- - And the Lord direct your heart in the love of God as you continue to faithfully serve Him - -

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         TO:  Interested Onliners                                                                                                            FROM: Jim Bramer, Retired Auditor-CPA
                                                                                                                                                                        
   
         RE: J I Ms  J R N L for the month of April 2006                                                                           FILE:  0204-06/jrnl        
                (Click Here for "Blogger like" perspective/rationale)      

01 -  So There is a Problem !!! - (01)

        What about this scenario:  Let's suppose that the General Purpose Fund (GPF) at your Church (or other Christian Ministry for that matter) is struggling and the last finance report indicates that there is $4,200 in the Bank and it is spoken for as follows: $4,000 In approved Donor Designated Special Purpose Funds (SPFs); $2,200 In approved Board of Leadership Discretionary SPFs; and there is a  ($2,000) accumulated deficit in the GPF since the 1st of the fiscal year.  In other words, the Board of Leadership has allowed the GPF to use a portion of the the Discretionary SPFs of $2,200 to cover it's $2,000 deficit, and, your Finance policy appropriately does NOT permit borrowing any of the Donor Designated funds. Other "There is a Problem" indications include the following:

1>  The financial record keeping is not good.  Financial info is not timely received nor is it understood by those who should know.
2>  Staff members are not getting paid timely
3>  The rent (or mortgage payment) is often late
4>  Some of the unpaid bills are more than 60 days old
5>  Ministry operations are being funded by sale of assets
6>  GPF Income is erratic

QUESTION:  So what does the Church (in this example) do under these circumstances and how does it continue to function?
ANSWER:    It controls its spending by structuring it's accounting system in such a manner as the following:

A> The leadership decides which AREAS of the GPF operations has "Ministry Priority"  and sets up a GPF AREA ( we will use the term AREA rather than Fund) for each: Examples are:  AREA  1> Semi-Monthly Salaries/Benefits  AREA 2> Monthly Missions  AREA 3> Monthly Debt Service Payments and AREA 4> AllElse Operations
B> The weekly deposit that pertains to the GPF is placed, in priority order, within these 4 GPF AREAS  
C> After the weekly amount needed for 1> is placed within this AREA then the balance goes to 2>, and 3> etc. until the amount needed is reached.  AREA  4> receives the balance. If the amount needed does not come into the applicable AREA, then the unpaid needed amount might be carried over until it is. For example, if the needed amount has not come in for the Sal/Benefits then the amount is paid from the available AREA and such remainder is delayed until the following week, etc.
D> The Leaders receive a weekly report clearly showing which GPF AREA belongs to the the GPF money in the Bank. Or, if there is money in the named 4 GPF AREAS then they can spend it --- no money then no can spend, etc. There might be wisdom in leaving some residual like $200.00 in the 4> AREA in case of some type of operational emergency.

    Contact us if you need some help in getting some solutions or if you have any questions about the above system outlined in more detail when you go to   0002.

02 - Ministry Finance Integrity Pledge  (02)

        It seems that we are hearing all too frequently about money being stolen by seemingly reputable people from a Christian Ministry -- especially a local Church.  Of course,  this is so very sad for those involved plus it is embarrassing for those in charge.  The Ministry Finance community simply must have some ways to reduce, or make every attempt to eliminate, this sort of thing.  For example, please note the Ministry Finance self exam resource and related resources found in the recommended process when you go to  0039 ... as it is designed to wave applicable "red flags" that a Ministry should address immediately.
        Some type of Ministry Finance Integrity Pledge seems to be in order.  I know you have to be realistic about such an effort.  But it is imperative that the Ministry takes as many steps as possible in order to "be safe and not sorry".  Maybe Ministry officials responsible for handling money should be required to regularly take an oath that says something like the following: 

    "Some of my responsibilities at this Christian Ministry involves receiving or spending money.  I recognize that people can be tempted to steal financial and fiscal resources in a variety of ways. I hereby pledge that, as the all knowing Lord God Almighty is my witness,  I have not, and will not, steal money or fiscal resources from this Christian Ministry."

