Articles

From his column God, Government and Me—Money in the Church

god-government-me-03-13-1We expect to hear about the inappropriate use of finances in the secular world—big business and government—but, poor stewardship of God’s resources in the church by Christians? Surely that is an oxymoron.

And yet, news media all too regularly report on the inappropriate stewardship of funds at one church after another. It’s a slip of integrity here and a case of fraud there. Sometimes the issues are small; other times, they shake a congregation to its core, causing worshipers to look for another church. Either way, the consequences are not a positive witness for our Lord and Savior!

These problems occur in churches large and small. Financial impropriety is an equal opportunity problem.

How do these tragic financial events occur in the church? Financial impropriety happens when leaders lose sight of the ultimate Owner of everything. When we truly understand that church funds belong to God, we provide special care for them with the attitude of a steward-manager, not of an owner. As a steward-manager, we welcome accountability for the way we use assets God entrusts to us. “Now it is required that those who have been given a trust must prove faithful” (1 Cor. 4:2).

In Luke 16, Christ shares the parable of a manager who was required to give an account of his management. There, the master chastised the manager for not being trustworthy with someone else’s property.

Taking the high road of financial accountability requires church governance that demonstrates:

A Heart for Accountability to Model the Handling of God’s Resources

A heart for accountability starts with the senior pastor and other church leaders—clergy and lay—demonstrating a heart for accountability. Then, it will permeate the staff. Without a heart for financial accountability among core leaders, a church is headed for disaster.

Financial accountability often goes awry when the senior pastor of a church insists he or she is above accountability. Peter understood the importance of leadership accountability in the Early Church as he called his fellow “shepherds of God’s flock” to be accountable to one another and to God (1 Pet. 5:1-4).

A Willingness to Be Diligent

Caution: Hard work required!This is how the sign might read before a church enacts a system of financial accountability. It is hard work to be financially accountability—it requires discipline.

Is it exciting to document expenses under an accountable expense reimbursement plan? No. It’s hard work. Does it require discipline to be sure all taxable elements of payments to staff are properly reported to the government at year end? Absolutely! But this extra effort is essential if we are to be financially accountable for the use of God’s resources that have been provided to the church.

An Acceptance of Policies and Procedures

Part of the price of financial accountability is adopting and following policies and procedures with respect to handling God’s money. My friend, Brian Kluth, with Maximum Generosity, says before God supplied resources for any ministry, “the plans were written down.” When Moses built the tabernacle in the desert, he had to write down detailed plans provided by God (Ex. 30-33). Then, the funds came in as the people gave gladly (Ex. 34-36).

David wrote a plan for the temple, and there was a huge offering from the people toward fulfilling those plans (1 Chron. 29). The Apostle Paul wrote a letter to churches concerning who they were helping. He made it clear what he was going to do with the money, and then he did what he said he was going to do.

Where the Problems Occur

Where do financial integrity issues most often arise? Here are just a few common issues:

1) Improper handling of restricted gifts.
Most churches accept donor-restricted gifts. These gifts may relate to a capital campaign for a building project, funds given specifically for missions, for benevolence, or some other purpose. These restricted gifts create specific responsibilities for the church including:

2) Communication with donors
Communication between the church and donors must be clear as to the donors’ intentions and that the purpose of the gifts are to benefit the church.

3) Tracking system
The church must provide an accounting system that tracks both restricted donations and expenses—starting with the fundamental principle of honoring a donor’s restrictions.

4) Setting the compensation of the senior pastor
The formal approval of the senior pastor’s compensation by the full board and contemporaneous documentation of the compensation package—including fringe benefits and the reporting of all taxable compensation elements for tax purposes—are fundamental issues for churches.

The higher the compensation of the senior pastor, the more important it is to use reliable comparability data in setting compensation.

5) Transactions involving conflicts of interest
Churches are frequently involved in transactions with related parties. For example, the church purchases casualty insurance from a firm owned by a church board member. Or, web development services are provided by a pastor’s spouse.

The proper handling of related-party transactions starts with a sound conflict-of-interest policy. Significant transactions between a church and “insiders” should be subject to certain safeguards to ensure transactions are in the best interest of the church (see below for the ECFA’s new standard which includes related-party transaction guidance).

The Bottom Line

This is our day to demonstrate financial accountability in the church. Surely God will be glorified if churches always strive for the high road of financial accountability. “For we are taking pains to do what is right, not only in the eyes of the Lord, but also in the eyes of men” (2 Cor. 8:20-21).

Dan Busby, President of the Evangelical Council for Financial Accountability (ECFA), is a nationally recognized author and speaker and a member of the Commission on Accountability and Policy for Religious Organizations.

 

 


 

ECFA Announces New Compensation-Setting Standard

ECFA has announced the addition of new policies for setting compensation for top leaders of its member organizations. These practices become effective January 1, 2014, allowing ECFA-accredited churches and Christian nonprofit organizations time to implement the changes.

Beginning January 1, 2014, Standard 6 will state: “Every organization shall set compensation of its top leader and address related-party transactions in a manner that demonstrates integrity and propriety in conformity with ECFA’s Policy for Excellence in Compensation-Setting and Related-Party Transactions.”

While all organizations are encouraged to adopt the practices, organizations with higher paid leaders (defined as total compensation of $150,000 or more) will be required to perform minimum due diligence to ensure reasonable total compensation. “The new standard takes compensation-setting practices for ECFA-member organizations to a higher level,” said Dan Busby, ECFA president.

The new due diligence standards do not place a cap on compensation; however, when a leader’s compensation reaches the $150,000 threshold, the new compensation-setting practices are required.

Go here for more information.

 

 

 

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