Missions Finance Issues at a Church 5015-02 ZZchu

                                                                             - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -

                            TO:  Interested Churches                                                                           FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                       FILE:  5015-02/chu

                             RE: Church Missions Finance Issues                                                    Originated:  May 2000                           

        Below is a hypothetical Online Email dialog, or  thread (THRD), between any one of the following MFTeam members: PAT: (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper) and   Jim@bcidot.org   Click here and go to List of threads (THRDs) at www.bcidot.org

FR: Lee

        Jim, our church is very "Missions Minded" and Missions expenses  probably constitute between 15 to 25% of our annual expenditures. Please share your financial experiences as Churches like ours care for these matters.
        By the way, you will remember that we are using
QuickBooks (TM) (QB)
so please respond accordingly.    

FR:   Jim@bcidot.org 

        That's great, Lee ..... seems that too many of our Churches these days are reducing their Missions involvement and related financial commitments.    My experience working with a variety of Evangelical Churches indicate that: 

  1.   One Church includes general Missions expenditures within their General Fund and Givers do NOT make general Missions Fund designations.

  2.   Another Church maintains a separate Missions Fund and asks Givers to donate thereto. They even take something like 10% of each General Fund dollar and move it to the this Missions Fund.  When you Go Here  you will find some accounting samples of such an effort.

  3.   Both of the above Churches, however, make annual budget financial commitments to fund either generic Mission Agencies and often to fund a specific missionary family unit. This procedure varies, of course, depending on it's Missions funding philosophy.  

  4.   Either of the above Churches have special Missions Projects apart from the general Missions Fund that Givers support.  

  5.   As needed , be sure we discuss problems when a Church functions simply as a conduit, or "Pass thru", of monies per the Giver's personal Mission(ary)  interests.  Please Go Here  for more information along these lines.

FR: Pat

        Actually, Jim,  our Church has been functioning as per your first example above.  But we are contemplating the fourth method above for the upcoming new fiscal year.  Because we seem to be so "Mission Minded", we wonder if our people would respond better via the fourth method, especially if we ask them for a Missions "Faith Promise".
        What Mission accounting system do we need?

FR: Jim

        You will remember that in This Publication we point out the need for both a General Purpose Fund - GPFund - and also the necessary Special Purpose Funds - SPFunds. You would, of course, set up the applicable SPFunds for Mission projects Go Here   for our publication re Mission Trips.  Obviously, the Mission project expenses are limited to whatever comes into the applicable SPFund.  

FR: Lee

        OK, I think I understand how to handle the Missions Projects. 
        If the budgeted Mission expenditures flow via our General Fund we simply have Mission Budget line items and proceed accordingly.  By the way, we like to have individual line items for generic named Mission Agencies and Missionary units. 

FR:  Jim

        Sounds great !!  Since you are a QuickBooks (QBs)  user, let me know if you would like a copy of our QBs Church SAMP where some of this is displayed.   

FR: Lee

     Do we need a Special fund if we ask Givers to donate to a general Missions Fund?

FR: Jim

        This is where it gets interesting.  Factors include:

  1.     Some Churches use a general Missions SPFund;

  2.     But if your Missions Budget is larger than the general Missions designations, you undoubtedly will meet your commitment via the GPFund.

  3.     Integration within the GPFund is a viable option, because, at least within QB reporting, you can better report budget commitments. 

  4.     Provide an "Actual to Budget"  financial statement  (Go Here   for a general QB "A to B" sample) that clearly shows the selection of general Missions Gifts as income and the expenditures of various Mission budget line items in comparison to what was budgeted.

  5.     With the QB system you do not have an "Actual to Budget" option for an applicable SPFund.

  6.    This GPFund report will show if such designations covers the Missions financial commitments,.

  7.    With any deficit absorbed within the General Fund.

  8.    Or if there is a year end surplus, the leadership can spend more on Missions for that year as it sees fit or carry it forward to the new year.

  9.     All of this, of course, is within established Board financial policies having to do with Mission finances. Look Here  for such matters.

FR:  Lee

    Appreciate this info, Jim .... let me put it in my words and then let me know.

a) To gain the advantage of A to B record keeping and reporting for "general Missions Spending" using QB, it is necessary to handle these expenses like General Fund expenses, setting up expense account(s) for them.

b) To track the giving designated for these missions expenses, an income account for designated Missions giving is established separate from the other giving to the General Fund.  Even some Churches remove something like a tithe of the General Fund and place it in this Mission Fund.

c) A filtered P & L Budget vs. Actual report can then be generated to show how designated giving for general Missions compares to the actual expenses and budgeted amounts for general Missions.

d) At the end of the Fiscal Year, any of last year's giving above the actual expenses can, if desired, be transferred into an equity account and held there as a Missions Fund "carry over" . 

e> If giving for Missions falls short of the amount actually spent for that year, then draw on carryovers of earlier years, or look to the General Fund of the current year or other available Board discretionary monies.

f) If general Missions spending is handled in this way, the "net income" amount found in the balance sheet and P & L reports will no longer reflect only General  Fund results, since the general Missions expenses are now included. It seems that we need to follow your Sample within your This Publication and use QBs classes to produce filtered P & L reports for departments within the Gen'l Fund - I believe you call them Dollar Accountability Groups - DAGs.  This way we will know what part of the QB Net Income, if any, has any 'strings attached.'

FR Jim

            Right On !!!!  Thank you for referencing the DAG sample as I believe some of you will find it helpful to divide up your GPFund in this manner and provide such reports to various staff or volunteers.  Of course, as you mentioned, you can forget about the DAG QBs classes and simply filter out a Missions P & L report. Let me know how it goes.  

    Please Click here for list of Church resources here on www.bcidot.org. The bulk of this Publication originated in May 2000 and was   UPTD: March 09, 2012