New Churches - New or" Lil Sister" Church --- 5050-02 ZZchu

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                   TO:  Those Interested                                                                                                          FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                                      FILE:  5050-02/chu

                   RE:  New Churches - or "Lil Sister" Churches                                                             Originated:  January 2004                                


        Below is a hypothetical Online Email thread (THRD) between  Jim@bcidot.org  and one of these Ministry MFTeam members: PAT (Pastor or Ministry Executive), LEE (Ministry Volunteer Treasurer), and FRAN (Ministry Computer Bookkeeper).   


        From:  Pat - 

       
    Jim, I am the Pastor of a brand new Church -- or we are starting from 'scratch.'  In our case, a non-denominational down town Church is helping us some, but I am paid from the resources of this brand new Church.  Or we are a "Little Sister"  Church in the outskirts of a larger city and the down town Church is our  "Big Sister."  As in the case of most "Big Sister" Church relationships, they are providing us with some funds, plus much needed encouragement and council, but we are pretty much on our own.  We are NOT a "Church Plant," per se,  from a denomination or an extension of a large church..
            I am seeking your help from a Ministry Finance perspective --- what do you have to share along these lines, Jim?       

From:   Jim@bcidot.org 

    Your request is quite relevant, Pat, as I have been dealing with such matters quite a bit in the last few months.  Especially note the new sister website as of July 2006 having to do with SPENDING CONTROLS when you  Click Here.
    Every "Lil Sister" Church situation seems to be a little different; even when such a new endeavor is under the auspices of either a Church denomination or a good sized Church - who provide quite a bit of both financial and 'how to' help.  But it sounds like that is not the case in your situation. 

        From:  Pat - 

            Our "Big Sister" sends us about $200.00 a month which we are to use as we see fit;  and this is their first "Lil Sister" church endeavor  --- so both of us are learning a great deal about such matters.

From: Jim

      OK - well first let me point you to some Resources  at the end of this web page that I hope you will take time to read/digest.
    Then you should  Click Here  and follow similar steps as you become a legal not-for-profit entity and you set yourself up properly with the Federal and State governments.  Please also determine a fiscal year that does NOT end 12-31-xxxx.  Click here  for more info on this topic.
    Next, I would suggest that you thoroughly digest the Church Business Administration material at the end of this web page as we cover such topics as:

 1>  Handling Money (Church Finances and Management of Special Funds)
 2>  Internet and Computer systems (
Such tools are invaluable these days) 
 3>  Property (
Buildings and Equipment management), and
 4>  People issues (
Payroll and Human Resource matters).

        From: Pat --

            Thank you.  I guess my concern has to do mostly with Church finances and payroll matters.  After we have our Church Governing Board in place, what do you suggest as to methods, policy and procedure for such things.

From: Jim

        Please consider:

  •   Conclude that Pat, as Pastor,  or a family member would NOT handle the Church monies - Pat would not count/deposit church monies or write and sign checks. Someone else handles the money transactions and Church check book, etc.

  •   The Board appoints a Treasurer (I will assume that the name is Lee) and a Ministry Finance Team (MFT) - such MFT would initially consist of only three people, which includes both Pat, Lee and let's say Susan - who is not a Board member, but has business experience. 

  •   Lee establishes the Church Bank Account --- Lee and Susan are the two required check signors.

  •   The MFT concludes how money is counted and deposited in Bank - preferable by some people other that Lee and Susan .... and how bills are incurred and paid.

  •   Pat has provided the Board with Housing Allowance info. They conclude Pat's salary and benefits for the first six months.

  •   The Board concludes what to do about rental of facility -- then Board Chair or Lee (not Pat) sign the lease etc.

        From: Pat --

            OK  -- what about the actual bookkeeping itself?  What is Fund Accounting in this setting?

From: Jim

        Lee is to do the  "Fund Accounting" -- or do the bookkeeping of "Spoken For" Church money; which means it is to be spent only for indicated Church approved purposes.  This leads me to such matters as the following:

  •     The Church always need to know who belongs to the money on deposit.

  •     To accomplish this,  I recommend what I call the  Bux-Box   system using an older version of QuickBooks (via eBay, etc) or Quicken - please read/digest our article about Bux-Box below.  Please also be aware of the following "how we can help with QuickBooks"  when you read  0199  But basically a deposit of Board discretionary money to the bank is assigned to a different Bux-Box in your bookkeeping system.  And the amount in each Bux-Box provides the Church with  "I can spend" information.  Example -- if the Church wants to spend $300.00 and there is only $50.00 in that Bux-Box for that purpose, then it can only spend the $50.00, etc. 
       
    Accordingly, I recommend that you initially have a minimum of three Bux-Boxes - where you assign your receipts in priority sequence  -- 

  •  

    •           Priority #1>  Facility costs,

    •           Priority #2>  Salaries and Benefits and

    •           Priority #3>  All Other Church purposes.

