1. Operations 104 Finances, Part 2

2. Recap from Last Week with Mike Boblit on Qualifying for a Bank Loan
Build liquidity
Read/update bylaws (focusing on leadership)
Monitor variances in budget:
Push down accountability to ministry leaders
Staff expense control
Open up communication:
Financial reports (push/pull)
Frequency (how much?)
Establish ministry measurements (benchmarks/dashboard):
Meaningful
Measurable
Manageable
Mmmmm… actionable
Recap from Last Week with Mike Boblit on Qualifying for a Bank Loan

3. Michael Welles serves as the Executive Pastor of Administration at Calvary Church of Santa Ana and has been on staff there since He loves the challenge of figuring out how to support the vision of the church and school and make it all happen. He graduated from Biola University with a degree in accounting and gained experience as a CPA and auditor at Arthur Andersen. Michael received his MBA from California State University of Fullerton and has served as an Adjunct Professor of Accounting at Biola University and currently chairs the Audit Committee at Wycliffe Bible Translators.
Michael Welles

4. Class 4—Finance Committee and CFOs
A Finance Committee and CFO have unique roles in the local church. This class will examine the policies and practices of the Finance Committee and CFO. Your church may or may not have a person with the title of CFO, but will, by necessity, have someone functioning in a similar capacity. Churches need to define the relationship between CFO, Treasurer, and other staff. Churches also must define how their Board and Finance Committee communicate with each other and manage church funds.
Class 4—Finance Committee and CFOs

5. Non-denominational mini mega-church founded in 1931
Total weekend attendance of 3,300 with Spanish and Mandarin services
$4.8m General budget; $1.2m Missions; $3.5m Schools
24 Pastor/Directors; 200 total employees
Governance: Elder Board

6. Elder Board – Hires/Fires Sr
Elder Board – Hires/Fires Sr. Pastor; Spiritual Oversight; Meet Monthly, Pray weekly; Final Decision Making Authority, Receive staff Strategic updates, provide advice
Trustee Ministry Team- Audit Committee of Board; Led by Treasurer of Elder Board; Approve Budget, make recommendations to Elders on Finance and Facility; Meet monthly
Executive Leadership Team (Sr. Pastor and both Executive Pastors – Ministry & Administration) – responsible to lead staff; provide strategic direction; meet weekly
Governance Structure

7. Org Chart

8. Responsibilities of CFO
Oversee Administrative Staff
Lead from 2nd Chair
Vision Implementer
Budget Wizard
Audit Preparer
Finance / Investment / Cash Flow Manager
Capital Campaign Director
HR Manager – Bus Seat Reassigner
Risk Manager / Insurance / General Counsel
Chief Negotiator
Responsibilities of CFO

9. Responsibilities of CFO
Facility Operations / Campus Upgrades
Technology Guru / Database & Website
Communications Strategy
Bookstore / School Operations
Stewardship Ministry
Whatever the Senior Pastor cannot figure out
Complaint Manager / Chief Listener
Architect / Designer / Master Planner
Networker in Chief – Liaison to other Churches
Responsibilities of CFO

10. CFO Support Staff Accounting Staff: Controller, A/P, Payroll/HR
Facilities
IT / Tech
General Contractor
Communications Director
Bookstore
Stewardship
School / Preschool
Questions to Consider
In House vs. Outsourced Support
Paid vs. Volunteer
CFO Support Staff

11. Focus Time / Buffer Time
With all the hats you wear, you could work 80 hours per week forever, how do you balance everything?
Focus Time / Buffer Time study
You study spending to create budget; budget your time too.
Shut door; be intentional; get off campus
Prayer time off campus
Utilizing your assistant and volunteers
Balancing “getting things done” with “listening to people” MBWA
Focus Time / Buffer Time

12. Time Study Chart

13. Role of Finance Committee (Trustees)
Hire / Communicate with External Auditors
Executive Session without you
Perform Internal Risk Reviews
Understanding how the church works in detail
Provide guidance and expertise to CFO on Banking, Investments, Legal, HR, Construction, and marketing matters
Brainstorming is fun
People love using their giftedness
Role of Finance Committee (Trustees)

