Appropriate allocation of Church funds

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dunkmachine
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Appropriate allocation of Church funds

Post by dunkmachine » Wed Jan 23, 2019 7:08 pm

I was hoping I could get some Bogleheads advice for an issue I'm having with our Church's is handling of previously gifted funds. We are a relatively small congregation (about 200 people in attendance each Sunday morning). The Church has a little over $500K in various buckets, consisting of: 2 Ameriprise accounts worth of ~$120K and ~$180K, 2 accounts in with (I believe) the Southern Baptist Foundation worth $140K (it was explained to me that these are in a money market account), and the balance in a checking account acting as an pseudo emergency fund. The funds in the checking account are a line item in the expense budget, listed as designated funds (copier replacement, church van replacement, etc).

A new proposal is being brought to the Church to combine all these funds together into one account to be invested. The intent is to allow future donors to contribute to the new fund and let the church disperse it based on need vs. majority of the gifts going to the general budget.

None of the funds currently have restrictions placed by the donor. How it works now is our Church has earmarked one of the Ameriprise accounts as an Endowment to fund scholarships, and the other Ameriprise account to fund student ministry, missions, and small projects. The income earned from these investments in the previous year is then dispersed out to these various church ministries based on need. Basically, all these reserves will be repackaged into a "Legacy Fund" and the Finance Committee has the freedom to either use or recommend the use of the money as they see fit.

I met with the Pastor and Elders to discuss my frustrations with this plan, immediately concerning was the lack of an overall plan or investment policy. And secondly, I don't want all of the Church's money to be invested, and definitely not with Ameriprise. That is a real touchy subject, because as you probably imagined, a respected member of our church also doubles as a financial adviser at Ameriprise, and handles the church's account. I explained the high fees associated with Ameriprise, but was shut down quickly because the financial adviser has lowered his fee and also tithes his commission back to the church. They are not interested in switching from Ameriprise, they are happy with the returns, and as a bonus, they are impressed that they tend to exchange in and out of funds regularly. :oops: Nobody knows what we are invested in at Ameriprise, except "in some mutual funds." I explained that we should maintain an emergency fund, and only the Endowment allocation should be invested, with the initial principle based on our expected distributions. The balance can be put in a CD ladder.

The congregation is excited because they are sold on "we've been averaging 7% returns!" and trust Ameriprise. The pastor stated he'd like to only distribute 80% of the income generated from the Endowment and reinvest the remaining because "if you continue to put money back into the principle, you will never lose money, even in the bad times". I just shook my head and realized I was just beating my head against the wall.

This is really just me venting. But any suggestions on what I should do? I don't know how to relay the message that in a market downturn, our church may not have any money to distribute, or lose 40% of the fund's value. This all as really made my wife and I interested in a Donor Advised Fund to avoid letting the church try and manage our gifts.

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Re: Appropriate allocation of Church funds

Post by Mike Scott » Wed Jan 23, 2019 7:14 pm

You have done what you can do to provide information and now you know what they plan to do going forward. The only thing left is to decide what your personal response is going to be. Religous and social organizations can get trickey because our relationships with them are not "just business" but do sometimes involve money.

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Re: Appropriate allocation of Church funds

Post by fru-gal » Wed Jan 23, 2019 7:17 pm

I'm not sure why they don't understand the concept of an emergency fund. Can you present them with some examples (roof replacement in the past few years?) where they needed significant money quickly?

How in the dark are they about how the Ameriprise money has been doing? Can you get that information and show them? If there is a lot of buying and selling I am pretty sure they are not making 7%, maybe they are even losing money.

Is the Ameriprise person making money on this? When you said he is tithing back, is that 100% of his commission or 10%?

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Re: Appropriate allocation of Church funds

Post by longleaf » Wed Jan 23, 2019 7:33 pm

The reasons listed above serve as my justification for not desiring to advise/serve in the above area. An advisor has a level of professionalism which you don’t necessarily offer, and when not if the time comes that the market declined, he will have much greater ease of brushing off any fault than you will.