         This suggested "Ministry Finance Integrity Pledge Process" may sound a little harsh as we presume everyone is honest, but it may serve as a reminder that any "hanky panky" is a matter between the individual and the Lord God Almighty.  Recommended financial internal controls (see  0039 for some specifics), or procedural checks and balances, may be in place, but they can be circumvented by Satan inspired wily people who are very clever and come up with all sorts of deception/tricks that systems or men do not detect. 
        However, they can not fool the omniscient Lord God Almighty that we serve. It is a spiritual issue with the culprit ... especially in a Christian Ministry setting.

03 - Bank Balance Management via a Manual SWEEP Alternative:  (03)

    When you  Click Here  we discuss a SWEEP arrangement whereby a Ministry has two Bank accounts;  a "Daily Interest Bearing Saving (DIBS)" account plus the usual Checking account. Under a fee based SWEEP arrangement the Bank daily automatically zeros out any balance in the Checking account and transfers it to the DIBS account. The result is that the Ministry is then earning daily interest on all of their bank balances. Sad to say, all Banks do not provide this SWEEP service so a Ministry should be a good steward/money manager by manually doing something similar. I suggest that you take steps like the following:

A>  You arrange for a Line of Credit at the Bank so that all checks will clear the Checking Account even if you for some reason fail to manually transfer money as you should.  A contingency plan.
B>  All deposits go to the DIBS account
C>  You write and release your checks
D>  You make use of delay (Float) as to when the bank will charge them to the Checking account
E>  Or you wait two working days, then
F>  You run an adding machine tape of these checks - lets say the total was $5,000, then
G> You manually transfer (at most Banks you can do this Online) $5,000 from the DIBS account to the Checking account

    You will find more info along these lines when you  Click Here  and  Here.

    THE THRUST !!!!! ..... Do NOT leave unnecessary balances in your Checking account even if it does earn a little bit of interest income; be sure Bank Balances are earning the maximum amount possible !!!

04 - "QBatch" is now "QBunch"  (04)  

    Some of you are aware of the "QBatch" Yahoo Forum Group whose introduction included the following: "The intent of this Yahoo Group is to provide a -kiosk- for users of QuickBooks (QBs) as used by Christian Ministries to especially administer designated or restricted funds".  At one time there was some 120 members in this Group.
    The "QBatch" group is being replaced by what I call the "QBunch" Yahoo Forum found at http://groups.yahoo.com/group/qbunch/ As explained in the Q&A paper found when you Click Here, all present members of "QBatch" are invited to become members of the new "QBunch" Yahoo Group.  In order to better assist fellow "QBunch" members there are stricter "QBunch" membership requirements.

05 - Ministry Money and Gospel Quartets (05)

    We  "Olders"  grew up listening to Gospel Quartets who consisted of these singers: a Bass, a 1st Tenor, a 2nd Tenor and a Baritone. Each have a significant part in the overall effort, but together they still deliver wonderfully harmonious music.
    Please liken the elements of handling Ministry money along these lines
    A Ministry is responsible for "WE SHALT" monies, or the Board (of Leadership) decides how to use General Purpose Fund (GPFund) financial resources. But the Board also accepts pre-authorized  "OBLIGATORY" monies which means that the Board must also administer "THOU SHALT" or Special Purpose Funds (SPFunds.)  Such issues remind us that  Ministry Fund Accounting is the science of handling such externally imposed or "OBLIGATORY" funds, or a Ministry must responsibly handle abnormal operating funds. The Board will also do some internal imposing of various monies for such reasons as "Self Funded" operations of the Ministry plus "SetASide" money for usually certain future purposes.
    Please accept the Gospel Quartet analogy and the following Ministry Finance factors:

01 - Baritone     --- Thou Shalt, or designated money via Donors or the Constituency -    (SPFund)
02 - Bass           --- We Shalt, or money assigned for "Board Discretionary" purposes -    (GPFund)
03 - 1st Tenor    --- We Shalt, or money assigned for "Self Funding" purposes -              (SPFunds)
04 - 2nd Tenor  ---  We Shalt, or money assigned for "SetASide" purposes -                  (SPFunds)

    Like a Gospel Quartet made up of various God-given musical elements, all aspects of Ministry Finance must also blend together and harmoniously complement one another.