14. Role of Finance Committee (Trustees)
Provide oversight for budget / review monthly financials
Discussing a plan if we fall short of budget or exceed it
Provide update and recommendations to Board of Elders on Finance / Facility / Capital Campaign matters
Do we debt finance expansion?
Are there deferred maintenance that has to be in budget now
Review major contracts (define “major”)
Construction: Owner vs. General Contractor
Cell Tower
Any Loans / Financing
Anything else bylaws stipulate
Role of Finance Committee (Trustees)

15. Reporting Details Monthly Financials (with YTD Budget Info)
Summary of Total Revenue and Expenses and Cash Balance per entity (Church, Missions, Schools)
Capital Projects Report
Capital Campaign Income and Expenses
Other Reports (usually annually, possibly quarterly):
Giving Trends
Budget proposals
Bookstore Cost of Sales
Reporting Details

16. Trustee Culture Have a meal every month at your meetings
Annual dinner with spouses
Annual hangout with Elder Board and spouses
Monthly reports from ministry heads
Monthly lunch with Chairman (agenda setting)
Minimal monthly reports; have informal conversation about current issues
Trustee Culture

17. Trustee Culture Engage them to do research and analysis for you
No surprises / develop a culture of trust
Don’t hesitate to create expert committees for project (i.e. Building committee)
Since they aren’t final decision making authority, you need to show how their decisions are vital
Trustee Culture

18. Policies Trustees Approve
HR – Employment Handbook
At-will, sexual harassment, computer use policy
School Policy Manual
Auditor Recommended
Conflict of Interest, Whistleblower, etc.
Internal Controls
COSO Matrix to Review
Ministry Policies
Child protection, permission slips, volunteer application
Policies Trustees Approve

19. Internal Control Reviews
Assigned
Financial Transaction Cycle/Component
to:
High
Mod
Low
Comments
CAROLYN
Fixed Assets and Capital Expenditures X
Purchases exceeding dept. budgetary guidelines need approval Capital Expenditures are pre approved by Trustee Board
Purchases/Accounts Payable/Expenditures
Request for payment are submitted for processing after department management approval, and reviewed at signing
Petty Cash
Petty cash is reconciled monthly and replenished, $700 is the maximum in the fund
Long-Term Debt and Notes Payable
Only one outstanding debt balance - Heritage purchase Loans from Farmers and Merchants and 2 private parties
Travel and Expense Reimbursements Reports
Reimbursement policy is enforced. Reports are reviewed by department managers and accounting staff.
PAUL
Contribution Revenue - (Church & Missions)
Layered process involving staff and volunteers for counting and recording
Contributed Professional Services
No dollar value is assigned for recording for contributed services No donation is recorded in the donor records
Auto / Non Cash Donations
Onerous new tax rules. Highly discouraged
Long-term Pledge Contributions
None at the current time
JASON
Payroll, Staff Compensation
Payroll is prepared in house for processing thorough an outside vendor
Executive Compensation
Sensitive issue in the public eye, salary surveys are used and Executive Pastor salaries are determined by the Trustee Board
Internal Control Reviews

20. Lessons Learned in Trustee Communication
Asking what they want to know or understand
Push back if requests are inefficient and explain
Limit re-discussing same topics month to month
Differentiate between asking them for brainstorming input and informing them about a decision that was already made by management
Lessons Learned in Trustee Communication

21. Lessons Learned in Trustee Communication
Have a clear understanding of roles / responsibilities
Have a new Trustee Orientation Lunch
Vet Trustees in other leadership roles first
Have a team of experts that you can call on for advice and they don’t have to be Trustees
Lessons Learned in Trustee Communication

22. Develop relationships with experts in your church to seek advice in areas you aren’t as strong on.
Delegate projects to Trustees, Elders, Committees, or other staff
Keep communicating the “why” behind audits, budgets, policies and procedures to staff
Set aside time for strategy and prayer personally and with your leadership
Keep learning from the pros: David Fletcher, Richard Hammar, Frank Sommerville, Dan Busby, Vonna Laue, Dave Moja, Michael Batts.
Use your vacation and sabbatical policies!
Best Practices

23. Send Questions via Chat to David
Q & A
Send Questions via Chat to David