Present your position and leave it there.
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Re: Appropriate allocation of Church funds

Post by RadAudit » Wed Jan 23, 2019 8:36 pm

IIRC, my local church almost removed me from the fellowship when I suggested that they might not want to have 1/2 their funds in a single bank stock. And, they might want to have more than one guy making all the investing decisions. So, there may be some non-financial risks in trying to offer an opinion. (It was BOA before it dropped to ~$4.00 and before they set up a finance committee.)

Again, IIRC, Mr. Jack Bogle suggested in his first book on mutual funds that one view these funds as if they were supporting / providing for pensions in perpetuity. I think he suggested an AA of 60 / 40 back in the early 90's. (It matched the average AA of pension funds at the time.) The AA may have changed by the late 2010's. But the idea may still be sound. The church has made a number of commitments (missions, etc,) and there may be an expectation that these commitments will be met for sometime to come. Appropriate stewardship of financial resources would suggest that those commitments be met at the least appropriate cost and risks.

Although there is something to be said for a community of like minded individuals banding together to support a shared cause vs. depending on a pension fund AA of moneys that are already there.

YMMV
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Re: Appropriate allocation of Church funds

Post by augryphon » Wed Jan 23, 2019 8:37 pm

I see your concern, and you are correct in my opinion, but you are pushing on a rock that won’t move the direction you want it to go. Most likely, if you keep pushing, it’ll roll back over you and sour your view of the church and its leaders. You’ve spoke your mind, now let it go.

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Re: Appropriate allocation of Church funds

Post by Katietsu » Wed Jan 23, 2019 8:49 pm

Since the Ameriprise argument is lost, start by accepting that as a given. What do you think would happen if you spoke with the Ameriprise advisor about asset allocation and safe spending levels? Could you hide your disapproval of the active management?

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Re: Appropriate allocation of Church funds

Post by celia » Wed Jan 23, 2019 9:33 pm

I've been in a similar situation with a non-profit board that didn't know much about investing or saving. The few members that had personal savings appeared to be using a financial advisor to make their "magic" happen. It was difficult to get them to see that our 0.2% --earning CD was not even keeping up with inflation and that the rate we are withdrawing from it (from a bequest 10 years ago) was drawing it down too fast.

The best you can do is realize that less than 1% of the general population has Bogleheads' knowledge and experience. And the small church or non-profit doesn't have many people to draw their board of directors from. It is best if there is a committee sharing decision-making responsibilities, so that there is input from a variety of people. At least your church has a member who is a financial advisor, who will have to explain future losses.

I recently had a break-thru with my own board in that they agreed to put the savings in a money market account, so we could get 2% instead. But they don't trust any online institution. It had to be a brick-and-mortar institution--like a bank! (I tend to agree with this for our organization since we don't know who future officers will be and how long they will serve--up to half of us turn over each year.) But I found a Fidelity branch a few miles from us, and now they are agreeable to using them. Money Market, here we come!

OP, Are you also aware that organizations are limited in what they can invest in? For example, it appears that less than half of the MM funds at Fidelity (or Vanguard) are available to organizations? Check the prospectus for Vanguard's Prime Money Market, page 7.
The Fund is only available for purchase within accounts beneficially owned by natural persons.
You might want to check the prospectus for the funds the church is in.

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Re: Appropriate allocation of Church funds

Post by megabad » Wed Jan 23, 2019 9:56 pm

Do you like the church? Would you like to continue going? If so, you've voiced your piece so keep quiet and vote when the time comes (if you are an elder or however your congregation does it). If not, find a new church. Personally, I do not give to organizations that I don't feel can adequately manage my funds. This includes religious organizations and other charitable organizations (including colleges).

However I might offer a tip, be polite and work your way onto into the elders. When I became a board member for one of my recent charitable organizations, I simply put forth a bunch of spending to drain the investment accounts (obviously didn't state this as my strategy). This partly solved a similar controversy since most boards love spending. We had new roofs, new HVAC, new lighting, and doubled the direct charitable stuff. These were all good things that needed to be done eventually and will reduce future expenses. In other words, focus on the positive solution, not on the negative problem. If advisor charges 1% AUM fee, than reduce AUM and you reduce fee...no reason to reveal your altruistic ulterior motives though.

