going beyond the numbers - paul clark › files › nacba-2009-going...going beyond the numbers...

Going Beyond the Numbers 7/19/2009

NACBA 2009 - Paul Clark 1

A Broad Perspective On A Broad Perspective On

Understanding Church FinancesUnderstanding Church Finances

Going Beyond theGoing Beyond the

NumbersNumbers

Rev. Paul Clark

Fairhaven ChurchFairhaven Church

Dayton, OHDayton, OH

www.fairhavenchurch.orgwww.fairhavenchurch.org



www.paulclark.orgwww.paulclark.org

Conference ResourcesConference Resources

•• Right Team (building your financial team)Right Team (building your financial team)

•• Budgeting Best PracticesBudgeting Best Practices

•• Performance ReviewsPerformance Reviews

•• StaffingStaffing

•• Sample financial reportsSample financial reports

•• Policies and ProceduresPolicies and Procedures



Workshop DescriptionWorkshop Description

Financial reports are the cornerstone for Financial reports are the cornerstone for understanding the fiscal health of any church. understanding the fiscal health of any church. Financial reports are generated every day by Financial reports are generated every day by thousands of church administrators across the thousands of church administrators across the country, but too often financial reports never get country, but too often financial reports never get beyond the basics of information or go beyond beyond the basics of information or go beyond the administrator’s office. This seminar will the administrator’s office. This seminar will examine the benefits of using financial reports to examine the benefits of using financial reports to not only inform, but to involve and inspire church not only inform, but to involve and inspire church leadership, staff and congregants. leadership, staff and congregants.

Step 1

Mission

StatementStep 2

Leveraged

Advantage

Step 3

Vision

Statement

Step 4

Core

ValuesStep 5

Long-Term

Objectives

Step 6

Analyze the

Environment

Step 7

Know Your

Audience

Step 8

Short-Term

Goals

Step 9

Action Plan

Step 10

Budget

Support

Ongoing

Execution

Measure

Evaluate

Adjust

"If you don't know where you are

going, you are certain to end up

somewhere else“ -Yogi Berra

Finances & Strategic PlanningFinances & Strategic Planning

Going Beyond…



Beyond the Basics

Beyond the Data

Beyond the Boardroom

Going BeyondGoing Beyond

Let’s talk about how we can use financial Let’s talk about how we can use financial

information to go…information to go…

TypesTypes

PurposesPurposes

BenefitsBenefits

TrendsTrends

StoryStory

MeaningMeaning

StrategicStrategic

Context & Context &

CommunicationCommunication

Information

InvolvementInspiration

Going Beyond the BasicsGoing Beyond the Basics

Many churches Many churches

never get past never get past

information…information…

Broader audienceBroader audience

Staff… leadership…congregantsStaff… leadership…congregants

We run reports:We run reports:

•• AccurateAccurate

•• TimelyTimely

•• ConsistentConsistent



Financial

Information

Inform our BoardInvolve our staff

Inspire our

Congregation

Placing alongside ministry outcomes

RoadmapRoadmap

Beyond the BasicsBeyond the Basics-- InformationInformation

•• Language of businessLanguage of business

•• MeasurementMeasurement

•• PlanningPlanning

•• EvaluateEvaluate

•• Fulfill Fiduciary ResponsibilityFulfill Fiduciary Responsibility

-- FASB 117 FASB 117

-- goals: income, spending, historygoals: income, spending, history

-- realistic, for ministry, capital assetsrealistic, for ministry, capital assets

-- how resources are being usedhow resources are being used

-- donors/constituentsdonors/constituents

Is the financial information Is the financial information

you generate as the CBA you generate as the CBA

being used effectively from being used effectively from

the above perspective? Why the above perspective? Why

or why not?or why not?



•• Involve staff, donors, lenders, and auditors Involve staff, donors, lenders, and auditors

•• Organizational ControlOrganizational Control

•• Decision makingDecision making

Beyond the BasicsBeyond the Basics-- InvolvementInvolvement

How engaged is your staff in How engaged is your staff in

the flow of financial the flow of financial

information?information?

What benefit do we gain by What benefit do we gain by

bringing staff into the loop of bringing staff into the loop of

understanding financials?understanding financials?

