Operations 103Finances 1. Cash & Fungible Assets 2. Income
3. Expenses 4. Budgets 5. Reporting 6. Audits & Financial
Reviews 7. Financial Health 8. Tax & Legal 9. Insurance for
Employees 10. Insurance for the church
Slide 4
Chris Gunnare Chief Operating Officer Lutheran Church of Hope
West Des Moines, Iowa
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Cash Flow Management Since cash flow describes how and when
money comes into the church and is spent, cash-flow management
involves projecting income and expenses with the goal of paying
bills on time and creating a surplus for growth.
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Cash Flow Management Project revenue each June for following
fiscal year Use historical data to project future giving
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Cash Flow Management Project expenses each July for following
fiscal year Payroll should be 50% of general fund giving 10% of
general fund goes to external mission partners & projects
Operational budget is set using historical data (utilities,
interest, phone, internet, etc) Program budget set based on
strategic objectives, allowing us to move resources based on what
we are focusing on
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Cash Reserves / Surpluses Liquidity simply means available
funds. The goal of liquidity management is to have enough funds
available for current expenses and new ministry opportunities.
Managing liquidity is tougher than it seems because income doesnt
always come in when expenses need to be paid. And we always have
unexpected expenses. Cash Flow Fluctuation + Unplanned Events +
Potential Opportunities = Operating Liquidity Balance Target
Slide 9
Cash Reserves / Surpluses How much cash do you have in reserve?
Is it enough? 60 to 90 days of expenses is average Does your senior
pastor know? Does your council know? Do you have/need a sweep
account? How much interest is your reserve earning? What interest
rate are you paying on loan(s)? Work with experts in your area you
trust Work with ECCU (link on xpastor.org) Excellent white papers
on many subjects we covered today
Slide 10
Income Sources & Types Cash & Check Covered last week
Stock Process to receive Hold or Sell Property Donor values
property Donor reports to IRS
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Income Sources & Types Property (cars, boats, planes) Pub.
4302 Sells vehicles and uses proceeds exclusively to fund its
charitable programs Regularly uses vehicles for significant period
of time to conduct activities that further its charitable programs.
Sells the vehicle after it makes a material improvement to the
vehicle and uses proceeds to Distributes the vehicles at a price
significantly below fair market value to needy individuals in
direct furtherance of its charitable purpose of relieving the poor
and distressed. If partner with for-profit agency ensure its
legal.
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Income Sources & Types Legacy Giving Life Insurance Estate
Planning Tax advantage for donor Endowment Manage internally Manage
professionally Manage through community foundation
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Income Charitable Contributions Charitable contributions
generally must satisfy six requirements. 1)Give of cash or property
2)Claimed as a deduction in year it was made 3)Unconditional and
without personal benefit to donor 4)Made to or for the use of the
charity 5)Within allowable legal limits 6)Properly
substantiated
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Restricted & Designated Funds Restricted funds are
charitable gifts whose use is restricted by donors to churches. The
church has no discretion in the management and disbursement of such
funds. (could be mission partner, denomination, etc) Designated
funds are charitable gifts with the stipulation that they be used
for a specified purpose. Such funds could support a building
project, mission fund, organ fund, etc. It is very important to
note these gifts are held by the church in trust for the specific
purpose outlined by the donor.
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Restricted & Designated Funds Policy for Restricted &
Designated Funds Counters/Tellers flag new funds Finance team
reviews and contacts donor Council approves all new funds Building
Fund (delay but not abandoned) Project abandoned Contributions to
foreign charities
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Slide 17
Restricted & Designated Funds Where do my donations to
Willow Creek go? General Operating Fund: Donations to Willow Creek
Community Church support its General Operating Fund. This fund
makes possible the day-to-day ministries and services of the
church. Special funds: Periodically, opportunities to designate a
donation to a specific ministry initiative become available.
Celebration of Hope and the Year-End Fund are two examples of
ministry-initiative funds with specific start and end dates. To
designate your contribution to a specific fund, simply indicate the
name of the initiative (e.g., COH or YEF) on the memo line of your
check or on your envelope.
Slide 18
Income Unrelated Business Income (UBIT) Net income from
unrelated activities will be subject to UBIT if the following three
conditions are met: The activity constitutes a trade or business,
The trade or business is regularly carried on, and The trade or
business is not substantially related to the organizations exempt
purpose. Examples Advertising / Gaming / Merchandise / Rental
Income / Bookstore / Coffee Shop / Catering / Concerts
Slide 19
Send Questions via Chat
Slide 20
Justin Gottlieb Questions/Thoughts for Money Matters Chapter 3
& 4: * What maximizes giving in your church? * The need for
mission and vision in successful budgeting.