Finance Committee Report Parish Annual Meeting 2016 Finance Committee Report Presented by Stephen Smith, Treasurer February 21, 2016 Presentation available online at columba.org. Report of the Finance Committee to the parish of St. Columba’s Episcopal Church for presentation at the February 21, 2016 annual meeting. Web link: www.columba.org.

Agenda Financial summary 2013-2016 Quick overview of FY2016 budget Alignment of budget and stewardship Progress in 2015 Remaining challenges Treasurer provides independent oversight of the financial operations of the church and chairs the finance committee Collaborates with the rector, vestry, and COO on the development of the annual budget Provides updates such as this one to the parish -- Ultimately the priorities of the budget are set by the rector and endorsed by the vestry Since we have only a short time this morning, I’m going to focus on the church’s operating budget rather than on the capital campaign or the nursery school.

Financial Summary 2013-2016 We have run persistent deficits for the past several years … larger deficit in 2014 comes from one-time expenses associated with our leadership transition.

FY2016 Revenues TOTAL REVENUES $2,476,543 Pledges are 80% of total revenue, and offerings are 10% All other sources (e.g., facilities rental, hospitality) make up the remaining 10% TOTAL REVENUES $2,476,543

FY2016 Expenses TOTAL EXPENSES $2,458,261 OPERATING INCOME $18,282 Personnel accounts for 68% of our budgeted expenses Plant maintenance is 12% Everything else is single digits Personnel, of course, supports all of the areas of our program: worship, formation, outreach, and management. TOTAL EXPENSES $2,458,261 OPERATING INCOME $18,282

Budget and stewardship STEWARDSHIP TIMELINE Calendar 2015 $1,936,789 actual Calendar 2016 $2,200,000 goal January December January December $968,394.50 $1,100,000 BUDGET TIMELINE When we do our stewardship campaign, half of the value of pledges will apply in the current FY and half in the next. In other words, we develop a budget knowing pledges for the first half of the fiscal year, but we don’t know the second half … althought this year we have applied a modest contingency to increase the likelihood we can close the year in the black FY2015 Fiscal Year 2016 Fiscal Year 2016 $2,068,394.50 pledge budget FY2017 July June

Progress in 2015 Prior to 2014 … 8 consecutive years of fewer pledges 7 consecutive years of less pledge income In 2014 and 2015, we increased both pledging units and pledge income 146 increase in pledging units $305,420 increase in pledge income

Progress in 2016 We have exceeded last year’s pledge income and are tracking toward exceeding pledging units as well 2016 is our first balanced budget in recent memory We are seeing really good progress, but we are still far below peak: Peak pledging units 919 in 2005 Peak pledge income of $2.532m in 2006 In 2015 we had 624 pledging units representing $1.937m in pledge income Adjusting for inflation our $2.532m in 2006 pledge income would be $2.977m in pledge income today – more than $1m more than last year.

But … challenges remain Program budgets are tight Outreach, especially, is modest We have the potential to do more We are below target on our EDOW pledge Paying down debt will free up resources in future years If you have not yet pledged, please do so as soon as possible Budget cuts over the past decade mean we are already spending less on outreach than we would like Diocesan Convention approved a resolution calling for each parish to pledge 10% of NOI to EDOW. We are at ~4%. Each additional % is ~$23k. We hold a $900k mortgage on the church and a $600k mortgage on the church- owned house at 4221 Albemarle St NW. Debt repayment was a goal of the capital campaign, but because the campaign came in more than $2m under its goal, we are unable to pay down debt at this time. We have taken advantage of favorable interest rates to refinance, but this is not a good long-term solution to the church’s cash needs.

We need only 68 additional pledges at or above our average of $3,500/year to meet this year’s campaign goal As of 2/19, we have 560 pledges in hand for 2016 at an average pledge of $3,499 (versus 624 at $3,104 last year). 119 pledging units from 2015 have not yet submitted a pledge for 2016. If each of those pledged our average of $3,499 to date, we’d beat this pledge campaign by $175k. Key points to remember … Pledge income is our most important and predictable source of revenue We have drawn down our reserves significantly with multiple years of deficit spending We need a successful stewardship campaign to finish the year with a balanced budget – remember the budget is based on an assumption for this year’s campaign We need to rebuild our reserves The budget will dramatically affect the type of church we can be and the impact we can have Thank you!