Urban Promise 7,250$ 7,250$ 9,513$ 16,763$ 10,000$ 1

TOTAL 2017 BENEVOLENCES 183,866$ 189,136$ 125,295$ 314,432$ 182,214$

NOTES: (1) 2017 Additional Funds include Christmas Eve Offering (2) Budgeted 2017 funds ($500) will be distributed in 2018 (3) Additional designated gifts are available to supplement the funds budgeted in 2018

10 2017 Incoming Fundraising & Designated Gifts

Each year, Session approves fund raising efforts for specific purposes. Also, throughout the year, the churchreceives donations where the donor asks Westminster to use the funds to support a specific benevolence orministry of the church. This report reflects donations received for specific purposes above and beyond amounts allocated in the annual operating budget. Westminster, and the ministries with whom we partner, are deeplygrateful for the generosity of members and friends who support these causes.

Backpacks Project 4,845$ Bazaar 7,497$ Burton House / Helen Greene Fund 6,000$ Chad Miller Mission Fund 24,683$ Christmas Boxes 544$ Christmas Eve 29,111$ Church in the World 100$ Congo 2,480$ Daughtry House 85$ Delaware Futures 4,902$ Disaster Relief 3,785$ Discretionary 3,250$ Emmanuel Dining Room 350$ Family Promise 325$ Food Bank of Delaware 50$ Friendship House 895$ Guatemala 28,419$ Habitat for Humanity 470$ Hanover Food Closet 395$ James and Audrey Bennett Memorial Fund 700$ Mission Trips 600$ Music Fund 4,666$ New Life Furnishings 308$ One Great Hour of Sharing (OGHS) 15,754$ Peace Drum Project 170$ Refugees 1,166$ Saturday Breakfast Club 4,745$ SERRV 528$ Sojourners' Place 300$ Souper Bowl of Caring 787$ Urban Mission 1,000$ Urban Promise 565$

Total 149,475$

11 2018 Budget Detail Description 2018 Budget Detail Description 2018 Budget Detail

  

Net Current Year Pledges 1,006,682$             HVAC Maintenance / Repair 18,000$                   

Current Year Over Pledge 50,000$                  Building Maintenance / Repair 30,000$                   

Endowed Pledges 18,000$                  Total Maintenance Expenses 48,000$                   

Prior Year Pledge Payments 31,790$                 

Total Pledged Contributions 1,106,472$             Flowers, Easter, Xmas Decorations 7,000$                     

Worship Supplies 2,500$                     

Contributions Unpledged 80,000$                  Music ‐‐ Adult Choral and Inst 8,350$                     

Loose Plate 11,000$                  Worship Living Mosaics 4,939$                     

Special Gifts ‐‐ Memorials, etc. 20,000$                  Professional Soloist 22,140$                   

Total Other Contributions 111,000$                Guest Preachers 500$                        

Stephen Ministry 2,200$                     

Miscellanous Income 2,000$                    Membership & Evangelism 3,500$                     

Facilities Use Income 25,000$                  Stewardship 3,700$                     

Weddings 500$                       Session Activities 1,500$                     

Prior Year Surplus ‐$                        Hospitality 5,500$                     

Total Other Income 27,500$                  Audio‐visual Aids 500$                        

Congregational Life (Deacons) 3,265$                     

Trnsfrs‐Endowment Fnds ‐ Unrestricted 319,843$                Total Programs 65,594$                   

Trnsfrs‐Endowment Fnds ‐ Mission 28,483$                 

Total Endowment Fund 348,326$                Curriculum and  Resources 2,655$                     

Supplies for CE 1,000$                     

Total Income 1,593,298$             CE Leadership 1,500$                     

Vacation Bible School 250$                        

Salaries ‐ Ordained Staff 157,539$                Adult Education 1,500$                     

Salaries ‐ Office & Clerical 217,852$                Special Events 500$                        

Salaries ‐ Programs 206,941$                Youth Music Education 2,500$                     

Housing ‐ Ordained Staff 27,000$                  180 Youth Fellowship 11,000$                   

Total Salary Expense 609,332$                Family Events  750$                        

Total Christian Ed 21,655$                   

Pastors' Pension/Death/Disability 22,805$                 

Lay Staff Death/Disability 4,085$                    Chimes & WWW 13,250$                   

Lay Staff Pension Contribution 18,139$                  Web Site/ Monitors 3,500$                     

Social Security & Medicare 32,497$                  Advertising 350$                        

Workers' Comp Insurance 3,000$                    Total Communication Expenses 17,100$                   

Staff Healthcare Benefits 34,700$                 

Pastors' Healthcare Benefits 51,208$                  Copier Expenses 16,000$                   

Mileage and Travel 4,000$                    Paper 3,000$                     

Benefit Administration 5,000$                    Office Supplies 2,900$                     

Professional Dev. ‐ Ordained 5,500$                    Computer Maintenance 11,700$                   

Professional Dev. ‐ Non Ordained 4,000$                    Telephone & E‐mail 7,800$                     

Banking Fees 900$                        

Total Benefits 184,934$                Postage 7,960$                     

Miscellaneous 3,000$                     

Total Staff Expenses 794,266$                Audit 10,250$                   

Staff Training 1,200$                     

Salaries: Facilities 149,328$                Total Administrative Expenses 64,710$                   

Benefits: Facilities Workers Comp 1,000$                   

Benefits: Facilities Social Security 11,424$                  Total Benevolences (see page 9) 182,214$                 

Benefits: Facilities Medical 34,151$                 

Benefits: Facilities Death/Disability 1,555$                    Total Presby Church (USA) Fees 27,086$                   

Benefits: Facilities Retirement 6,071$                   

Electric & Gas 60,000$                  Property Fund 50,000$                   

Water & Sewer 14,500$                 

Safety and Security 14,000$                  Total Expenses 1,642,554$              

Property Insurance 34,000$                 

Pest Control & Garbage 4,000$                    Surplus / (Deficit) (49,256)$                  

Outside Cleaning Services 5,000$                   

Cleaning Supplies 6,000$                   

Grounds Maintenance 27,000$                  Daughtry House 

Parking Space Rental 3,900$                         Total Income 14,400$                   

Total Occupancy Expense 371,929$                     Total  Expenses 14,400$                   

© 2018 Westminster Presbyterian Church

1502 West 13th Street Wilmington, DE 19806 (302) 654-5214 www.wpc.org Download the 2017 Annual Report and Financial Supplement at www.wpc.org/communications.