Small Ministries and ECFA 0922-03 ZZfwi

          TO:   All Interested Onliners                                                                                                                FROM: Jim Bramer - Retired CPA-Audtor
                                                                                                                                                                              FILE:  0922-03//fwi

           RE:  Small Ministries and ECFA                                                                                                        Originated in January 2003

    "Today's "Ax to Grind"   
Perspective

    As I understand it, a major objective of the fantastic organization called ECFA (Evangelical Council for Financial Accountability)  is to give assurance to the Christian Public that ECFA's members are appropriate stewards of money handled.  Please  Click here  and go to  ECFA's web site and view its "Standards of Responsible Stewardship.".

    A major aspect of this is to have an independent, qualified professional (CPA-Auditor) audit their books; then declare financial information over this professional's letterhead that includes a statement that, in their opinion, everything is A-OK and according to hoyle. Of course, this is all said in legalistic CPA-Auditor terms. See  0003  for more detail about various types of year end relationships with Auditors.

    All of this righteously gives credibility to any Evangelical Ministry, but especially to those who are remotely financially supported by the Christian public and is not responsible to a membership, per se.  Examples include:  Camp-Conference Ministries; Radio-TV Ministries, Rescue Missions, and Mission Agencies and like groups.

    Personally, I believe that local churches are not  ECFA candidates because they need to be accountable to their membership for such matters.  However, when a Church is in compliance with ECFA's objectives it enhances their accountability to their constituencies (including any applicable denominational entity) plus money borrowing sources.

                                                                              Small Ministries

    By Small Ministries I mean those who have no more than $500,000 annual Income.

    It is extremely hard for such Small Evangelical Ministries to afford both the required CPA-Auditor relationship and the ECFA membership fees; yet they need to be accountable like everyone else to their constituency.  Below are some of the reasons such Small Ministries are more in need of good financial stewardship/accountability than even larger Ministries:

  • "Mom and Pop" organizational culture;

  • Often untrained volunteers handle the money;

  • Their leaders are often non-business people;

  • Due to size, limited internal financial controls

  • And the overall aspect of limited financial resources;

Proposed Solution

   In addition to the information  found in  0192  and  0930  , what about something like the following, since such Ministries are in need:

  •   ECFA provides a special "Small Ministry" membership (perhaps not a member per se , but some type of ECFA Associate, etc.) that includes an appropriate CPA-Auditor Assurance statement. See  0063  for some ideas along this line.

  •   There is a Ministry savvy CPA-Auditor (some might be willing to do some volunteering here) relationship that provides Internet Services  that comply with ECFA's Assurance requirements. see  0109  for more info.

  •   ECFA annual "Small Ministry" membership filing would minimally include: 1>  Some type of annual CPA-Auditor provided Internal Controls grade report --- see  0128  for examples -- and any other Assurance Statement from the CPA that ECFA believes necessary. 2> A copy of CPA-Auditor prepared annual IRS form 990 (not form 990EZ), as prepared via GAAP and includes complete annual financial information. 3>  Place a copy  (via Adobe graphics, etc) of their annual form 990 on ECFA's web site. Contact us for more about a web site that contains copies of annual form 990, etc that is available to the public. 4>  Finally they make available an Annual Constituency Report that includes what money (and non-cash assets) they have and how they spent their money  (Program, Mgt and General and Fund-Raising) during the past year as per financial data appearing within their form 990. Plus inform their readers where they can go online and see their entire financial statement per form 990, etc..  

IMPORTANT NOTICE AS OF OCTOBER 2007:  

         ECFA  now has new "Affiliated"  members whereby all Ministries with $1,500,000 or less per annum can derive the benefits of ECFA and pay their Auditors less money.   Please go to  0210  and link to ECFA for more information.

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UPTD: April 27, 2008

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