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Re: Appropriate allocation of Church funds

Post by stan1 » Wed Jan 23, 2019 10:05 pm

You could:
- Look for a new church
- Stay and fight
- Stay and over probably years try to build the pastor and elders trust. Look for a few small victories at a time.
- Stay and be ready to jump in to save the day when there is a crisis and no one knows what to do
- Stay and not worry about it

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Re: Appropriate allocation of Church funds

Post by AlphaLess » Wed Jan 23, 2019 10:11 pm

My suggestion:
- keep your relationship with the Church at arm's length,
- you can continue to donate or not, support or not, attend or not,
- you have said your part.

At the end of the day, if the Church assets fall 40% during a downturn, then so be it.
You represent one out of 200 members, and so your part is relatively small, so to speak.
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Re: Appropriate allocation of Church funds

Post by finite_difference » Wed Jan 23, 2019 11:08 pm

fru-gal wrote:
Wed Jan 23, 2019 7:17 pm
I'm not sure why they don't understand the concept of an emergency fund. Can you present them with some examples (roof replacement in the past few years?) where they needed significant money quickly?

How in the dark are they about how the Ameriprise money has been doing? Can you get that information and show them? If there is a lot of buying and selling I am pretty sure they are not making 7%, maybe they are even losing money.

Is the Ameriprise person making money on this? When you said he is tithing back, is that 100% of his commission or 10%?
Even if his commission is 100% returned, you would still be paying high fees to Ameriprise, e.g. 1%, vs Vanguard?

Or is he also giving back all of the ER of all of the funds? In that case, you are getting a great deal (effectively 0% ER)!

Does turnover matter for a Church-owned fund? Does the Church pay taxes on funds it owns?

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Re: Appropriate allocation of Church funds

Post by carolinaman » Thu Jan 24, 2019 7:00 am

An investment portfolio should have a benchmark to be measured by. How does the church know they are getting good performance from their investments? Of course they do not, but they should. This is a concept they should understand even if they are defensive about their Ameriprise guy. The Ameriprise guy should be able to articulate his investment strategy so that an appropriate benchmark can be established.

Surely, someone at the church is getting reports on Ameriprise investments. Using a benchmark, they should see how they are performing against the benchmark. Most advisers have unduly complex portfolios that are hard to decipher, but if it is targeted at a certain asset allocation and risk, comparing against pro rata low cost index funds would be revealing.

The church should be transparent about this to you but it sounds like they will not do so. Sad but no unusual.

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Re: Appropriate allocation of Church funds

Post by BarbBrooklyn » Thu Jan 24, 2019 7:50 am

Wow! Is there any guidance from your church's parent body on how monies should be handled/invested?

Is this "advisor" a fiduciary, fee-only advisor?
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Re: Appropriate allocation of Church funds

Post by retiringwhen » Thu Jan 24, 2019 9:24 am

I would ask two questions to help answer your concern (I have been a finance Deacon and finance committee member/leader for most of the past 20 years).

1.) what is your role in the church? Leader/Deacon/Elder (or similarly named / elected / appointed role?), Member, regular attender?
2.) What is the constitutional / bylaws of the local church body? In other words, what are the legal documents that support the leadership model of the church? Who is legally responsible for the funds and what level of accountability does that responsible party have to the congregation (you'd be surprised how varied those arrangements can be.)

Based on the answers to those questions, I could give you some ideas how I would address the issues (I have served under two very different church bodies, a local congregation of a fairly strong denomination and in a totally independent local church with no outside oversight.)

From the description above, I would suggest there are two concerns to be addressed first and foremost.

1.) What transparency, accountability and auditing processes are in place to protect the church and its leaders from misappropriation of funds or other shenanigans.

2.) What is the budgeting model for the church and how does the the "endowments" fit in that model? The description you provide suggests some serious confusion on that matter.

The Ameriprise problem is actually likely low on the list of concerns and can probably be resolved once the thornier issues of accountability and transparency are addressed. Frankly, in my church, there is similar relationship with a Schwab-based advisor and it is actually not bad for the church, but we only know that due to relatively strong transparency processes.

