Sunday, July 31, 2011

Training and Conferences

Training is underrated in most church office venues. I think that most churches don't want to spend the money on doing the training when it is incredibly beneficial. Every year I attend a national conference of my peers and I learn so much at each one even though I've been doing this work for over 15 years. Sometimes what I learn re-enforces what I already know, but that is a good feeling, too.

Ministers and other management staff need to go to at least one training conference a year. If for nothing else, it is good for their morale to get out of the office and to hang around peers. Usually money is budgeted for these positions so the people can go if they'll only make it a priority. It is up to the supervisor to make the subordinate attend a conference - too many say they can't fit it into their schedule. Everyone has excuses, just find the time to go!

Administrative Assistants (Admins) are on the low end of the totem pole and rarely are they included in a training budget. That is wrong. I work with about a dozen ladies - all of whom are very committed to their work and to the church. They are consummate professionals - very skilled at what they do and anxious to do it right, the first time.

When I came to my current church, I was told that the church database was insufficient for the church's needs and that one of my priorities was to get new software. I had used that software for over 10 years so I knew what it could and couldn't do. What I soon learned is that the Admins were not knowledgeable about the software. I began to remedy that immediately.

First, I brought in an expert to lead all-day classes for the ladies. We set aside time and they brought in questions. It cost me about $1,000 for the consultant and for the lunches. I probably recouped that money within three months - what the Admins learned they implemented immediately and they became more productive and efficient.

The second year, I brought in the same consultant for a half-day training session. After lunch, the consultant spent about 30 minutes in the cubicle of each person addressing her needs and concerns. The third year, I brought the consultant again. By now the ladies were pretty knowledgeable about the software and the complaints from the ministers and managers had diminished but I knew the ladies wanted to know more. This time, the consultant spent 45-60 minutes with each person - there weren't classes for everyone, just individual sessions. After the consultant left, I met with the Admins and they drafted a series of documents to help new Admins and as "cheat-sheets" for the current Admins.

Finally, for the past several years I've sent at least two Admins to a national conference. These two get to spend a week out of the office in a nice hotel with company-paid meals and travel (that is a huge morale booster for them). They hang around other Admins for the week and get to know the software developers and technicians - now when the Admins call for help, they can put a face with the name. It does cost about $3,000 to do this each year but that money is recouped within six months in efficiency, effectiveness, shared knowledge with the other Admins, and morale.

A side benefit to all this is that the turnover of the Admins has been pretty low (less than the ministerial staff turnover). Every year they talk about who is going and they pretty much self-select - I don't have to make the choices. They are a wonderful group of Admins who can now do just about anything on the software - there are no complaints about what the software can or cannot do. The Admins know it all!

Lead On!

Sunday, July 24, 2011

Telling Stories

Here are two secrets - people that give money to churches and other non-profit organizations really, really want to know what their money was used for. AND, if you tell them and it is a compelling and life-changing story, they'll give you more money.

Most churches do a poor job of telling stories to their constituents. Churches just presume that people will continue to give "because that's what the Bible teaches." Sorry, that doesn't cut it any more. Our society has trained people, especially the under-40 crowd, to ask questions about "what happened to my money." They want to know - they expect and demand to know. There are two consequences:

  • Tell people where their money went
    • Once people see the good things that happened as a result of their money, they will tell others about it and, very often, give you more money. Telling stories is a game-changer: people will step up to the plate like they've not done before and they'll tell others the stories they are hearing. Telling stories is huge!
  • Don't tell people where their money went
    • If you do not prioritize telling people about how their money was used and you just presume that money will continue to come in, then you continue to operate as you are now. You may not see a decline in giving but you will probably not have an increase either.
How do you tell people? That's easy. Every way you possibly can.  Use every medium possible from print to social media to illustrations in sermons to my favorite, completely altering the offering time.

Telling stories during offering time
The offering time has changed in the past couple of decades. It used to be a time for special music to show off some piece the choir or a soloist worked on and wanted to fit in the worship service. Not any more. Offerings need to be interactive and here's how.

