Update from the Board on Church Finances

I’m writing with an update on church finances but let me begin with gratitude. Gratitude for the work of the staff in naming and addressing financial challenges the church faced. Gratitude for our Treasurer, Bernard Mustafa, and his clear and consistent financial analysis. And gratitude for the many congregants who have given their time, talent, and treasure, both this year and in prior years, to sustain the church.

When I last wrote about church finances, I said that the Board would review whether we think the church needs to make any changes to this year’s budget due to fiscal constraints, and would also talk about lessons learned and process improvements. I’m writing now to provide an update about where we’re at, and answer some questions I’ve heard.

How are our finances looking for the current fiscal year (July 2022 – June 2023)?
This fall, after we learned of a surprisingly large deficit from last fiscal year (July 2021-June 2022), the church ran a secondary stewardship campaign called Funding Our Future, which was designed to bolster our finances for the current fiscal year. That campaign has been successful! We raised well over $400,000, of which half are pledges that will continue into the next church year, and half were one-time gifts.

Bernard, our Treasurer, presents a quarterly financial report to the Board. According to the quarterly report we reviewed last week, All Souls had the strongest quarterly performance in at least four years, and we are running approximately $130,000 ahead of budget for the year. That is very good news, although sustaining this performance will require us to continue to give and fulfill our pledges. Due to the success of the stewardship campaign and our strong second quarter performance, the Board has not made any changes to the budget for the current fiscal year, and we happily do not expect to run a large deficit this year.

What changes are we making to the budget process?
One challenge we have faced the past few years is that we have had to commit to a budget prior to having an accurate picture of our pledge numbers, and the Executive Team has now modified the budget process to remedy this.

Under the revised plan, the Board and Finance Committee will review an aspirational draft budget in January, and then launch an extended stewardship campaign based upon that budget. The goal of that aspirational budget is to provide for our realistic needs and have a balanced budget. This year, that extended campaign will run from February 12 until April 9. Following the stewardship campaign, the Executive Team will revise the budget based upon the campaign’s results, bring the proposed budget back to the Board and Finance Committee for review in April, and then present it to the congregation in May at the annual budget hearing. The Board will then send the budget to the Congregation for a vote at the June annual meeting.

Since this new process begins earlier and runs longer, it gives us more time to solicit pledges during the stewardship campaign and to then build a more accurate budget based upon pledges made, rather than pledges anticipated. Most large UU churches use this iterative process for developing a budget.

What are the Board and Executive Team doing to strengthen our stewardship efforts?
The success of the Funding Our Future campaign is certainly good financial news, but we still have work to do. In particular, we need to make sure the church is supported by a robust donor base, rather than by a small number of extremely generous donors. Giving one’s treasure to the church does more than keep our lights on and pay our staff fairly–it financially ties the giver to this community, and those ties spark spiritual commitment. Speaking for myself, the more I have given to the church, the more I have received in return. We hope to make sure that as many members as possible feel the spark of commitment that flows from financial generosity.

At All Souls, the Stewardship Committee, which Executive Director Traci Hughes-Trotter chairs, plays a lead role in our stewardship efforts. The Board wants to make sure this committee is strong and well-supported, and Board members are meeting with the committee and reviewing stewardship practices at other churches to get a sense of how to best support this key group of lay leaders.

In addition to launching earlier and running longer, this year’s stewardship campaign also will focus on connection and re-gathering. The Executive Team has recruited dozens of “visiting stewards” to meet with about 10 families each and talk with them about both their generosity to the church and what meaningful experiences have sparked that generosity. This past Sunday, All Souls member Mark Ewert, a philanthropic coach who has literally written the book on congregational stewardship, trained the stewards on how to hold these conversations. I’ll be one of the stewards, and I hope to meet with some of you soon to talk about your connections to the church.

How can congregants help strengthen our stewardship efforts?
What our extended stewardship campaign practically means for congregants is this: it is so important for you to make your pledge between February 12 and April 9, even though you will not need to start giving toward that pledge until July 2023. Ideally, those pledges will be made by early March. These pledges allow us to predict our income and build our budget. While we certainly appreciate your financial generosity later in the year, the best way to help us build an accurate budget is to make your pledge this spring.

Also, congregants who have a passion for talking with others about giving have a community here that’s ready to welcome them. If you would like to get more involved with stewardship at All Souls, please contact Traci (executivedirector@allsouls.ws) and talk with her about joining the Stewardship and Fundraising Committee.