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Re: Appropriate allocation of Church funds

Post by dunkmachine » Thu Jan 24, 2019 9:52 am

Thank you guys for the replies!
How in the dark are they about how the Ameriprise money has been doing? Can you get that information and show them? If there is a lot of buying and selling I am pretty sure they are not making 7%, maybe they are even losing money.
The finance committee chairman claims to know what we are invested in but did not divulge that information to me. My crude attempt was to estimate what an allocation would like like in order to have a 7% annualized total return and put that in Portfolio Visualizer. I showed them the value of of $100K during 2007-2009 and then explained that we lost more than that accounting for the fees with Ameripride.
OP, Are you also aware that organizations are limited in what they can invest in? For example, it appears that less than half of the MM funds at Fidelity (or Vanguard) are available to organizations? Check the prospectus for Vanguard's Prime Money Market, page 7.
Thank you for this information. I was not aware. I've researched the Uniform Prudent Management of Institutional Funds Act, but didn't feel that was applicable in our case since none of the funds were established by a specific bequest.
Do you like the church? Would you like to continue going? If so, you've voiced your piece so keep quiet and vote when the time comes (if you are an elder or however your congregation does it). If not, find a new church. Personally, I do not give to organizations that I don't feel can adequately manage my funds. This includes religious organizations and other charitable organizations (including colleges).

However I might offer a tip, be polite and work your way onto into the elders. When I became a board member for one of my recent charitable organizations, I simply put forth a bunch of spending to drain the investment accounts (obviously didn't state this as my strategy). This partly solved a similar controversy since most boards love spending. We had new roofs, new HVAC, new lighting, and doubled the direct charitable stuff. These were all good things that needed to be done eventually and will reduce future expenses. In other words, focus on the positive solution, not on the negative problem. If advisor charges 1% AUM fee, than reduce AUM and you reduce fee...no reason to reveal your altruistic ulterior motives though.
Yes, I love our church and whatever happens with the direction of the funds, I will not leave. Basically my intent with calling a meeting with the pastor and elders was to show them that I didn't want to just complain, but I wanted to be active in finding a solution. I agree with trying to spend down the money, vs. our perpetual "save for a rain day" that never comes. We have earmarked part of the money to be used for new HVAC, which I agree with.
Even if his commission is 100% returned, you would still be paying high fees to Ameriprise, e.g. 1%, vs Vanguard?

Or is he also giving back all of the ER of all of the funds? In that case, you are getting a great deal (effectively 0% ER)!

Does turnover matter for a Church-owned fund? Does the Church pay taxes on funds it owns?

I do find it somewhat ironic that you are complaining about lack of reason in a faith-based organization ;)
I'm not sure if he's tithing (10%) of his commission or the total (an offering). Can a Financial Advisor with Ameriprise decrease the ER of funds? I figured that was controlled by Fund manager/Ameriprise. Turnover mattered in the since that I am sure most of these funds come with some sort of front or back loaded fees that become non-negligible at a high turnover rates.
Wow! Is there any guidance from your church's parent body on how monies should be handled/invested?

Is this "advisor" a fiduciary, fee-only advisor?
If I understand your question correction, we don't have a parent body, our church is autonomous and self-governing. I'm not sure about the advisor being a fiduciary, but using the standard Ameriprise model, I'm assuming he works on commission.

I've decided to take a step back from this, and not push the issue anymore at this time. I can tell that they have no interest in moving away from Ameriprise. The church is happy with their performance in the past and they provide a comfort to the church.

A little more background, I am a Deacon on the church, but not on the Finance Committee (who will be handling the funds and investments). I am on another church committee (Building and Facilities) which is a 4 year rotation. I've bought into the Bogleheads mentality and realized that handling finances and investments is not as complicated as it had previously appeared to be for me. So selfishly I was thinking I could help the church by forcing them to change they way they think without them necessarily wanting to or believing that they needed too. When I roll off my committee and try to get on the Finance Committee maybe I'll be in better position to improve upon how our church's finances are handled.

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Re: Appropriate allocation of Church funds

Post by dm200 » Thu Jan 24, 2019 10:08 am

While your church may be fully "self governing", I would guess that the denomination might offer some "best practices" or guidelines for such financial governance. Perhaps, if not already done, check with similar congregations for ideas.