  • Every Sunday of the year, have a story about how the offerings have been used. You'll need to coordinate the stories - don't just insert stories - make them relevant to the message and/or to something going on in the life of the church at that time.
  • If you don't have 52 stories, you've got serious problems and they're not financial - your church is dying because you're not aware of how at least 52 lives have been affected by your church.
  • Take 3 or 4 minutes each week during the offering to tell a story in different formats
    • Use videos of different things, slide shows, live interviews on stage, narratives, songs by children, conversion and baptism stories, etc. 
    • Alter the format each week to keep the story-telling time fresh and interesting
    • Give each ministry of the church (missions, education, worship, fellowship, care, and administration) two or three times during the year for them to tell an interesting story about their ministry and how people's contributions made all the difference.
    • If you're doing a live interview, rehearse with the people you're interviewing so that you'll know their story and can help them get over their nerves about standing in front of "the whole church."
    • When planning a story, think about the end first. What do you want people in the pew to hear and take home? Then backtrack till you come to an appropriate place to start the story. But always, always think about the end of the story first and then decide how to start the story.
  • Tell stories about 
    • The youth mission trip that you're raising money for, that is going out next week, and that just came back. That's three times to tell the same story with different angles each time.
    • The Vacation Bible School that is coming next week and that happened last week. Two times for stories.
    • People!!! Every story is about people - every story must be centered around a person or group of people. Stories should have names (first name is enough) of lives that have been changed because of what people gave. I can't emphasize this enough - even if the story is about how members gave money for a building, then talk about who will use that building and why!
Critical Elements
There are two things that need to be in every story-telling time. These two things need to be used every week and they need to be said in different ways so that these words are honest and genuine, not a refrain that everyone tunes out.  Here they are:

  • Thank you
    • Say thank you every time you can. People like to be thanked, even if they only gave a couple of bucks. If people are shown appreciation and not taken for granted, they're more like to give next time. Say thank you as often as you can and be innovative in the ways that you use those words.
  • Generosity
    • Use the words generous and/or generosity as often as possible. Generosity has replaced "stewardship." There are no negative connotations to generosity while stewardship can have some minor misunderstandings. Use these words - generous is a more accurate depiction of what God has done for each of us in opening his hand to share with us his wealth of love and in spreading his arms out to die for us and in holding us close to him in times of our distress.
We need to encourage our constituents to be generous, like God, and thank them for their generosity. Tell them stories about how generous God has been with us and how their own generosity has changed the lives of so many people.  So please, TELL STORIES!!

Lead On!

Wednesday, July 20, 2011

Financial Statements - Balance Sheet

This is a pure accounting post - fair warning.

The balance sheet is a snapshot of your organization's financial status at one specific moment in time, usually the end of the month for public purposes but it can be produced for any date of the month or year. The balance sheet is divided into three main sections: assets, liabilities, and equity. For non-profits, I have specific guidelines for each of these three areas; these guidelines differ from what you may see in other balance sheets but it has passed muster on decades of audits and reviews by Big Four audit firm audit partners.


