105. Case Study #3: Downloading to the Next Generation

[In all case studies the names and incidents are fictional and have no connection with any specific persons, board or congregation.]

When the audit committee reported to the church board that there was a surplus of $15,000 in the prior year’s financial operation, the board members felt immensely grateful to God for his wonderful provision. Nothing like this had happened in recent experience and it was another indicator that spiritual health was returning to the church family. The board chair knew that the board would have to formulate a recommendation for the use of these funds that could be presented to the annual general meeting which was six weeks away.

The chair wondered at the irony of this situation. On the one hand God’s gracious provision was evident. On the other hand he knew from previous discussions in the board meetings that reaching consensus on what to do with these funds would prove difficult. Two members of the board believed that it was not right for the church to have financial reserves. In their view, if God gave the funds, these needed to be expended as soon as possible on ministry activities. Further, if in the future a financial crisis arose, God would at that point bring the resources through the faithful response of his people. Their theology seemed sound and many precedents could be cited to support their position.

Conversely, several members of the board were business owners and they knew the importance of building some reserves to carry a business through ‘rainy day’ periods. They firmly believed in God’s ability to provide, but also believed that God required them to exercise wise stewardship of the resources once provided. They too could provide theological warrant and precedent for their perspective.

At this point in its history the congregation had no financial reserves. If a financial emergency occurred, then some ministry staff probably would have to be laid off in order to sustain the congregation. As well, a recent building renovation had left a debt of $300,000 which for a congregation of 150 people would probably take four to six years to repay. They were managing now, but the building was mortgaged to support the debt and if a financial downturn occurred, who knew what the creditors would do. Further, if some serious repair became necessary, there were no funds to pay for it.

The chair himself believed that it would be prudent for the board to give leadership in developing a contingency fund equal to two of three months of the church’s normal operational budget. The current budget was $25,000 per month and so this principle, if acted upon, would require a contingency fund in the range of $50,000 to $75,000. In addition, even though the church building recently was renovated, there were no funds being set aside to pay for replacing equipment or carpets, repainting, or other things necessary to maintain the facility properly. The current generation was using the facility, but not paying for its maintenance. In essence they were downloading these costs to the next generation. He thought good stewardship required the board to lead the congregation in setting aside $5,000 a year to cover such replacement and facility renewal costs. He had shared with the board his concerns previously and suggested that a combined contingency and replacement fund could be established over a three to four year period through careful financial management that would create such a fund. However, significant voices in the board had not responded very positively to his suggestions. Maybe this unexpected $15,000 surplus could form the initial basis for such a fund.

So now the debate would be joined again, as the board would have to formulate a recommendation to the congregation about the use of these surplus funds. He was not sure as chair how hard he should push his proposals, even though he knew it was the prudent thing to do. Five years ago when the church was enjoying some surplus the practice had developed of giving the surplus away, or as some called it “tithing,” to some external ministry.The pastor always seemed to favour this kind of direction.

What leadership was he going to provideĀ  to the board members about this?

Possible responses:

1. As chair he could present his viewpoint during the board’s discussion and see what the response would be. He could emphasize again the need for this current generation to exercise appropriate stewardship for its use of the facility. It might be positive or negative, but whatever the board decided, at least he had tried, even if they rejected the idea.

2. Another tact might be to introduce the concepts again and encourage the board to recommend that 50% of the surplus be used to initiate such a fund and that the rest be used in accord with previous patterns. This would get the fund established with $7500 as seed money. It would be a good start and could build consensus between the two views.

3. Another direction the chair could take would be to talk with the leader of the board audit committee and seek his advice. For example, did the auditor support the establishment of a contingency fund and would this lead the auditor to alter his report, upgrading his estimate of the financial health of the congregation? Further, he might have a side conversation with the lead pastor suggestion the consequences to his ministry leadership should cut backs to staff become necessary because the church had no resources to weather a financial crisis. This might encourage his support of a modest investment in a contingency fund. In other words some quiet work in the background might enable some board members to see the prudence of such a direction in a new light and be willing to give it support. Board education is a continuing exercise. He might even ask the chair of the audit committee to lead the charge on this issue.


This entry was posted in Board, Board Chair, Board Governance, Board Member, Senior Pastor and tagged , . Bookmark the permalink.