Monday, January 14, 2019

Potholes and Diversions

“As Christ’s messengers, our lives and institutions are like the road between two cities. If that road is full of potholes and diversions, people will too often turn off and choose another destination instead. We must strive to remove those potholes and diversions, leaving nothing to stand between the message of Jesus Christ and a waiting world.

The late Mark Hatfield, long-time Senator from Oregon and someone who was very public about his faith in Christ, offered these insightful remarks on the occasion of ECFA’s 20th anniversary two decades ago. He emphasized our duty as believers and leaders in Christ-centered churches and ministries to clearly pave the way for the Gospel.

Senator Hatfield went on to compare ECFA’s ministry to a road crew, serving alongside our members “to ensure that business and financial matters do not become potholes and diversions.”

Fast forward another 20 years, and ECFA marks its 40th anniversary in 2019—now serving over 2,300 members committed to upholding high standards in governance, financial management, and gift administration. 

Thank you for your continued partnership with ECFA as we work together to remove barriers in reaching a world in desperate need of the Savior’s love. We pray that 2019 will be your most fruitful year of ministry yet.     

Happy New Year!

P.S. Continue to watch the blog and the website for more exciting new resources and announcements as we celebrate ECFA’s 40th anniversary in 2019 as the “Year of Excellence in Governance.”  

Friday, December 21, 2018

Merry Christmas from All of Us at ECFA

From all of us at ECFA, 
we wish you, your ministry team, and your families
a very Merry Christmas as you celebrate the birth of Our Savior

Monday, December 17, 2018

Essentials of Gift Acknowledgment and Reporting

As 2018 comes to a close, the holidays bring with them a time of reflection. One of our favorite traditions here at ECFA is our last webinar of the year, the 10 Essentials of Gift Acknowledgment & Reporting. To clarify some misconceptions about end-of-year giving, we’ve addressed three of the most common myths to get you and your givers through the season and charitable deductions.

Common Gift Deduction Myths of Givers

Myth #1: You don’t need a gift receipt if you make cash gifts.
Single gifts of any amount over $250 require a written gift acknowledgment. 

Myth #2: You can deduct the value of your time, and/or the rent-free use of property.
Though these two gifts may be some of the most valuable to an organization, they are not deductible for tax purposes. Unreimbursed out-of-pocket costs incurred by volunteers, however, may qualify for a charitable deduction.

Myth #3: It’s OK if you receive a gift acknowledgment after you file your tax return.
Givers must have a proper charitable gift acknowledgment no later than the due date, plus any extension, of their federal income tax return or the date the return was filed, whichever is earlier. Churches should be sure to have appropriate acknowledgments into the hands of givers well before tax time.

Monday, December 10, 2018

ECFA State of Giving - Big News for Churches

As your church comes down the home stretch for 2018, we’ve compiled ECFA State of Giving 2018 to show how last year ended for the nonprofit ministries and churches that ECFA certifies:

  • Big news: Cash giving is up 5.9% between 2016 and 2017, the highest one-year increase since 2012-13, unadjusted for inflation.
  • The 5.9% increase compares with 2.2% for 2015-16 and 2.2% for 2014-15.
  • The data is based on $13 billion of cash giving.
  • For individual churches in particular, giving was up 7.4% between 2016 and 2017, compared to the previous year where it was up 2.5%. 
  • The size category with the largest increase is churches with a budget of $25 million and higher, which is up 8.8%. The smallest increase is churches with less than a $1 million budget, which increased by 1.8%. 

For more insights on giving trends for churches for the complete ECFA State of Giving report.

Monday, December 3, 2018

How to Avoid Church Financial Scandal

How transparent do your church finances need to be?

Are you aware of the legal challenges that may be facing church 990 exemptions and the minister’s housing allowance? 

These questions and more were addressed in a recent webinar from MortarStone titled How to Avoid Church Financial Scandal. The webinar features great insights from Gunnar Johnson, Executive Vice President of MortarStone and founder of Financial Freedom International, and ECFA’s Vice President, Michael Martin.

Here are a few key takeaways from the webinar:
  • Society’s view of the Church’s financial credibility is suffering. Studies have shown a growing distrust of churches and the way they handle money. Millennials in particular are skeptical of organized religion and its impact. A recent Barna study showed that of those Americans who identify as agnostic or atheist, distrust of the Church is listed as a top reason for their beliefs.

  • Leaders must be committed to stewardship. Scripture itself underscores the importance of stewardship in church leaders:
“Moreover it is required in stewards, that a man be found faithful.” (1 Cor 4:2)

“The saying is trustworthy: If anyone aspires to the office of overseer, he desires a noble task. Therefore an overseer must be above reproach…not a lover of money.” (1 Tim 3:1-3)

“We are careful to be honorable before the Lord, but we also want everyone else to see that we are honorable.” (2 Cor 8:21 NLT)
  • There is an increasing demand for transparency in churches. The courts are seeing a rise in cases in which atheist groups and others oppose religious protections for churches, such as the housing allowance and other tax advantages. The increase in this type of litigation is symptomatic of a culture that is calling churches to an account. Churches should therefore take steps toward appropriate transparency.