How engaged are your How engaged are your

lenders and auditors in the lenders and auditors in the

flow of financial flow of financial

information?information?

What benefit do we gain by What benefit do we gain by

bringing our banks and bringing our banks and

auditors into the loop ofauditors into the loop of

our financials?our financials?

Ultimate benefit is greater Ultimate benefit is greater

organizational control and organizational control and

better decision making by better decision making by

those in your organization those in your organization

who are wellwho are well--informed and informed and

involved…involved…

•• Opportunity to celebrate God’s provision Opportunity to celebrate God’s provision

•• Opportunity to tell your storyOpportunity to tell your story

•• Opportunity to rally your staffOpportunity to rally your staff

•• Opportunity to inspire greater generosityOpportunity to inspire greater generosity

Beyond the BasicsBeyond the Basics-- InspirationInspiration

Only a CBA can use Only a CBA can use

the words, the words,

“financials” and “financials” and

“inspiration” in the “inspiration” in the

same sentence…same sentence…



Standardized Financial

Statements

Custom Reports

Dashboard Reports

Beyond the DataBeyond the DataMost Common ReportingMost Common Reporting

Statement of Financial PositionStatement of Financial Position

•• Financial position at a “point in time”Financial position at a “point in time”

•• Assets, liabilities, net assets, or fund balanceAssets, liabilities, net assets, or fund balance

•• Index Index vsvs Year Ago to identify trendsYear Ago to identify trends

Beyond the DataBeyond the Data

Fairhaven Church

Statement of Financial Position

December 31, 2003

Common Size Index versus Year Ago

ASSETS 2006 2005 2006 2005 2006 2005

Cash & Cash equivalents $2,342,579 $2,984,954 12.7 18.0 78% na

Accounts receivable, net 208,737 245,731 1.1 1.5 85 na

Pledge receivable, net 2,947,230 16.0 na

Investments 31,110 28,780 0.2 0.2 108 na

Inventory 304,842 270,252 1.7 1.6 113 na

Prepared expenses 736,866 954,412 4.0 5.7 77 na

Other assets 30,859 68,423 0.2 0.4 45 na

Fixed assets, net 11,833,229 12,047,924 64.2 72.6 98 na

TOTAL Assets 18,435,452 16,600,476 100.1 100.0



Balance Sheet Questions:Balance Sheet Questions:

1.1. What’s our short term liabilities What’s our short term liabilities

coverage ratio (quick ratio)?coverage ratio (quick ratio)?

2.2. What’s our current ratio?What’s our current ratio?

3.3. What’s our Net Temporarily Restricted What’s our Net Temporarily Restricted

Assets ratio?Assets ratio?

Statement of Financial PositionStatement of Financial Position

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•• Summarizes revenue and expensesSummarizes revenue and expenses

•• Include Index vs. Year AgoInclude Index vs. Year Ago

Statement of ActivitiesStatement of ActivitiesB

eyo

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ata

Be

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Fairhaven Church

Statement of Activities

Year ended December 31, 2003

Common Size Index versus Year Ago

2006 2005 2006 2005

Changes in unrestricted assets

Revenues, gains, and other support

Fee income $8,507,028 $7,655,515 111 na

Contributions $1,267,424 $923,065 137 na

Product Sales $2,196,670 $2,277,957 96 na

Interest and investment income $11,336 $20,788 55 na

Other revenues $455,784 $459,861 99 na

Total unrestricted revenues, gains and other support $12,438,242 $11,337,186 110 na

Net assets released from restrictions $13,033,347 $13,050,354 100 na

Total unrestricted revenues, gains and other support $25,471,589 $24,387,540 104 na



Income/Expense Questions:Income/Expense Questions:

1.1. Is the increase (or decrease) from a year ago Is the increase (or decrease) from a year ago

expected or unexpected?expected or unexpected?

2.2. Did changes in revenue and expenses Did changes in revenue and expenses

behave as expected?behave as expected?

3.3. Can we do a better job next year or next Can we do a better job next year or next

quarter predicting and managing resources?quarter predicting and managing resources?

