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A Financial Catechism
A catechism is a teaching device that was used by the early church to help introduce inquirers and members of the congregation to the basic contents of the faith. As the Prayer Book says in the introduction to its catechism (p. 844) it is designed “to provide a brief summary of the Church’s teaching for an inquiring stranger who picks up the Prayer Book.”
At St. John’s there often appears to be a great deal of confusion and misconceptions about our parish finances. This brief Financial Catechism has been created to provide some very basic information about our income, expenditures and outreach mission.
Q. What are our sources of income?
A. St. John’s funds its budget through several streams of income:
1)Pledges from parishioners make up approximately 82% of our income
2)Money put in the plate brings in another 4%
3)Funds raised at the St. John’s Auction party and Fair account for an additional 10% of income
4)Rental income and designated gifts brings in 2%
5)Investment income from the endowment brings in 2%.
Q. How large is our endowment?
A. Our current endowment is $450,000. That figure will be increased with the completion of contributions to the capital campaign.
Q. How is the endowment invested?
A. The endowment is invested with our Diocesan Investment Group which has a portfolio valued at approximately $170 million dollars. The funds are divided between the Income Fund (45%) and the Stock Fund (55%). The Diocesan Investment Trust is managed by a group of professional managers and their performance over the past few years has exceeded the benchmark rates of return for these types of funds.
Q. How much of our endowment income are we allowed to draw upon?
A. Many years ago the vestry approved a formula by which 5% of the average balance of the endowment for the prior two years could be used to fund operating expenses. In 2006, the draw was $23,000.
Q. What happens to all the monies made at the Auction Party and Fair?
A. For the past three years, the vestry has had to take $40,000 from Auction/Fair income to balance the budget. Any monies above that amount may be allocated to the Outreach Committee for distribution to worthy organizations and agencies but the vestry may decide to direct those additional funds to the operating budget.
Q. What happens to the money made at the Community Shop?
A. All profits made from the Community Shop go directly to the Outreach Committee for allocation. Last year that amounted to about $28,000.
Q. How much does St. John’s give to outreach?
A. When we add monies raised by the Community Shop, the Auction/Fair, the Christmas, Easter and United Thank offerings, St. John’s has given away over 60,000 each year in 2003, 2004, 2005 and 2006.
Q. What do we spend our income on?
A. Basically, the St. John’s expense budget is divided into four categories:
1)Staff Costs account for about 65% of the budget and include salaries, insurance costs, pension benefits, payroll taxes and other clergy expenses.
2)Administrative costs include the expense of running the office, buildings and grounds (snow removal, landscaping, utilities/fuel, insurance and repairs), parish events and depreciation. These costs represent about 17% of the expense budget.
3)Ministries include adult education, church school and confirmation costs, music and worship, youth and childcare. Those expenses represent about 5% of the budget.
4)Support of the larger church primarily includes our Diocesan assessment, the monies we send to the Diocese of Massachusetts to support their staff, program and ministries. We also make a small contribution each year to one of the Episcopal seminaries. These two figures represent 13% of the expense budget.
Q. Do we receive any monetary support from the Diocese of Massachusetts?
A. On the contrary, as mentioned above, we pay an annual assessment to the Diocese to support their program and administration. In 2007 that amount was $87,811.
Q. Can we reduce the amount of money we send to the Diocese?
A. The simple answer is “no.” The amount is generated by a formula that is applied to all parishes and failure to pay could lead to the loss of Diocesan membership.
Q. Who creates and implements the budget?
A. The budget is initially created by the officers, two vestry representatives and the rector in consultation with the staff and vestry. The budget is then introduced at one monthly vestry meeting and is then voted on at the following vestry meeting after plenty of time for discussion and consideration of recommendations and changes. The vestry is responsible for the final creation of the budget and for funding the budget and the rector is responsible for implementing the budget.
Q. What can I do to promote the financial health of the parish?
A. First and foremost, make a pledge to the annual appeal. As you can see, pledge income is the life-line of our parish. For the past seven years, gains in the amount of annual pledge income have only managed to cover increases in fixed costs such as health insurance, utilities and fuel. We have not had the money to expand any of our parish ministries and programs, nor add any new ministerial initiatives.
At present, a significant portion of our parish membership does not make an annual pledge! The vestry uses pledge commitments to determine whether the operating budget needs to be adjusted. If the total pledges declined, then the vestry would have to reduce operating expenses. If the total pledges increased, the vestry would expand the resources for parish ministries and programs. The vestry understands that a pledge commitment may have to be altered should an individual’s or a family’s financial health change.
If everyone made an annual pledge, the vestry would have more knowledge concerning the parish’s ability to fund the budget and whether expansion of parish ministries and programs was appropriate. Until we reach that goal, the vestry can only make fiscally responsible assumptions about income and the accuracy of these projections won’t be determined until after year-end.
Q. What amount should I pledge?
A. As you might imagine there is a great diversity in the size of pledges with some parishioners giving thousands each year and some giving hundreds. The average gift is around $1,500 per year but any amount, large or small, is greatly appreciated.
Q. What should I do if I have additional questions or concerns?
A. There are any number of things that you can do:
1)You can speak to the rector, treasurer or any vestry member
2)You can attend a vestry meeting, all of which are open to parish members unless specifically designated as a closed meeting.
3)You can attend the Annual Parish Meeting which takes place in late January and includes extensive financial reports on income and expenses and budgetary concerns.
Q. What has all this got to do with my faith?
A. The topic that Jesus talked about the most was money, not because he thought it was the most important thing but because he knew that money is the primary way that we invest in what we value the most. Money is a language that we use to express the values we believe make our lives rich and filled with meaning. If your faith is something that you value, you need to find ways to use your money to support and enrich your faith and what better way to do that than to invest in the worship, ministry and common life of the Body of Christ.
For where your treasure is, there your heart will be also.
Luke 12:34
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