Michael Blanton: Obviously I’ m a technology person, so I’ m going to focus on the capabilities you have in place to do your reporting. The reality for most churches today is that a lot of that work is being done manually, regardless of church size. In fact, among high-growth churches, they’ re only adding on to the manual reporting burden that’ s already there. So, I think it’ s a good idea to really take a hard look at how much work you’ re doing— manually— to produce some of the more meaningful reports that you’ ll be managing against and producing for your board. Consider modern technology or other partners that can help you streamline those things. To get started, look out ahead and understand the initiatives of the organization. How can you embed that more at the transaction level of how you do your accounting today? That’ s really the starting point for having clean data that can enable systems to help you automate and get more streamlined reporting.
Denise Craig: Good advice. Having spreadsheets everywhere— even if you’ re an Excel guru— probably isn’ t the best idea.
Sandy McClure: This topic is where I‘ live’ daily. With reporting, churches are asking: Who do we need to talk to? Who’ s the report for? Who’ s using the information? Bankers want reporting differently than church leadership or auditors, so we encourage church clients to do‘ mini audits’ all year so they’ re not stuck at year’ s-end looking for approvals and reconciliations for their auditors. If you have dashboards that let you prepare to comply with your bank covenants, then you won’ t have to go back and recalculate when Jeremy [ Moore ], Dan [ Mikes ] or David [ Lee ] call and say,‘ What’ s in this number?’ With a click, you’ ve got that information.
Denise Craig: Right. Something that both Sandy [ McClure ] and Michael [ Blanton ] touched on is having a single point of information so that you can process reporting easier. That’ s really important. Jeremy, I think you were going to add something?
Jeremy Moore: Yes. As Sandy [ McClure ] was talking— and on most of the points made— I think it’ s important that we talk about networking with peers. By‘ peer,’ I don’ t necessarily mean another church in your denomination; it might actually be more valuable to interact with churches that are a similar size. If a church is already using Sage, that tells you something about their financial sophistication versus a church that’ s using Excel spreadsheets. And both of those tools have their place, right? Some churches don’ t need Sage; but if you’ re a church with $ 5 million in annual budget, there are going to be more commonalities with a similarly sized church.
TRANSPARENCY
Q: How much and what types of financial information should be shared with the board or congregation to ensure transparency?
Dan Mikes: We, as a lender, don’ t have a requirement related to disclosure of financial details to congregants. Personally, however, I think it’ s wise to offer an annual meeting for donors. The bylaws of certain denominations actually require this, even if the level of detail varies. At minimum, providing a high-level summary is a good idea. And certainly, it’ s great to alert donors about potential upcoming challenges.
Jeremy Moore: Yeah, I’ m definitely pro-transparency, personally. I really appreciate more information. I think a lot of donors my age and younger are looking for transparency from those they give to. Remember that you’ re not just competing for these dollars with other churches; you’ re competing with the college football program, the Salvation Army,
Operation Christmas Child and everything else. So, donors— especially those donors with the capacity to give large amounts— are really going to be sensitive to that. At a minimum, I’ d encourage you to look at ECFA accreditation. It’ s a great place to start, as they offer some tenets around transparency.
Sandy McClure: Provide information in charts and graphs as opposed to financial statements with numbers. Show donors what has been accomplished. How many are being fed from the food pantry? How many baptisms were performed? These are not financial numbers, but are lifechanging numbers which are as important or more important to donors.
David Lee: The level of transparency that’ s appropriate will vary depending upon the audience. You may not need to be communicating the same kind of information to the congregation that you are communicating to the board or finance committee. Remember that the information shared should help each audience make more informed decisions— especially as it relates to how effective the church is at fulfilling their mission. I’ ll share a quick story. At the small church I attended during high school, following the collection of the offering in the basket, the senior pastor would— during the service— open the offering envelopes and read off the names of those who gave, and then the amount. I guess some would say that’ s transparency and accountability, but perhaps not the most effective. We need to keep in mind that how and what information we share with our donors will, many times, determine whether they feel compelled and committed to continue to give.
Michael Blanton: To piggyback on both these statements, what we see folks most commonly— from a technology perspective— is reporting for a church board. If you know one or two questions are most likely to be asked by the board, give them the ability to find those answers for themselves in your reporting. Personally, I think all but the most forward-thinking churches aren’ t effectively communicating the mission when they talk about transparency and financials. For example, I might be attending service regularly and when you talk about church financials, I’ m literally just thinking about the sustainability of the church and how tithes are doing. These communications should be supported by the right balance of ministry metrics and financials.
Denise Craig: Sure, that’ s great. Also, with a decision-making body— depending on the governance of your church— we’ ve got to make sure the financial statements are understandable in layman’ s terms, because everybody will have a different level of financial astuteness.
OUTSOURCING ACCOUNTING
Q: Is there a case to be made for outsourcing church accounting in today’ s economic climate?
Sandy McClure: There is— often due to staff turnover. Maybe the accounts payable person is retiring and they need somebody for three months until they hire. Or they’ re losing three people to retirement. Should we outsource or hire? It’ s difficult to find qualified applicants with expertise in faithbased accounting. With outsourced accounting, you don’ t have to worry about replacing and training new team members. What’ s frustrating is hearing,‘ We use X [ for outsourced accounting ], but we have to talk to five different people whenever we do anything related to housing allowance.’ If you outsource, find a provider who knows the faith-based arena. It’ s important for funds reporting, audit prep— everything bankers want to see.
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