  • Assets should only be cash assets. Cash assets means "money in the bank" - what you can actually spent as of the Balance Sheet date. My balance sheet has three lines for assets:
    • Checking account - I have one and only checking account. It is easier to reconcile and saves lots of time of transferring between banks. Having more money in one bank gives me more clout with that one bank - clout is good!
    • Endowment Fund or Foundation - this is a one-line summary of the endowment funds. The line item detail of the various sub-accounts is spelled out in the liabilities section of the balance sheet.
    • Petty Cash - if you have a petty cash bag somewhere in the church, that amount needs to show up in the assets. It's not going to be much, between $50 and $250, but for good accounting records, you need to show that money.
  • What is not in the assets category? 
    • Property, plant & equipment or PP&E (sometimes known as furnishings, fixtures and equipment) is one of the biggies not in there. Why? Because my experience is that someone will see that you have several million dollars of PP&E and say that the church already has millions of dollars in the bank. Trying to explain to Mr. or Mrs. Smith that PP&E is bricks and mortar and not dollars in a bank can be difficult. I just avoid the conversation altogether by omitting PP&E. I don't ignore PP&E - one of the notes of the audited financial statements shows the insured value of the church's PP&E. That should be based off of a valuation done within the past five years but it can be taken from the commercial property insurance contract for the church.
    • Depreciation is the other thing that is not in the assets. Depreciation is done purely for tax purposes. Since a non-profit does not file income taxes and thus does not take a deduction for depreciation, there is no need to record all the inventory and track all their depreciation. FYI, I track inventory differently - every few years I get a video inventory of the entire church, inside and out, so that if there is a disaster, the insurance company can value things from a picture and not from a written document. I make several copies of the video inventory and these copies are placed in several locations, onsite and offsite including with the insurance agent.
    • Accounts Receivable - I use the cash basis of accounting which means that I only record cash when it is received and when it is spent. Thus, I do not record receivables such as member pledges. People may pledge to give your non-profit some money, but there is no legal binding to require them to give you the money, only their conscience. Because I do not know if I will get their pledge or not, I do not record money until I receive it in the office. It keeps things neat and clean.
  • Liabilities are monies that are due to other organizations or are designated for a specific cause. I divide the liabilities section of a church's balance sheet into several sections.
    • Payables are monies that are due to others. Typically the payables I have are for taxes, retirement, and other payroll withholding items.These are monies that were withheld from paychecks and the organization is holding them only until it is time to file with the proper authorities.
    • Donor Restricted Ministry Funds are funds that were given by people for a specific purpose such as the benevolent fund, the youth mission trip, a building campaign, etc. Legally, the non-profit can only spend the money on the cause to which the donor gave the money. If you spend the money on anything else without the permission of the donor, you're in legal hot water (close to the boiling point!). I have this category because all of the funds in the donor restriction ministry fund section will be spent by church members or committees of the church. Members of the church will determine where and how the money will be spent.
    • Donor Restricted Missions Funds are funds that were given by people for a specific organization that is not located at the church. These funds will not be spent by church members or committees. Instead the monies are forwarded on several times a year to the appropriate organization who in turn will spend the money on their mission. Examples of these funds are national or international mission offerings and organizations with whom the church has an affinity but does not exercise control such as Habitat or a campground.
    • Church Designated Funds are funds the church set aside out of its budget and/or out of any funds leftover at the end of each budget year. Forward-thinking churches will establish reserve funds for major building maintenance items (think A/C units costing $30,000 each), office equipment (new computers), etc. The church is in complete control of these funds and can change when and how it spends these monies because these monies came from undesignated gifts.
      • A special mention to one fund. I am a strong proponent of establishing the "Unspent Ministry Fund" which is the church's rainy day fund or emergency fund equivalent to 30, 60 or 90 days worth of revenues (whatever the church's finance committee establishes). The source of these funds is the money that is "left over" at the end of each budget year. Instead of leaving it in the equity section of the church balance sheet, I clear out that figure to Unspent Ministry Funds. This helps in a several ways:
        • I can look at the equity line and see immediately how well (or not) the church is doing this year and
        • It clears out all profits and losses from prior years into this one fund
    • Endowment Fund or Foundation is the detail for all the various sub-accounts of the endowment fund or foundation. 
      • My first presumption is that your church has a foundation - that will be a subject for a future post. If you don't have a foundation or endowment fund, you need to get one this year - do not wait!!
      • Secondly, these sub-accounts show what the church and its members value by establishing a separate fund for a specific cause. These are the only permanently restricted accounts (for purposes of FASB 116 and 117). I work with donors to establish funds and then spend money from the fund according to their wishes. The church has ultimate control over these funds but they should spend them according to the donor's desires. If you do that, you'll get more money, guaranteed!