06 - Unique Expenditures of your General or Operating Fund  (06)

    Discretionary donation income coming into the  General Purpose Fund-GPFund  of a Ministry must cover the traditional operational expenses of Salaries/Benefits, Operational expenses like Supplies, Facility costs/Utilities, and often Mission Grants by a Church. But, as most of us know, unlike the usual business operation, such income must also pay for:

DEBT SERVICING:

    Obligations like monthly Mortgage payments include both principal and interest. But the total obligation usually must come from the operations income or the GPFund. Therefore, we recommend that the budget expenditure line item have a generic title like "Debt Servicing" and be for the total amount of the monthly payment. The principal portion will at least annually show up as a reduction of the liability account. More information along these lines is found at 2011.

FURNITURE & EQUIPMENT ACQUISITIONS:

    At times Furniture and Equipment will be acquired from monies gathered specifically for Special Purpose Fund-SPFund  purpose. But the usual practice is to purchase such items as a budget expenditure line item. All Furniture and Equipment costs should be added to the Fixed Assets at least annually. Please go to  0033  for more information about Land, Building and Equipment and related accountability issues. The Construction information at  5024  might also be of interest.

    Also please go to  0088  where we discuss funding via a SetASide process within the  GPFund  provides for future needs that might include Facility replacements or for anticipated major Facilities repairs and maintenance.  
    Plus you might find of interest the "Three-Legged" accounting approach found at  0111.  

Links not on this Web Site    

        01-Missionary TECH Team ---- http://www.techteam.org .
        02-Non Profit Bookkeeping Primer by Don Glenn ---  http://www.quickbooksgroup.com/qblibrary/Tips/QBNonprofits/
        03-Handling of Church Offerings and Internal Controls ----   http://www.thechurchreport.com/content/view/1240/32/
        04-Running Gifts "through" the Church ---   http://www.thechurchreport.com/content/view/757/32/
        05-How to process Electronic Funds Transfers (EFT) -- http://www.missionarytechteam.org/contribute/eft.pdf
        06-Online Giving and Event Processing -- http://www.signusup.com/
        07-Emergency Response Issues -- http://www.uprightministries.com/EmergencyResponse.pdf
        08-Church Business Administration Resources (Excellent) --  http://www.churchadminpro.com/

Links on this Web Site

    As some of you know,  I have, since 1999, been placing  xxxx-xx  web pages into www.bcidot.org . Below are some links for this month that I believe warrant sharing with you. I appreciate your continued prayers for the relevancy to readers of these  xxxx-xx  web pages.

Name                                                                        Web Page xxxx-xx Link
Two Computer Acctg Compartments                           http://www.bcidot.org/fwi/0921-03.html
Ministry Buying Cycle                                                http://www.bcidot.org/all/0013-01.html
Ministries and Depreciation Expense                           http://www.bcidot.org/all/0125-02.html
Ministries and their Budgets, or Alternatives                 http://www.bcidot.org/all/0010-01.html
Finance Issues with Church Auxiliaries                        http://www.bcidot.org/chu/5090-02.html

Current "Ministry Finance" Truism

    Below is one of my Ministry Finance precepts/beliefs/principles, or  "rules of thumb". Please go to  0069  for complete TRUISMS list   My hope and prayer is that your Ministry does in fact have an appropriate and effective Finance Team.   Please bear in mind that the Living Bible states Proverbs 24:3-4 as follows:   "Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of the facts