Tuesday, July 31, 2012

Electronic Donations

Making donations or gifts without using checks or cash is increasingly routine and within a few years will become the norm for many churches (but not all - some churches will fight this tooth and nail). There are a lot of ways to give electronically - let me list a few:
  • Bank Drafts
    • Bank drafts have been around for a couple of decades or more. This is where you authorize your bank to send money to the bank account of an organization (either at your bank or even another bank). It is easy to do but the donor has little control over the situation and gets reports only from the bank statement or from the organization sending the donor a contribution statement. This system is okay, but antiquated.
    • I work with a church that has been using this system for many years. Each month, almost 10% of their budget comes in this way. The fees are very low and the church gets most of the money, too.
  • Online Giving
    • In the past 10-15 years online giving has become quite the rage - as it should be. Younger generations don't carry cash or even plastic - they "keep" their money in their phones or other electronic devices. They want to be able to go to a website where they can readily and easily give money to the organization they wish to support. This is a very good way to support your church and every church should have an electronic giving portal.
    • Credit card fees range from 2.30% to as high as 5% of the total gift and debit cards are typically much less. These fees should be considered part of the "cost of doing business." In general, the easier it is for people to donate, the more people and the more donations will be received which will offset the fees. http://www.serviceu.com/ or http://www.e-giving.org/ are good companies that know churches and can provide solutions.
  • Giving Kiosk
    • About 10 years ago the idea was born of a computer station in the lobby of the church where people could give by either swiping a credit card or going to a website to give money. This is very neat - Stu Baker with http://www.securegive.com/ can show anyone their product which was developed by his father, a pastor in Georgia.
    • This kiosk provides great flexibility to the donor who can set up a one-time or recurring gift (just like in online giving), but it also gives the donor the option to swipe a credit or debit card by which means that personal data is transferred to the account and that makes it even easier for the donor. I very much like the idea of giving kiosks.
    • A colleague of mine even dreamed up a "kiosk-lite" by finding an old computer and monitor, connecting them to the internet and programming the PC so that it would only stay on their churches E-giving website and never go anywhere else.
  • Texting Service
    • After natural disasters like the earthquake in Haiti in 2011, several organizations advertised where people could text money. This is a very simple method for people to donate money to their favorite cause - the problem is that most of the organizations that coordinate these apps have amounts of $5 and $10 - nothing more. I'd like for there to be an "unlimited" category where people put in their own amounts. I read in June 2012 where they are exploring increasing the amount that can be given to $20 (this is negotiated with the cell phone companies). 
    • This is very convenient but it limits how generous people can be. If I want to give $100, I don't want to tap my phone 10 times (at $10 per time) to give money. I very much like this concept, I just want it to be less restrictive.
  • QR Code
    • A QR code is that square made up of hundreds of very small black and white squares. QR codes are free. What they do is to activate the web browser on a portable device (phone, tablet, etc.). Every QR code is linked to a specific website. Linking your QR code to your churches giving website allows people to navigate to that site immediately.
    • A friend of mine created the QR code for his church and now places the QR image in every Sunday bulletin. As the offering is passed, people can pull out their smartphones, scan the code, and give as much as they want.
    • This is ultimate flexibility - it puts the donor in total control of when, where, how much, and to what he or she is giving. People can take the document with the QR code and use it later or save the destination of the QR code for later referral.
Additional benefits to electronic giving:
  • There is the well-documented fact that online giving is pretty much impervious to Sundays where the church is closed due to weather (snow, hurricanes, etc.) and tithing declines due to vacations and holidays. The internet is never closed due to weather and it never takes a vacation or is sick.
  • What is less well-known is how much online giving will make it easier for people (guests and regular attendees) who want to give who don't have cash or a check with them that Sunday. If they could, they would give - but they left their money at home. No one leaves home without their smartphone!
  • An insurance agent told me the church's premium will decrease because of the reduced exposure since there is less cash on hand (fewer dollars that could be stolen). That is a good but hidden benefit!
  • Online giving is becoming the norm - society is teaching people how to buy things online and make them feel comfortable with it. Since the marketplace is already doing the education to/for church members, churches can piggyback on this and leverage this knowledge for the church's benefit through its online giving.
  • Donors can keep track of their contributions themselves. People can see what they've given to and what they haven't supported (yet). This will help the church's Finance Office by having donors more informed and even be able to print out their own statements of contribution as they need.
  • It also makes it easy for the church to send an email to everyone who has donated online which can result in increased communication between the church and members, especially donors.
  • Also, it might help the Finance Office. Some online giving sites interface with church financial software so that online gifts can be imported directly to the member's database. That will update the financial portion of a member's record and help the church keep track of all contributions by that person.
There are lots of ways to leverage online giving. Wise churches will be looking at ways to maximize the number of ways to receive gifts and to make it easier for donors to give. If you make it hard, then you'll be on hard times. Make it easy for people to give - use the KISS principle: "Keep It Simple, Stupid!"

Lead On!

Tuesday, July 17, 2012

How Much Debt Should a Church Have?

Personally, I think church debt should be exactly like your homeowner's debt: that ratio should never exceed 2 to 1. Yes, a bank will loan you 3 to 1 but you'll be so strapped financially that you won't have any disposable cash for doing anything else.

The ratio to the operating budget, my suggestion is 10% or less. Basic economics for a church with no debt:

  • building is about 20%
  • programming (including missions) is about 30%
  • staffing is about 50%
To pay your loan, you've got to take it out of one or all three of these. Most of your building costs are fixed (energy and maintenance). That leaves programming and staffing - if you cut those too much, you'll have a great building with no one to lead and no one to follow.

Better to have programming at 25% and staffing at 45% with some growth than to cut to the bone at 20% programming and 40% staffing (which will kill your staff, too). You can grow out of debt, but that takes a lot of intentionality - that is hard when most pastors are trying to manage what they already have and can't imagine taking on more in order to grow giving and attendance even more than they are already doing.

I've worked with some churches that have a 3 to 1 ratio (debt to annual budget), but they are hurting financially. And, their new building will be old and worn down long before the debt is paid off at their current rate. The appearance won't attract new people, especially a younger generation.
My recommendation, get out of debt as soon as feasibly and fiscally possible. Debt is fine so long as it doesn't become the boa constrictor that wraps around the church and kills it.
Lead On!

Thursday, July 5, 2012

Roadblocks to Strategy Implementation

Below is the outline of materials presented by Susan Beaumont, a consultant with the Alban Institute. She is very effective and what she has to say (and how she says it) is excellent. Think about each of these 10 items - flesh them out in your own mind and reflect on which one(s) are the roadblocks to the success of your vision and your church.

Top 10 List of What Gets in the Way of Executing Strategy

  1. Too many strategic priorities (should be no more than 2-3 priorities)
  2. Senior clergy losing strategic focus
  3. Board fails to provide oversight
  4. Rogue committees that over-function
  5. Board micromanages the staff team
  6. Staffing structures that don’t support the strategy
  7. No performance management system
  8. Absence of program evaluation
  9. Lack of meaningful measures of success
  10. Operating budget not aligned with strategies

Lead On!