Contingency plans created by Ohio church

Your church may be challenged by the recession, but other trends can hit congregations at the same time, leading some to consider reserve funds.

For example, one or both of these financial realities can reduce giving these days:

1. A significant number of church members are employed by a large employer in the community – and layoffs or even company closings are underway; or
2. A generational shift is taking place in your congregation and many households grow gray, moving toward fixed incomes. 

These realities were named in a recent Teleios sampling of 49 pastors – pushing more churches to look at new ideas in the event finances become tighter.

Bob Kulp at Findlay Grace Brethren Church in Ohio comments, “We are alright at present, but we have a contingency plan developed if the general fund drops to various levels.” Church Finance Secretary Ron Dorner helped the church grapple with the reality of having about two-thirds of their households in the retirement stage of life. Kulp is grateful for his finance secretary’s leadership in congregational financial planning. “Ron helped us develop a contingency plan for when the general fund falls to various levels – and what we’ll do at step one, step two, and step three.”

Dorner said they took into account the total expenses of the last six months, found the average monthly expense total, and multiplied that average by three – to give them a three-month figure to fund a reserve. Then, the church began to list what action would be taken if the general fund approaches or falls below the trigger figure. The goal of a contingency plan is to identify triggers for specific actions and prevent future trends or events from driving the congregation to make decisions based on emotion.

Marian Liautaud provides a comprehensive overview of contingency planning in the article, Budget Bullseye, which summarizes interviews and a survey of more than 1,000 churches at yourchurch.net. Liautaud says 32 percent of churches surveyed indicate giving is up for 2009 while 40 percent say giving is decreasing.

Meanwhile, as budgets decrease in many communities, needs and ministry opportunities are increasing. One respondent, Anne Kessler, notes her church froze salaries, cut some benefits, yet still proceeds with an attitude of “Don’t stop (ministry), but re-evaluate.”

But what is the appropriate level of operating reserves? The Office of the Treasurer of the Evangelical Lutheran Church in America says there is no set answer, but there are things to consider when constructing a contingency plan:

• When income is from a broad range of contributors, operating reserves may generally be lower than if income is mostly from a small group of large contributors.
• If cash flow is irregular, operating reserves should be higher.
• If expenses are mostly fixed or predictable, reserves may generally be lower.
• Reserves should be higher for congregations with long-term debt.