Church Insurance

On 9/11/2001, the insurance industry took the largest hit ever - over $40 billion dollars in claims - as a result of the terrorist attacks on the twin towers, the Pentagon and the planes. The insurance industry raised their premiums in an effort to recoup their vast losses - commercial insurance prices rose a lot in 2002 and then stabilized. In an effort to help the insurance industry, Congress also permitted the industry to levy a terrorism fee on new insurance policies (this authorization for this fee expires in 2014). As a result, church's have been paying more for their commercial property insurance for ten years.

Actually, the price increases for churches are not entirely attributable to 9/11. There were two other series of incidents in the 1990s that exacerbated church insurance premium hikes. The Roman Catholic Church (and other church's, too) had a series of well publicized pedophilia scandals which then tainted all faith institutions and raised premiums. There were also a number of church vans that tipped over and killed several people. 9/11 was the third of unrelated incidents which affected church insurance.

Since 9/11/2001, every commercial property insurance has carried a terrorism clause and premium. The dollar amount isn't much and is rarely noted by the policy holder and not often mentioned by the insurance agent. This is a voluntary payment - churches can exempt themselves from paying this by simply stating they do not want this coverage. The coverage is automatic unless the church specifically states it doesn't want the coverage. Please call your insurance agent and have that coverage removed. In my opinion, churches don't need it because of the very limited coverage it offers: the terrorist attacks must be perpetrated by US citizens and acknowledged as terrorist acts by Congress are the only ones covered. Therefore, nothing on 9/11 would be covered but the Oklahoma City bombing would be covered.

In recent years I put my church's insurance contract out to bid. Here's what I learned. We paid over $42,000 for five consecutive years. In the year that the contract went to bid, the incumbent agent came back with a quote of just over $28,000 - a reduction of 35%. Two other bids came in at the same price so I knew that was a reasonable amount. In December 2010, a year after the initial bidding, I put the contract back out to bid and got back a quote of $24,500 - even more savings. We have shaved about 45% off our insurance contract.

With that savings I paid for a current valuation of the church's property so that we have an accurate estimate of the worth of the church's buildings and furnishings. I also got a video inventory of every room, cabinet, closet and office in the church. We made several copies of that video inventory and placed the copies with different people in their homes (away from the church), including our insurance agent. I'm in favor of inventories but not paper ones - when it says "10 chairs" there is no knowing the worth of those chairs. An image of those chairs allows for better accuracy in getting an insurance settlement.

So, please do the following

1. Call your insurance agent today and delete the terrorism coverage on your church.
2. Put your church's insurance contract out to bid as soon as possible. Get at least three quotes and chose the low bidder.
3. Get a current valuation of your church's PP&E (property, plant & equipment)
4. Make a video inventory of your tangible assets and have copies made for several people

Lead On!
Steve

9/11 - 10 Years Later is on a Sunday

This year the anniversary of 9/11/2001 is on a Sunday. Churches will be filled with people as on every Sunday and many churches will make note of the sacrifices of the people working in the Trade Center Towers, the Pentagon, and the four airplanes. Hopefully they will also recognize the first responders (fire and police personnel) who rushed into the burning buildings only to have the towers collapse and kill them. 

While it would not be appropriate to either trivialize the significance of 9/11 in American history, it is also not right to make it a jingoistic or nationalistic event. That day was one of the worst terrorist attacks but it was preceded and followed by scores of other terrorist attacks across the world (Nairobi, Madrid, London, Oklahoma City, Bali, Beslan, Mumbai, etc. to name but a few of the most infamous and deadly). The attacks are the feeble attempt by a few to disrupt lives and impose their ideology on others.

For 9/11, I’m asking our members of the church's Safety Officer Team who are active duty police officers to come in uniform (with weapons) and with a marked car. Ostensibly this is to remind people that on 9/11/2001 it was the first responders who voluntarily went into the burning towers and to their deaths. The other reason for very visible officers is to deter someone from attacking the church. Of course, our regular traffic officer will be on the street with his marked car, too. There has been much speculation that Al-Qaida or some other organization or person wanting to make a name will attempt a terrorist event on this upcoming anniversary.