What changes are we making to our financial procedures?
One reason the deficit last year was so unexpected was that our expectations were based upon straight-line income projections, which assumed relatively steady giving throughout the year. While we have aimed for steady levels of giving, and encouraged members to set up monthly donations so that we can have a steady income stream, the reality is that some months will always feature far greater donations than others, and the final months of the church year will likely always have the weakest income. Our Treasurer has modified the financial projections for the year to account for spiky giving cycles, and we hope that our new financial model will better reflect anticipated giving levels, and better allow us to monitor church finances throughout the year.

The church also has a policy of undergoing a full audit every three years, in addition to an annual review of our financial statements. The last audit we had was based upon the church’s financial position as of December 31, 2019. We were already scheduled to have an audit based on the FY22 financials, and it is underway, with results anticipated this month.

What should congregants expect for next fiscal year’s budget?
The stewardship campaign that launches on February 12 will be used to gather pledges to support the budget for next fiscal year (July 2023-June 2024), and the congregation will vote on that budget at this June’s annual meeting. While we have made great progress this year in increasing our pledges–and I expect to not run a deficit for the current fiscal year due to generous one-time gifts–it is unlikely that our fiscal problems can be fully resolved within one year. That means that next year’s budget may again feature a deficit, and we will know more about this as our stewardship campaign and budget process play out over the course of the spring.

What other financial concerns are on the horizon?
During the past month, the Board and Executive Team also learned of some serious concerns about water infiltration into the church basement. Last year, the church had repairs done to waterproof the courtyard and stop water from coming in through it, but those repairs have recently failed. This failure and existing structural deficiencies that have led to water infiltration through other avenues have caused damage to several rooms in the basement, and the Executive Team decided to temporarily close those rooms as a safety precaution.

Remedying water infiltration will take significant resources, and the Board and Executive Team are working with an architect to learn what is required to protect our home.

What about our membership numbers?
We have also been discussing our membership numbers, and how we define membership. In December, the Board reviewed our current membership numbers, which we’ve been in an ongoing discussion about, and last week the Board discussed how our bylaws define membership. Two points are obvious from that discussion.

First, the church has experienced a moderate decline in the number of voting members of the church. A voting member is a person who is a member and who has given to the church during the past 15 months, and we usually measure this number at the time of the Annual Meeting. In 2013, we had 967 voting members; in 2017, we had 1,082; and now we have about 770. While we still are in the process of re-gathering, we must be clear that the church is smaller than it once was. Change is not necessarily bad, and size is sometimes out of our control. In 2017, for instance, the national political crisis likely prompted many to flock to church, and All Souls was there for them when they needed us (as we still are).

Second, the church has always had several hundred “non-voting members” in addition to “voting members” on its books, and this group of people is, on average, less involved in church life. Under our current bylaws, a non-voting member is a member who has not given to the church during the past 15 months. In addition to not having recently donated, very few members of that group participated in the creation of the Ministerial Search Committee, and less than ten of them participated in Imagining Our Future last year, a church-wide project where we recommitted to our mission and set our Church Goals.

All Souls is a place that welcomes all people of good will, and people who do not donate will always be welcome at our services. However, our membership numbers drive our budget and programming, and it is important that those numbers accurately reflect the number of people actively engaged with the church. The Board is currently in the process of proposing large revisions to the bylaws, and in January we discussed potential changes to how we define membership. Those potential changes will be shared in the very near future with the congregation, with discussion sessions during February.

That covers some of the basic questions I’ve been hearing. Please feel free to stop me after service or send me an email (nmanzullo@allsouls.ws) if you have more questions.

Also, on a personal note…let me just say that being on the Board, even during a time of financial uncertainty, is a joy. If you are passionate about church finances or lay leadership or just want to work with a stellar Executive Team, I encourage you to talk with Bill Kules of the Nominating Committee, which is beginning to actively recruit Trustees to join the Board next Church Year.

-Neil Manzullo
President, Board of Trustees

This Post Has 2 Comments

  1. Michael Milano

    Thank you, Neil, for your update.
    Thanks to the board for all its thoughtful work.

  2. Laura Lester

    Thank you,Neal. We were onsite members from 2003-2017 (I attended and participated for several years before joining) and still pledge and watch from the west coast. Your thoughtful, detailed and forward thinking explanations are very much appreciated, and some of the best that I have seen come from any President of the Board.

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