4.4. What if revenue did not cover expenses? What if revenue did not cover expenses?

…an unsustainable position over time…an unsustainable position over time

Statement of ActivitiesStatement of Activities

Income/Expense Questions:Income/Expense Questions:

5.5. Are we operating at a surplus or deficit?Are we operating at a surplus or deficit?

6.6. How does our budget compare to actual for How does our budget compare to actual for

revenue and expenses?revenue and expenses?

7.7. What are some important functional expense What are some important functional expense

ratios?ratios?

Statement of ActivitiesStatement of Activities



•• Cash flow from operationsCash flow from operations

•• Cash flow from investing activitiesCash flow from investing activities

•• Cash flow from financing activitiesCash flow from financing activities

Statement of Cash FlowsStatement of Cash Flows

Be

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Fairhaven Church

Statements of Cash Flows

Year ended December 31,

2006 2005

Cash flows from operation activities

Change in net assets $1,540,585 ($71,546)

Adjustments to reconcile change in net assets to net cash

provided by (used in) operating activities

Depreciation and amortization $1,609,962 $1,633,932

In-kind donation of land held for sale $25,000 ($25,000)

Gain on disposition of fixed assets, net ($10,893) ($184,730)

Cash Flow Questions:Cash Flow Questions:

1.1. Will we have the necessary cash to Will we have the necessary cash to

sustain shortsustain short--term operations?term operations?

2.2. Do we have cash reserves?Do we have cash reserves?

3.3. Will we need shortWill we need short--term borrowing?term borrowing?

Statement of Cash FlowsStatement of Cash FlowsB

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ata

Be

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Customized ReportsCustomized Reports

•• Modified Balance SheetModified Balance Sheet

•• Sources and Uses of FundsSources and Uses of Funds

How many of you use some form of How many of you use some form of

customized reports for your staff customized reports for your staff

and Boards, either in lieu of or in and Boards, either in lieu of or in

addition to standardized reports?addition to standardized reports?

What’s the goal of all financial What’s the goal of all financial

reporting to nonreporting to non--financial people?financial people?

Financial

Information

Inform our

Board

Involve our

staff

Inspire our

Congregation

Placing alongside ministry outcomes

RoadmapRoadmap

Dashboard ReportsDashboard Reports




How many of you use Dashboard Reports of some kind?How many of you use Dashboard Reports of some kind?

Provide quick, comprehensive overview of our status, and Provide quick, comprehensive overview of our status, and

overall direction using critical, preoverall direction using critical, pre--selected measures of selected measures of

organizational performance and ministry effectiveness.organizational performance and ministry effectiveness.

Two necessary Two necessary

elements: elements:

1.1.Choosing the Key Choosing the Key

indicatorsindicators

2.2.Creating Consistent Creating Consistent

FormatsFormats

Communicating Dashboard ReportsCommunicating Dashboard Reports

Key indicators visibleKey indicators visible

Consistent formattingConsistent formatting

Trends and changes identifiableTrends and changes identifiable

Driven by measured outcomes Driven by measured outcomes

Supports strategic alignmentSupports strategic alignment

Focus on what matters mostFocus on what matters most

Board responsibility and focusBoard responsibility and focus

Effective meetingsEffective meetings

Informed decisionsInformed decisions





Standardized Financial

Statements

CustomReports

Dashboard Reports


Capture data that has meaning to your Capture data that has meaning to your

church and get it in front of your church and get it in front of your

leaders.leaders.

Questions Questions

or or

Comments?Comments?



How do we get beyond simply reporting How do we get beyond simply reporting

church finances? How do we create church finances? How do we create

strategic alignment and communication strategic alignment and communication

beyond the Boardroom?beyond the Boardroom?

Balanced Scorecard

Communication

…Outcomes based…Outcomes based

…Purpose driven…Purpose driven

…Values centered…Values centered

Seeing finances in a Seeing finances in a

broader, more broader, more

strategic context…strategic context…

The balanced scorecard is a management The balanced scorecard is a management

system system that that enables organizations to clarify enables organizations to clarify

their their vision vision and strategy and translate them and strategy and translate them

into into actionaction. It provides feedback . It provides feedback in in order to order to

continuously improve strategic performance continuously improve strategic performance

and results. When fully deployed, the and results. When fully deployed, the

balanced scorecard transformsbalanced scorecard transforms

strategic strategic planning planning into into the nerve the nerve

center center of an organization.of an organization.