Inside the church's lobby, I've suggested that we have a poster for people to sign and write notes on. Actually, we need four of them because Sunday afternoon, we can take each of these four posters to the three fire stations and one police station who take care of our church. This will be our way of thanking them for their service to us but also to say that we remember the day they lost so many of their brothers and sisters.

Let me encourage every church to have some acknowledgement on 9/11 of the first responders in their area - that is a great tribute to those who died 10 years ago. But let me also encourage you to take precautionary measures to discourage terrorists.

Lead On!
Steve

Capital Budgeting

The List
Every church needs more money for it's capital projects. Oh, I presume that you have a list of capital needs which means you've already done a study of them. If not, here's what you need to do:

• Itemize
• Make a list of every thing you need to do in the next ten years. 10? Yes, because I guarantee you do not have the money do it all this year so you need to have a plan of what you're going to do over the next decade. Equipment will break down and need to be replaced. Keeping a list of your HVAC (heating, venting, and air conditioning) equipment and what needs to be replaced in the next few years will help you set money aside for those needs.
• Also, there are things that you don't see now that you will need in the future. In 1990, no one had any idea of the power of the internet - now it is an indispensable part of every office. Who knows what the next 10 years will bring - be prepared to control the future rather than having the future take control of you.
• The list needs to items that you know about but also what others see. No one person knows all in a church, consult with others (both staff and lay members) about what should be on the capital needs list.
• Most capital needs lists are physical plant items: air conditioning units, roofs, paint, furniture, buildings, etc. There is nothing keeping a church from establishing a capital needs list with items related to non-physical needs - items that will help others outside the four walls of the church and/or will enable members to go farther and do more. I wish more capital needs lists had other items such as
• Endowment or foundation funds: this would be a pool of funds to meet present and future needs of the church whether it is a physical plant need or a ministry need.
• Mission fund for a specific trip coming up or to take care of a ministry need somewhere else. 
• Prioritize
• After you've got a list, put them in some type of order. The best order is one which indicates their priority for being accomplished - the priority of need. This order is very fluid - some things will drop in priority while others will rise according to the needs of the church at any given time. For instance, new interior signage may drop in priority when people realize that the condition of the children's furniture warrants more attention and funding.
• This does not mean that you'll do the items on the list in that order. Several things may interrupt such as
• A donor sees something on the list that tickles his or her fancy and the donor decides to take care of that item(s). There are donors like this in every church - let members know about the list and you may be surprised by how many items are "just taken care of."
• Some items are so big that you can't do them in one year; instead, items are taken care of in phases over several years. I'm doing that right now with several items: installing electric shades in the dining room and gym; replacing all copper gutters and downspouts with aluminum ones with gutter guards (so I never have to pay for the gutters to be cleaned again); putting in new windows throughout the church; etc.
• Monetize
• Put a dollar figure beside each one. The dollar figure is very much a guess, but an educated one.  Do not spend the time now to get quotes for every item, just take a stab at how much each item will cost (aim a little high, too!). That way, when people see the list, they'll understand the scope of the needs. Also, if someone wants to "own" one of the items, they'll know how much to give to the church to cover that specific item.
• Date-ize
• Establish goals as to when items will be done.  These dates can be fluid, of course. But if you don't put some type of date/goal, then it may never get done. Put it on the list with a desired "due by" time frame even it is done piece-meal over several years.
• Publicize
• Tell people what the list contains, why items are on the list, ask them for additional items for the capital needs list, be willing to alter the list as needed, and continue to tell people about the list. The more publicity you can create, the better. You're not "poor-mouthing" the church, just making people aware of items that they may not know about or may have over-looked. Help people be aware of the needs - then they'll support you in your efforts to meet these capital needs.
• One of the ways that I make my list available is to put it in a rack just outside my office door. I totally believe in transparency so I make all financial info available to anyone who comes to my office (and a limited amount online at the church's website). That rack contains four items:
• The latest audit by the independent audit firm
• The most recent monthly financial statement
• The current capital needs list
• Give away books on stewardship and generosity (The Treasure Principle by Randy Alcorn and Fields of Gold by Andy Stanley)
• When a project is underway, let people know what is being done and why it is being done. AND, thank them for their financial gifts which made that work possible. Acknowledge their generosity every way you can whether it is in print or from the platform.
• Review-ize
• Every few months (definitely once a year), go over the list. Move things around in priority, re-value items as you have new info about their cost, change the "due by" dates as needed, move items to the bottom "already done" category, etc. The capital needs list is organic - don't let it be static.