  • Church's don't have equity, right? Actually, they do. All the cash and all the bricks and mortar belong to the church members. If the church were to close its doors, they would have to figure out what to do with all the money and mortar. Before you think you can cash in on this, IRS regulations regarding 51(c)(3)s stipulate that the bylaws of the organization must name a successor non-profit to receive all the equity of a church should it fold.
  • The way that I use the equity section is not unique, just different. I don't have any PP&E (see assets for that discussion) so several million dollars is missing from the equity. Instead, I have one line which shows the net surplus or deficit for the year. That one figure shows me at a glance how well or poorly we're doing for this fiscal year - I don't need to dig any further. The bottom line is truly the bottom line!
  • At the end of the year, I use the equity to fund several things if there is a surplus. Use the leftovers to pay for long-term things that you would otherwise not be able to afford. As I tell people, I can't find $100,000 this year but I can find it in the next five years. Plan for the future by taking a little money each year so that at the end of several years you've got what you need.
    • The first thing I do is to ensure that the Unspent Ministry Fund is fully funded to the level stipulated by the finance committee.
    • The next this is to fund any reserve accounts or upcoming projects that need funding. Sometimes there are projects that need some extra money that wasn't in the budget. Some times you need to set aside extra money for computers or a mission trip in a few years. Take a little each year and after three or four years, you'll have the money for new children's furniture or a youth trip to Scotland.
    • The last thing is to use the leftovers to pay for capital improvement projects in the following fiscal year. Every organization needs to spend money on its facilities but often the problem is they don't know where to get the money. The annual "leftovers" is a great place to get them. Use that money, given by members for their church, to improve the church facilities. That will help you from needing a capital campaign to fix up the church buildings and you can tell members regularly during the year how you are spending their money to fix up their building.

Lead On!

Saturday, July 9, 2011


I maintain my HVAC (heating, venting, and air conditioning) equipment in as good an operating condition as I possibly can, but that doesn't stop thermo-wars: people sitting next to each other where one is wrapped in a sweater and the other person is fanning himself because of the heat. I use a laser thermometer in these thermo-wars. Actually, my main weapon is education and the laser thermometer is a tool in the education process.

The laser thermometer looks like a small gun that shoots a laser beam. Within a few seconds after pulling the trigger,  the device displays the temperature of what the beam. The closer the laser thermometer is to the target, the more accurate the reading because longer "throws" allow for more dispersal of the feedback to the sensor. I use this device in several ways:
  • When staff or members tell me something is wrong, I get a laser thermometer reading and show it to the person. 
    • If the temp is off, I thank the person and begin working on the problem. That lets the person know I'm not ignoring them. That makes for good public relations with parishioners.
    • If the temp is fine, I show the screen to the person. Sometimes people trust technology more than other people and the laser thermometer can help convince them that the temperature is "normal."
  • I've also bought several laser thermometers for various staff persons. This empowers them to check the temp themselves. Then they can decide whether or not to call me. Giving laser thermometers to others has cut down on the number of "false alarm" calls to me.
  • When I do call my HVAC company to report a problem, I can tell them what the real temp is rather than give a vague response about what the temp is. It helps me to have better communications with the HVAC technician and so my relationship with him is improved.
As I said, it is a neat "toy" but it really does help members see what the real temp is and helps me respond to the members and to the HVAC company. The laser thermometer helps members know the real temp; but the real savings is in controlling the temperature in the building.

Lead On!

Friday, July 8, 2011


Heating and air conditioning are HUGE consumers of a church's budget - somewhere in the 5% to 10% range depending on the energy efficiencies of the buildings. There are direct costs to buy and install the equipment, to pay the electric and gas bills, and to pay for ongoing maintenance of the equipment itself including regular PM (preventive maintenance). There are also indirect costs of taking staff time to oversee this equipment and to handle the distraction of members who become obsessed with the temperature.

To save money in this area you need to know and control several things:

  • What the temperature is when it comes into the room
  • How long the conditioned air is on
  • Where conditioned air leaves the room