Beyond the BoardroomBeyond the Boardroom



““You cannot judge the effectiveness of You cannot judge the effectiveness of

your church unless your mission is your church unless your mission is

measureable… make it measureablemeasureable… make it measureable.”.”

Rick WarrenRick Warren

The The Purpose Driven ChurchPurpose Driven Church


Agree or disagree? Reponses?Agree or disagree? Reponses?

What are you measuring?What are you measuring?


•• AttendanceAttendance

•• GivingGiving

•• SpendingSpending

•• BaptismsBaptisms

•• Guest retentionGuest retention

•• AssimilationAssimilation

•• Spiritual formationSpiritual formation

•• ??????

Effectiveness by the Numbers: Effectiveness by the Numbers:

Counting What Counts in the ChurchCounting What Counts in the Church

by William R. Hoyt by William R. Hoyt



Donors care about outcomes…Donors care about outcomes…

•• Is my money wisely invested?Is my money wisely invested?

•• Are we accomplishing something?Are we accomplishing something?

•• Is this church effective in the use of its’ Is this church effective in the use of its’

resources?resources?

•• Are we making a difference?Are we making a difference?

87% of donors give two key components for building

loyalty and long-term giving:

1. Acknowledgement of their gift

2. Information about measureable outcomes

Tony Stremler, CEO Newdea

Every time you communicate financial information to Every time you communicate financial information to

your Board or your donors, you should frame it with your Board or your donors, you should frame it with

these four questions in mind…these four questions in mind…

Prompt, accurate, relational and confidentialPrompt, accurate, relational and confidential

Measuring the Health of Measuring the Health of FairhavenFairhaven

“13 Measures of a Healthy Church”“13 Measures of a Healthy Church”

1.1. A Balanced Scorecard… Measured A Balanced Scorecard… Measured

OutcomesOutcomes

2.2. Some are Quantitative, some are qualitative Some are Quantitative, some are qualitative

and some are anecdotaland some are anecdotal

Balanced ScorecardBalanced ScorecardBeyond the BoardroomBeyond the Boardroom

•• We publish theseWe publish these

•• All the staff knows themAll the staff knows them

•• We talk about themWe talk about them

•• We measure themWe measure them

•• We communicate our progress in themWe communicate our progress in them

•• We celebrate our successes in themWe celebrate our successes in them




1.1. People are coming to saving faith in People are coming to saving faith in

Jesus Christ.Jesus Christ.

2.2. Our International Ministries are Our International Ministries are

expanding locally, nationally and expanding locally, nationally and

globally.globally.

3.3. People are making public professions People are making public professions

of faith through baptism.of faith through baptism.

4.4. Attendance is increasing in worship Attendance is increasing in worship

servicesservices..



5.5. The worship experience is vibrant, The worship experience is vibrant,

enthusiastic and intergenerational.enthusiastic and intergenerational.

6.6. There is broad participation in There is broad participation in

serving throughout the ministries.serving throughout the ministries.

7.7. New ministries are beginning as God New ministries are beginning as God

imparts vision.imparts vision.

8.8. Guests are being connected to Guests are being connected to

church life.church life.




Balanced ScorecardBalanced Scorecard


9.9. Covenant membership is increasing.Covenant membership is increasing.

10.10. Our budgetary needs are being met.Our budgetary needs are being met.

11.11. Leaders are being developed and Leaders are being developed and

placed in ministry roles.placed in ministry roles.

12.12. Scripture is central to our message.Scripture is central to our message.

13.13. Staff relationships are healthy.Staff relationships are healthy.


If you were compiling a list for your church, what If you were compiling a list for your church, what

might it include that perhaps isn’t on this list?might it include that perhaps isn’t on this list?

Organizational & Ministry EffectivenessOrganizational & Ministry Effectiveness

Outcome Target Metric

Our International Ministries

are expanding locally,

nationally and globally.