  •     Let's suppose that the Church needs $250.00 first for monthly facility rent due on the 25th of each month.

  •     Then let's suppose that the Church needs $1,000.00 per bi-weekly pay day for Salaries/Benefits

  •     The accumulative donation income, less paid outs, to date through the 1st and 2nd Sundays of this month indicate a total of $975.00 available in the Bank, or there is $250.00 for the rental costs on the 25th (Bux-Box#1) and only $725.00 for Sal/Benefits (Bux-Box#2) to the staff ---- and none for any other Church purposes (Bux-Box #3) for this period of time. 

  •     The Board would make a policy as to whether or not the unpaid $275.00 of Sal/Benefits ($1,000.00 less the above $725.00) is carried forward and paid when available in the future, etc.        

    You will notice I have not mentioned a "Budget", per se, since the Bux-Box method controls spending and is an alternative to the usual expense/line item budget process. 
    After the first six months the MFT will have a better feel for the Church finances and should attempt to pre-authorize expenditures (as approved by the Board) for the remaining portion of the fiscal year, and of course, establish a process for future fiscal years.  Obviously, actual payments are always subject to available
Bux-Box balances under this system.

        From: Pat --

            In your judgment, Jim, do we really  NEED a computerized accounting Bux-Box system.

From: Jim

    My opinion is the the Church should generally make use of Computers and related tools ASAP, because the Church should have a computer database of your people for Ministry purposes
to be used effectively to make mailings and to keep a record of annual donations, etc.  I call this a DonaMail system - please see the DonaMail Resource below.   Many times a Church initially uses computers that belong to volunteers like Lee and Pat.   Doing bookkeeping manually these days is possible, but not recommended.  Please Click Here and go to some other DonaMail computer system possibilities.

        From: Pat --

            By the way, Lee works in the office at a local retail store, where he sometimes uses their computer - but he is not an accountant.  Is there any realistic way that we could get some outside help in doing some of this bookkeeping?

From: Jim (2)

    Please note the possible scenario below using some outside help - some of which might be pro bono (no fees charged):

  •   First of all, please read/digest the information found at  0208  and/or   0204  that includes use of Internet resources.  Click Here also for information about using HOMERs etc and use of Internet for such important purposes.

  •   And in some such manner obtain such weekly assistance in the Bux-Box process - which could involve such processes as the following:

  •   By each Tues/Wed,  Lee inputs all transactions into the Bux Box  System

  •   On Friday/Saturday the Bank automatically moves deposits and check equivalent info to the Bux-Box system.

  •   The result is that there is no need to bank reconcile and there are very few/if any uncleared deposits or checks.

  •   And the Bux-Box system's Bank Acct balance is always equal to bank statement balance.

  •   You then go to the Bux-Box system and distribute each transactions appearing in the Bank Acct to the applicable Bux-Box accounts.

  •   Then produce therefrom Bux-Box reports needed for buying purposes the following week, etc

        From: Pat --

            This approach might have some possibilities -- anything else, Jim?

From: Jim

    Yes ---  the  Church should ASAP document such methods, procedures and policies (see Policies and Finances below) and update them as this "Lil Sister" Church matures and grows. 
    Also please be aware of the helps/resources to Small Ministries as available via some means of what we share when you    Go Here


                                Resources:

Budgets at a Church - - - - - - - - - - - - - - - - - - - -   5009-02
Chart of Accounts - - - - - - - - - - - - - - - - - - - - - - 0069-01
Church Business Administration - - - - - - - - - - - - 0924-03
Bux-Box System - - - - - - - - - - - - - - - - - - - - - - 0002-99
DonaMail - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0021-02
Founder of a Ministry Info - - - - - - - - - - - - - - - - 0049-02
Fund Accounting - - - - - - - - - - - - - - - - - - - - - -   0041-01  
If Jim B was Treasurer - - - - - - - - - - - - - - - - - -   5089-02
Internal Financial Controls - - - - - - - - - - - - - - -    5039-77
Internet Financial Services - - - - - - - - - - - - - - -- 5109-99
Services via the Internet and Churches   - - - - - - 5888-01
New Church Treasurer - - - - - - - - - - - - - - - - - - 5091-02
Web Based Ministry Acctg Services, etc.  - - - - 0930-03
Policies and Finances - - - - - - - - - - - - - - - - - - 5005-08
QuickBooks Online - - - - - - - - - - - - - - - - - - - - 0801-01
Weekly Counting - - - - - - - - - - - - - - - - - - - - - 5001-77

 


      The bulk of this Publication originated in January 2004 and was .   UPTD: March 09, 2012  . Click here and go to a List of threads (THRDs) at www.bcidot.org

ABOUT  US   |  OUR PURPOSE   |  TABLE OF CONTENTS   |  SEARCH  MATTERS  |  HELP DETAILS   |  FUND ACCTG VIA COMPUTERS   |  GLOSSARY