  1. To control the temperature for the air coming into a room, I set all the thermostats at
    1. Occupied Heat (people using the room during heating season), 68 Fahrenheit
    2. Unoccupied Heat (the room not used during the heating season), 60
    3. Occupied Air Conditioning, 74
    4. Unoccupied Air Conditioning, 80
    5. You don't want to set the unoccupied temperature too high or low - that will cause the unit to have to work extra hard to get to the occupied temperature when it is called for. The occupied temps are just inside the "uncomfortable" zone - the temps are still comfortable but because they are at the limit, they save large amounts of money than if they were right in the middle of the comfort zone. Frankly, there is no comfort zone that meets everyone's needs - I hit the edges of the range and then rely on people to dress accordingly, but they still complain. Keeping your building temps within these ranges will save your budget thousands of dollars - I highly encourage you to do this.
  2. To control how long the conditioned air comes into the room, there are several cool pieces of technology
    1. Programable thermostats 
      1. These are great because they can turn a unit on and off when the room is being used according to the program that is keyed into it. This ensures that the units are running only when someone has told the unit to run. Most programmable units have some sort of temporary override button or control. The override is to ensure that when there is an unscheduled meeting, the unit can be turned on in order to get the room to the occupied temp (whether heat or A/C).
      2. The bad news about programmable thermostats is that they rely on humans. Humans have a tendency to want to mess around with thermostats. I've found thermostats with the date and time changed (which plays havoc with the schedule that was originally programmed). I've also seen thermostats with the programmed temp and run times completely changed. And it doesn't matter if the thermostat is behind a locked casing or a locked screen, that is just a challenge to some people to figure out how. The human factor is pretty frustrating.
    2. The latest piece of technology which I plan to try in a few places pretty soon is a thermostat with a motion sensor. The idea is that when the motion sensor comes on due to movement, it turns on the thermostat which in turn may (or may not) call for the unit to bring the room to an occupied temp.
      1. There are several good things about this: 
        1. You only need to program the thermostat (these motion sensor stats are also programmable) for the times of the week when people will definitely be in the room. The rest of the week the unit will turn itself on when it senses motion in the room.
        2. The thermostat will keep the unit on so long as movement is sensed and when it comes on, it will stay on for 15-20 minutes (whatever is programmed when it is setup). 
        3. This device completely eliminates the human error element and that is a huge relief. 
        4. You will see immediate savings because the unit is running only when it needs to run - not when the room is empty (even though a meeting was scheduled).
      2. There are several bad things (or perhaps I should say, "unknown things"): 
        1. The unit will turn on whenever a custodian comes into the room to get one chair or when kids are playing "hide and seek" in the room. 
        2. If the unit turns on and off several times a day, it can shorten the life of the unit by several months or even years. That can be mitigated by lengthening the "on" time for the unit to 20-30 minutes but that will also decrease the savings.
        3. These thermostats are not cheap. And, if the thermostat controls temps in several rooms, you'll need to install a sensor in each major room controlled by the stat so that if someone enters a room, that sensor will "see" the person and turn on the unit (even though the actual motion sensor thermostat is a couple of rooms away). Installing the extra sensors is not cheap either.
  3. There are only just so many places conditioned air can leave a room
    1. Ceiling - most commercial buildings have drop ceilings for the convenience of accessing equipment and running wires without destroying a hard ceiling. However, some amount of conditioned air is lost above the drop ceiling. The good news is that it is not that much and it is usually is a layer of hot air (because hot air rises) 
    2. Doors - every time a door is opened, air rushes out (or in). If the room's thermostat is in occupied mode, then it is a great idea to keep doors closed. Hallways may or may not have conditioned air but hallways, by definition, lead to doors that go to the outside.
    3. Walls - yes, walls leak air. If you can, insulate them in order to keep conditioned air inside the room. Insulating a wall after it is built is not cheap and it is very messy. But it can lead to energy savings.
    4. Windows - this is probably the place in a room where conditioned air is lost the fastest. Windows leak like a sieve. I highly encourage you to get double-paned, energy efficient windows in all your openings. 
      1. That is a huge expense to most churches - let me suggest that you begin phasing in the windows over a 5 or 10 year time period. Divide the church up into 5 or 10 sections and begin replacing windows one section at at time. Doing it in phases will not consume your maintenance budget in one year but spread the cost over several years. 
      2. The best time to do all energy efficiencies, is at the beginning of your budget year. If you don't have a capital budget (and most churches don't), then spend the money in the first month of your fiscal year. Charge some of the expense to your maintenance budget and the other part to your utility budget (because your utility budget will decrease that year due to energy savings).
      3. One way to fund capital needs, is to take any "leftover" budget money at the end of the fiscal year and put that money into a fund to pay for capital items. I'll explain this concept in another post - it's one of my favorite ways to get things paid for without hurting the budget.
There are significant and real savings is in controlling the temperature in the building.

Lead On!