What about the Pastor? While I understand in this denomination, the Pastor is not "the boss", nonetheless he/she might bring some solid "good sense" to the discussion.

I am active in a parish where the Pastor and denomination are in total control, with committees/boards being "advisory" only. I have been on the finance committee for many years. I have seen the good, the bad and the ugly.

Good Luck!

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Re: Appropriate allocation of Church funds

Post by LadyGeek » Thu Jan 24, 2019 4:31 pm

Several posts and off-topic comments were removed. Religion is a highly sensitive topic, much more so than politics. Please avoid opinions of religion and religious quotations (regardless of faith). See: Politics and Religion
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Re: Appropriate allocation of Church funds

Post by bengal22 » Thu Jan 24, 2019 4:51 pm

One thing our church did was to set up a legacy foundation fund which has been authorized by the state tax group and the IRS. We promote and handle legacy and special giving. We have a board that handles investments and dispursements. I am on that board. We also have a church finance committee that handles day to day giving and tithing and day to day "normal" expenses. We fund our scholarships and special needs or projects. We have a clear separation between the two functions.
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Re: Appropriate allocation of Church funds

Post by celia » Thu Jan 24, 2019 5:23 pm

dunkmachine wrote:
Thu Jan 24, 2019 9:52 am
OP, Are you also aware that organizations are limited in what they can invest in? For example, it appears that less than half of the MM funds at Fidelity (or Vanguard) are available to organizations? Check the prospectus for Vanguard's Prime Money Market, page 7.
Thank you for this information. I was not aware. I've researched the Uniform Prudent Management of Institutional Funds Act, but didn't feel that was applicable in our case since none of the funds were established by a specific bequest.
And I wasn't aware of the ...Act which sounds like it might apply to my group.
dunkmachine wrote:
Thu Jan 24, 2019 9:52 am
A little more background, I am a Deacon on the church, but not on the Finance Committee (who will be handling the funds and investments). I am on another church committee (Building and Facilities) which is a 4 year rotation.
I've found that sometimes when you make your concerns known, you might eventually be asked to work on the "problem". And it appears your Church committees have a rotation of members which is healthy for the organization. Hang in there, and I predict you will soon be chosen for the Finance Committee.

Be careful what you wish for! :D

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Re: Appropriate allocation of Church funds

Post by dunkmachine » Thu Jan 24, 2019 5:25 pm

Thanks for all the feedback. I really appreciate your help! I see there is a lot that I don't know and need to read up on to verify some of these questions posed.
One thing our church did was to set up a legacy foundation fund which has been authorized by the state tax group and the IRS. We promote and handle legacy and special giving. We have a board that handles investments and dispursements. I am on that board. We also have a church finance committee that handles day to day giving and tithing and day to day "normal" expenses. We fund our scholarships and special needs or projects. We have a clear separation between the two functions.
I would like our church to split out the investments from the finance committee and form an investments/endowment committee. Right now, our Endowment committee is really a "scholarship" committee. They decide who to give the money to. The finance committee tells them how much they can give our each year. With the new legacy fund, this will not change. As many have alluded to, we don't have a good transparency of how the funds are allocated to and from which bucket they are pulled from. It has always bothers me that in every meeting with the finance committee chairman, he has about three full, and disheveled binders full of information, but always struggles to find the right document when asked specifics.

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Re: Appropriate allocation of Church funds

Post by 123 » Thu Jan 24, 2019 5:54 pm

Undoubtedly the Amerisprise financial adviser also takes care of investments for others in the organization as well. So it's an insurmountable battle to suggest that anything needs to be done another way since that would likely question the wisdom of members' confidence in the financial adviser.

Once you've said your piece I don't think there's much else you can do. Instead of having the situation annoy you for the remaining term of your membership you might want to explore if another congregation might be a better fit. However I think many small organizations with a large purse likely are already in the clutches of a financial adviser. While the financial adviser may not profit from the services provided to the organizatio the fact that he/she handles the organization's money is an open door to provididng a similar service to all its members.
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Re: Appropriate allocation of Church funds

Post by fru-gal » Fri Jan 25, 2019 8:08 am

dm200 wrote:
Thu Jan 24, 2019 10:08 am
While your church may be fully "self governing", I would guess that the denomination might offer some "best practices" or guidelines for such financial governance. Perhaps, if not already done, check with similar congregations for ideas.
Some churches are truly independent. They may not consider themselves part of any denomination other than Christian or whatever.

