As Executive Director Traci Hughes-Trotter announced from the pulpit this Sunday, All Souls has made excellent progress in closing our fiscal deficit. We’re grateful for the work of the staff and congregants who made that progress happen. We’re also grateful for Rev. Sinkford’s presence and stewardship experience.

While the results appear promising, we still have work to do. At our December 14th business meeting, the Board will look at those results and review this year’s budget to decide if we need to revise it. As we approach that date, I want to address a few questions I’ve heard about the past, present, and future of church finances.

How does the church use its endowments, and how are decisions about the endowments made?

All Souls has a number of endowments that we draw on to sustain the church and its programs. Some of those endowments are generally available, and some are for specific purposes. For instance, the Beckner Advancement Fund is an endowment used exclusively to fund social justice work, and we also have a general endowment that we use for operating expenses.

Each year, the Finance Committee recommends a percentage distribution of the endowments to the Board. The committee bases its recommendations on the past 13 quarters of investment performance, and annually reports the recommendations to the Congregation. (You can read their report in the Board’s June 2022 and June 2021 annual reports.) During the past few years, the committee recommended distributions from the endowments in the 5-7% range, and the Board followed those recommendations. This year’s budget authorizes up to a 6% distribution, and we’ve taken 4% so far, and the committee will recommend drawing the final 2% only if needed.

These recommended distributions are below the expected rate of return for those investments, which means that the distributions aim to allow the endowments to continue growing, even as we draw from them. Despite our desire to close the deficit, the Finance Committee has not recommended, and the Board has not authorized, outsized distributions from the endowments because doing so would be fiscally irresponsible.

What did the financials reveal in the spring when the Board reviewed the FY 2022-23 proposed budget?

In April 2022, the Board reviewed the Quarter 3 financial report for FY 2021-22 and discussed the proposed budget for FY 2022-23. As of that Quarter 3 report, pledges were lower than the goal set to cover increased personnel costs, after a values-based decision to increase staff salaries. That was a concern, but, overall, the Quarter 3 report showed us only about $8,000 off budget because expenses were lower than anticipated in some areas.

This fall, however, the Executive Team discovered that a significant Third Century Campaign gift to the church had been misapplied as a core donation last year, and that accounting error meant that the donation amounts we reviewed in April 2022 were not correct. In reality, pledge donations were far lower than we realized. Coupled with a steep drop off in Quarter 4 giving, we ended up with a deep and shocking deficit at the start of this fiscal year.

What will the Board review at its December meeting?

When the Board approved the budget in May 2022, we were concerned about two numbers: weaker-than-expected donations and a rapid potential decrease in membership, which directly affects our budget. Because of that concern, we scheduled a full budget review for our December 14 meeting.

As mentioned above, the church has made significant progress on Funding Our Future, and we will review the data around that progress and the church’s current financial situation at our December meeting.

We’ll also look at membership data. While judging membership mid-pandemic is exceptionally difficult, we seem to be smaller than we once were. In December 2017, we had 1,082 active (voting) members; in May 2020, we had 880 active members; and in May 2022, we had 726 active members. Some of you have told members of the Board and staff that the drop in membership is due to attrition during an interim period, disconnections during COVID, and frayed ties to the church. It is also, for some, temporary. While some have permanently left the church, others are waiting in the wings for when they feel called to re-gather. It’s heartening to know that the Funding Our Future results were partly driven by more than two dozen people joining and returning to the church.

What will the Board and church learn from this experience?

During the past month, the church has focused on rapidly raising funds to ensure that we do not run a comparable deficit this year. That work has shown significant promise. We have not yet had time to focus on lessons learned, but doing so is critical: last year’s deficit cannot be repeated.

While our December meeting will focus on reviewing this year’s budget, I intend to use our very next meeting, in January, to turn to a discussion of lessons learned by the Board and staff, and the Executive Team also believes it important to have that discussion in January. The Board is a steward of the church’s finances, and we must determine what additional steps we should take to fulfill that role.

How will the money raised be used by the church?

This past spring, the Congregation overwhelmingly approved seven new Church Goals, which express our current priorities. For instance, there is a goal in which we, the Congregation, promise to use a “well-maintained” building to connect with each other (and many of us lived out that promise on Saturday night at the 200th-anniversary party!). In another goal, we promise to “deepen our spiritual lives through learning and creative expression.” The Executive Team is currently leading the work of figuring out how to make these goals real in our lives. And making them real will require our time, talent, and our treasure—maintaining an aging building, finding and retaining experienced staff, etc.

As we think about the future of our finances, remember that this is our church. The Congregation controls the ultimate direction of the church through the Goals, and the budget must center the priorities the Congregation sets to achieve them. However, money isn’t limitless. The budget must also balance competing priorities to support the fiscal health of the church for the next 200 years. As the budget for the next fiscal year comes together this spring, congregants should expect to see a budget that explains how their money funds our Church Goals.

Those are a few questions I’ve heard, and I’m sure there are more. Please feel free to reach out, and thank you for your work in connecting to and sustaining this community.

Neil Manzullo
President, Board of Trustees