The Money
I tell my vendors that while I cannot afford a new piece of equipment this year, I can pay for it in five years by setting money aside. Where does this money come from? Lots of sources - and that is key: tap various areas of the church's finances in order to pay for the various projects. Finding different pools of money to do things will let you do more. Here are some examples:

• Use the church's reserve funds for things that are needed. That's what the reserve funds are there for. Don't deplete the reserve funds, but also don't let those funds just sit there when they can be used for immediate and/or pressing needs. If necessary for a big project, tap the entire reserve fund with the understanding that the money will be put back if the church ends the fiscal year in the black.
• If the church ends the fiscal year in the black AND it has fully funded the reserve accounts it needs, then use the excess to pay for capital needs. Make sure that the governing body of the church authorizes this expenditure and as often as possible, let the congregants know about this project and how it was paid for out of their generous gifts to the budget.  
• The church's foundation was asked for money for the renovation (complete gutting) of the oldest bathrooms in the church. The foundation was informed that the total need is $100,000 and they would be approached five years in a row for $20,000 each year to do this work. The foundation agreed to fund this. 
• The gym needed new equipment. The need was made known to parents during Upward Basketball games and over the course of about 9 months, over $12,000 was received for this need. This money came from people outside the church so these gifts didn't affect the church's budget receipts - this was "gravy money" which we would not have received otherwise. 
• Talk about specific needs with various members of the church who you know have the gift of generosity. Twenty years ago a family donated funds to enhance a room in memory of a loved one. The room is increasingly out of date and needs some re-touching. I approached the family and they are more than willing to underwrite the cost of renovations to this room. In fact, I gave the family a ballpark of how much this would cost and they said that money is not a hinderance. They are a wonderful family and example of generosity.

In summary, keep a list (with lots of input), check it twice and thrice, find the money from lots of different pockets, spend the money while you tell people what you're doing and why, and say "thank you" lots of different ways.

Lead On!
Steve

The Shadow

Going to conferences is fun – you get to travel, stay in nice hotels (with comfy beds, hopefully), eat out, and meet old and new friends. I like going to conferences – I plan to continue to go to conferences. However, conferences lack something – that personal touch. 

Many times a year I’m asked, “Can you tell me in the next few minutes what a church administrator does?” I appreciate their interest so I figure that if they are really interested, they will want to learn. I make them an offer – come spend a day (in whole or part) with me: follow me around, sit in on my meetings, watch me answer email and handle personnel matters, read my financial statements, etc. In short, be my shadow and learn from the inside out what it is like to be an administrator. A few people respond positively, others say, “No thanks.” Those who shadow me leave at the end of the day with eyes wide open and a new appreciation. I’ve even had my finance committee chair shadow me – and come back for a repeat!

Church staff/leaders have a lot to offer and I wish we’d share more of this knowledge with each other. Sharing material in conferences is great but there is nothing like visiting a colleague’s church and shadowing someone for a day and seeing “what it’s really like.”

I’d like to propose that church leaders be intentional about being both a shadow and a shadow-caster:

·        Shadow-casters: these would be leaders who are willing to give a day or two a year to being shadowed. There is no agenda – they just meet the shadow at the agreed upon date and time and then let the person sit in on all that happens. If there is a confidential situation, the shadow can be excused.

·        Shadows: these are leaders, both staff and lay members, who want to shadow other church leaders. These church staff leaders may want to learn the “best practices” at another church. It could be someone interested in this field as a career opportunity and wants to learn about this career from the inside before embarking on it. It may be a lay member who wants (and needs) to learn more about what the professional minister does each day. We can all learn from each other - more than we think we can!

This year I’m taking some conference time and shadowing some counterparts in different cities. As long as I’ve been doing this, I know that I can learn from others especially if I am sitting as close to their shoes as possible. I'm looking forward to being a shadow; I've been a shadow-caster almost a dozen times so it's time for me to be a shadow. 

Lead On!
Steve