    As ECFA President Dan Busby says, “Facing an insatiable desire for transparency, trusted churches find the balance between being appropriately transparent and measuring privacy concerns and administrative burdens.”

  • Avoid the dreaded question: Where was the Board? When church financial scandal occurs, the responsibility nearly always comes back to the board. Churches can strive for “Verifiable Accountability” by maintaining an independent board of at least 5 members which meets at least semi-annually and focuses on policy and mission.

  •  Compensation and conflicts of interest are key issues to consider. When it comes to these issues, we must think about them from a LEGAL standpoint, a BIBLICAL standpoint, and a PERCEPTION standpoint – how will this appear to others?

  • Honor giver expectation and intent. ECFA’s 2017 Generosity Project survey found that 93% of all givers agree that it’s extremely important for ministries to uphold specific standards of financial integrity. A key ingredient in these standards is trustworthy stewardship – using the money the way you’ve said you will, and communicating accurately and appropriately with givers.

  • Churches are often vulnerable to fraud. Deliberate misappropriation of funds within a church often comes from a long-time, “trusted” member of the church. In order for fraud to occur, three conditions are usually present: PRESSURE (on the individual who commits the fraud – such as financial crisis or other life circumstances), RATIONALIZATION (the individual justifies their actions – “I’ll take this money now, but I’ll pay it back” or “I’m not being paid enough, so I deserve this”), and OPPORTUNITY, which is the only factor of the three that the church can, to some extent, control.

    Therefore, it is important to implement safeguards and internal controls which decrease the opportunity for fraud. ECFA offers resources to aid churches in this effort, such as basic fraud prevention steps, warning signs of a possible fraud environment, and steps to take if fraud is suspected. These resources and more are available through ChurchEXCEL, ECFA’s FREE online community for churches.

Ultimately, when it comes to avoiding church financial scandal, we must consider the calling we have, as it was so well stated by John Wesley, “Our responsibility is to give the world the right impression of God.”

Click here to view the full webinar, How to Avoid Church Financial Scandal.

Click here to join the free ChurchEXCEL Community and receive access to a wealth of free church financial resources from ECFA.

Monday, November 26, 2018

Retirement Planning for Ministers and Churches – Part 2

Consider these statistics:
  • According to the CDC, life expectancy in the U.S. has climbed from 66 in 1940 to 79 in 2016. This means that, on average, Americans need to plan for many more years of retirement than in previous generations.
  • Northwestern Mutual’s 2018 Planning & Progress Study found that 21% of those surveyed have $0 retirement savings, 40% have less than $25K saved.
  • Michal Grinstein-Weiss / Washington University study found that 45% of those surveyed had no retirement savings; the median retirement account balance was $3K, and only $12K for households nearing retirement

Clearly, retirement planning is important, and for ministers, the church has a responsibility to care for ministers as their role changes. In the recent webinar, 8 Essentials of Retirement Planning for Ministers and Churches, and in an eBook by the same name, ECFA lays out the roles of both the church and the minister, best practices to do what is right before God and man, and important concepts for practical application.

This 2nd post in a 2 part series will highlight Essentials 5-8. (Click here to read Part 1 on Retirement Planning for Ministers and Churches.)

Essential 5: Encourage Contributions

It is important for churches to help staff to understand the realities of longevity, the necessity for savings, and the freedom to go and grow during the future. Churches are urged to make participation and retirement preparation an expectation of every minister and staff person. Some churches may choose to automatically enroll individuals, consider an auto escalation feature for employee contributions, and strongly encourage ministers and staff to take advantage of any matching by the church for “free” money. It is also important to advise staff members with ministerial status about special tax advantages.

Essential 6: Recognize the Uniqueness of Ministers

There are certain aspects of compensation and benefits that are different for ministers than for any other church staff members. Two special benefits for those with ministerial status are:
  • Nonelective and elective employer contributions are excludable from income and SECA tax
  • Minister’s housing exclusion can be applied to distributions from denomination or church-sponsored 403(b)(9)
Churches can honor their ministers by helping them maximize all the tax benefits offered by careful planning.

Essential 7: Consider Planning Insights and Key Issues

There are four planning insights that are beneficial to consider:
  1. Spousal income – leverage any spousal income by saving when possible, and participating in matching retirement plans
  2. Social Security – be aware that whichever spouse is eligible for social security benefits, the other spouse is automatically eligible for 50% of that amount or their earned amount, whichever is higher
  3. Bi-vocational income – participate in employer match plans, but make the church plan your primary saving vehicle
  4. Living trust - create a living trust to avoid probate court and allow you to direct how your estate will be handled

Essential 8: Continue Planning

For larger churches with ministers not already covered under a denominational plan, consider a Retirement Plan Oversight committee to expand the oversight to more than one person, provide fresh perspective, and expertise in various areas. It is also helpful to add a person with little retirement planning knowledge to represent a lay perspective.

To help ministers make timely decisions that ensure a comfortable retirement, check out this Countdown to Retirement, provided in ECFA’s Knowledge Center.