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Re: Appropriate allocation of Church funds

Post by dm200 » Fri Jan 25, 2019 9:10 am

fru-gal wrote:
Fri Jan 25, 2019 8:08 am
dm200 wrote:
Thu Jan 24, 2019 10:08 am
While your church may be fully "self governing", I would guess that the denomination might offer some "best practices" or guidelines for such financial governance. Perhaps, if not already done, check with similar congregations for ideas.
Some churches are truly independent. They may not consider themselves part of any denomination other than Christian or whatever.
The OP indicated that this church was in the Southern Baptist Convention

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Re: Appropriate allocation of Church funds

Post by retiringwhen » Fri Jan 25, 2019 9:31 am

I will provide a link to a set of documents from the National Council of Nonprofits for some general best-practices if you want to think about how to address general governance concepts in a positive manner.

https://www.councilofnonprofits.org/too ... nonprofits

I had previously used some publicly available documentation from Compass Point (https://www.compasspoint.org/) to do just the same, but they appear to have removed those documents from their public site.

These best practices help show the need to create transparent and accountable processes for finances overall that protect the Church, the leaders and the donors. Since they come from a 3rd-party, it helps diffuse some of the "attack" aspects of making these changes. In our church, we thought we had good processes, but after reviewing the Compass Point best-practices we found several glaring, previously unidentified conflict of interest and/or accountability issues. None of the issues had resulted in malfeasance, but allowed for the appearance of impropriety. Some minor fixes of who and how certain tasks were done (who paid bills, who reviewed and approved account statements, handling of cash, etc.) left the board, treasurer and office staff in a more protected place. I will say from the statements of the OP, there appear to be places where conflict of interest is clearly demonstrated.

As an aside, calling the SBC a denomination is fightin' words in some circles. :-) (http://www.sbc.net/aboutus/acloserlook.asp)

I do think his church may have resources available from the SBC on how to handle endowments, Missionary support funds, etc. and it would be worth. I am not affiliated with an SBC church so cannot give specific advice on where/who to contact.

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Re: Appropriate allocation of Church funds

Post by spectec » Fri Jan 25, 2019 9:45 am

You've received many excellent suggestions and links on this thread. I'll suggest that you also take a look at the Evangelical Council fo Financial Accountability (ECFA) web site. Their guidance has been very helpful to me in a number of situations involving church and non-profit financial questions. http://www.ecfa.org/About.aspx

You can register and obtain access to much of their contact at no charge.
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Re: Appropriate allocation of Church funds

Post by dm200 » Fri Jan 25, 2019 10:02 am

As an aside, calling the SBC a denomination is fightin' words in some circles. :-) (http://www.sbc.net/aboutus/acloserlook.asp)
One of my interests/hobbies is learning and understanding all sorts of information about "Christian" groups, denominations, etc. A lot of (in my opinion trivial) differences over the centuries were things folks were killed or persecuted for. Although, growing up, I was familiar with Baptists (in the north), I did not really understand much about all the "flavors" of Baptists in the US. Years ago, I had a coworker who was a "Southern Baptist" (as in Southern Baptist Convention). He seemed to know all sorts of information and details - and I found it fascinating.

Fortunately, in my opinion, in the US today most "Christian" denominations or churches do not advocate violence, etc. against those with other affiliations and views - although this is not universal.

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marti038
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Location: Birmingham, AL

Re: Appropriate allocation of Church funds

Post by marti038 » Fri Jan 25, 2019 10:15 am

I'd ask them if they've considered how other churches go about "investing" their savings. I don't know of many who have an investment account with a financial adviser unless it's for funds designated for scholarships or a future purpose of some sort. Even then, equities seem like an odd place for a church to put it's money.