Growing numbers of

Fairhaven people

participating in local and

cross-cultural missions.

16 Short-term Missions Trips

involving 225 Fairhaven

people

Guests are being connected

to church life.

Guests are connected in

community, worship,

equipping and serving.

Director of Connecting

Ministries; measuring and

tracking three levels of

involvement among our

guests; quarterly connecting

events involved 350 people

Org. AlignmentOrg. Alignment Strategic FocusStrategic Focus

ValueValue--added added ActivitiesActivities Resource ManagementResource Management

ResultsResults--based based MinistryMinistry Donor Communication Donor Communication



•• What values and vision in your church can What values and vision in your church can

create a scorecard of outcomes?create a scorecard of outcomes?

•• What are the outcomes that you talk a great What are the outcomes that you talk a great

deal about, but aren’t measuring?deal about, but aren’t measuring?

•• How will you measure those outcomes?How will you measure those outcomes?

•• What systems or processes need to be in What systems or processes need to be in

place in order to be able to measure place in order to be able to measure

outcomes?outcomes?

•• Will there be resistance?Will there be resistance?

•• How could you implement this in How could you implement this in

your ministry?your ministry?


Any thoughts?Any thoughts?

Strategic CommunicationStrategic Communication

to the Leadership…to the Leadership…

•• Monthly Reports Monthly Reports –– Dashboard ReportsDashboard Reports

•• Board Portal Board Portal

•• Annual ReportingAnnual Reporting

Always lead with VISONAlways lead with VISON

CommunicationCommunicationBeyond the BoardroomBeyond the Boardroom

Stories, values, impact, Stories, values, impact,

celebrationcelebration

Balanced ScorecardBalanced Scorecard-- measured outcomesmeasured outcomes



•• Keep staff informedKeep staff informed

•• Present information in Present information in

layman’s termslayman’s terms

•• Give the good, the bad Give the good, the bad

and the uglyand the ugly

•• Act and respond as a Act and respond as a

teamteam

•• Affirm and celebrate as Affirm and celebrate as

often as possibleoften as possible



to the staff…to the staff…

•• TwitterTwitter-- BlogsBlogs-- FacebookFacebook-- WikiWiki-- emailemail

•• BulletinBulletin-- NewsletterNewsletter-- WebsiteWebsite

•• Quarterly Statements & Management LettersQuarterly Statements & Management Letters

•• Annual ReportingAnnual Reporting



to the Congregation…to the Congregation…

Always remember Always remember

those four questions…those four questions…



It’s not about money, it’s about…It’s not about money, it’s about…

•• Purpose: Living the Journey, Sharing the Purpose: Living the Journey, Sharing the

StoryStory

•• Values: Equipping, Outreach, Community…Values: Equipping, Outreach, Community…

•• TransformationTransformation

•• Putting God First in Your LifePutting God First in Your Life



Connecting Finances & Vision…Connecting Finances & Vision…

Share Share it!it!




Share Share it!it!


Create a culture where talking about Create a culture where talking about

finances is not an awkward, finances is not an awkward,

uncomfortable part of the uncomfortable part of the

conversation, but an integral, natural conversation, but an integral, natural

part of the ministry as a whole…part of the ministry as a whole…

Questions or comments?Questions or comments?

Preach it!Preach it! 4-week series

6-week series

4-week series

CommunicationCommunicationCreating a culture…Creating a culture…



Teach it!


Teach it!Teach it!

Celebrate it!Celebrate it!




Many churches only talk about money when Many churches only talk about money when

they’re behind in their budget or they want they’re behind in their budget or they want

to start a building project. Church finances to start a building project. Church finances

and giving is an integral part of something and giving is an integral part of something

much larger and more inspiring than simply much larger and more inspiring than simply

a budget. Stewardship and generosity a budget. Stewardship and generosity

cannot be separated from the conversation cannot be separated from the conversation

about purpose, vision, and fulfilling the about purpose, vision, and fulfilling the

calling of God for your church. A church calling of God for your church. A church

executive or administrator can help make executive or administrator can help make

that connection…that connection…

going beyond the numbers - paul clark › files › nacba-2009-going...going beyond the numbers...

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