I go to a mega church. It is a Southern Baptist Church in an affluent area. We have millions of dollars in cash in our accounts, but not a penny in any investment that has a chance to lose money. The return on our savings is paltry, but we're not an investment house. People give so the church can do the Lord's work, not generate a nest egg.

Your pastor and leadership should be ashamed IMHO. Personally, my approach would be to tell him that I can't continue being a poor steward by risking offerings in investments. If the church continues it's policy I'd quietly and respectfully find a new place to worship.

You can also designate that your gifts not be used as an investment. I'm pretty sure they have to use it as you direct by law, but this issue seems bigger to me. It's an indictment against the leadership of your church.

Sorry you're dealing with this.

Greenman72
Posts: 359
Joined: Fri Nov 01, 2013 2:17 pm

Re: Appropriate allocation of Church funds

Post by Greenman72 » Fri Jan 25, 2019 10:33 am

I am the assistant treasurer and business administrator of my church. (That is a part-time job for my church, which is relatively small--about the same size as yours.) I am a CPA/PFS and CFA. The Treasurer is a CPA. Other members of the finance committee are also professionals who work in bookkeeping or accounting. I would ASSUME (you know what happens when you do that) that your finance committee is similar. If it is not, then you have bigger problems.

I don't really have a whole lot to add to what others have said. Basically, you've said your piece, so just leave it there.

About the Ameriprise advisor: I have stated on BH that I am an advisor (as part of a bigger tax/accounting/wealth management practice), but I am generally hyper-critical of most "retail financial advisors" who are not well-versed professionals, but rather salesmen. While I do not know this advisor in particular, I would assume he's more salesman than professional. If he were truly interested in serving the church, he could simply cut his commission to zero. That way it doesn't show up on his tax return, and it stays in the church's coffers, and not in his. This is effectively a charitable contribution, even though it doesn't show up anywhere on a tax return. (Actually, if you're a "tax scientist", it's better than a charitable contribution). You might challenge him to do that. (But I wouldn't push it, or else you're causing unnecessary conflict.)

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dunkmachine
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Re: Appropriate allocation of Church funds

Post by dunkmachine » Fri Jan 25, 2019 11:23 am

Lots of good information here.

Our church does belong to the SBC, however I'm not sure how our church functions within that organization. I know that we tithe our offerings up to SBC. The times when we are pastorless, they help supply us interim pastors, and helps us fill those open positions. I believe we act as an independent and autonomous church as part of the SBC cooperative, and the SBC has no authority over the governance of the church.
I am the assistant treasurer and business administrator of my church. (That is a part-time job for my church, which is relatively small--about the same size as yours.) I am a CPA/PFS and CFA. The Treasurer is a CPA. Other members of the finance committee are also professionals who work in bookkeeping or accounting. I would ASSUME (you know what happens when you do that) that your finance committee is similar. If it is not, then you have bigger problems.
Unfortunately, I don't believe any members of the Finance committee have an accounting background. I do know of one accountant in leadership at our church, however he his on the Personnel Committee.
said your piece
As an aside, I have always thought it was "said your peace". Good to know!
You've received many excellent suggestions and links on this thread. I'll suggest that you also take a look at the Evangelical Council fo Financial Accountability (ECFA) web site. Their guidance has been very helpful to me in a number of situations involving church and non-profit financial questions. http://www.ecfa.org/About.aspx
Thank you for the link! I will for sure read through that.

Greenman72
Posts: 359
Joined: Fri Nov 01, 2013 2:17 pm

Re: Appropriate allocation of Church funds

Post by Greenman72 » Fri Jan 25, 2019 12:03 pm

From one Christian to another, another thing I'd add--church harmony is more important than money (at least to a certain extent). I wouldn't push it too far, unless you think that somebody is egregiously enriching himself at the church's expense.

And as I said before, I'm an advisor, and my standard fee for AUM is 1% of assets less than $2m, and .5% of assets above that. However, for my church, I would probably heavily discount it. (This is my business and my personal preference.) I don't think that it's necessarily improper for the advisor to charge a fee (since he is, at least in theory, providing some sort of value and can be sued for malpractice). The actual amount of the fee is subject to much personal opinion, but I'm not 100% against it.

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