Financially, your Conference had a satisfactory year since my last report. Our generous churches provided nearly $2.4 million in Our Church's Wider Mission (OWCM) Basic Support offerings in 2004, of which $1.5 million was provided to UCC national and global ministries. After other expenses, we ended 2004 with a $27,422 operating deficit, taking into account adjustments arising from our cash basis accounting. This is a modest amount compared to the total budget of over $5,000,000. Expenses were kept down by the strong management by our Conference staff and the deferral of planned capital campaign work. The major financial concern is the long-term decline in local church contributions to OWCM Basic Support. A 5% per year decline, as we have experienced in recent years, puts heavy pressure on the Missionary Society of Connecticut (MSC) operating budget and on our commitment to send 63% of OWCM on to the UCC national setting, as directed by the local church delegates to the Annual Meeting.
Over $18 million of MSC assets are invested in the Consolidated Trust Fund of MSC. The CTF - similar to a mutual fund - is managed by Columbia Management, an arm of Bank of America, under the direction of our Investment Committee. The Fund experienced an annual rate of return (income and appreciation less expense) of 11.4% in 2004.
The assets under management are over $56 million of Conference and other church investments. The CTF follows a prudent investment policy, which supports the Conference's total return spending policy of 5% per year on restricted assets. Your church is welcome to contact me or the Conference Administrator, Charlie Kuchenbrod, with questions about how to use the CTF to manage endowment funds.
This year, our Conference Committees on Audit and Finance invited bids from a number of accounting firms to undertake the annual audit for the Missionary Society, the Trustees for the Fund for Ministers, and the Consolidated Trust Fund. While we have had good experience with our long-standing auditor, we were strongly encouraged to put the process up for competitive bid to get a fresh analysis of Conference finances and operating procedures. After an extensive review of proposals, the firm of Haggett Longobardi was selected.
Why do we have the annual audit? Why should your church have a regular audit? These are almost the same question. Neither the local churches nor our Conference are legally required to have external audits or reviews, as are other non-profits. For a number of good reasons, your church governing body, like the Conference Board of Directors, needs to do it anyway: (1) The Church or Conference Board needs a full and accurate picture of its financial condition, both operating accounts and endowments, to know if it is healthy for the long run. (2) We need to know the economic, legal, and other risks facing our organization, regrettably including potential fraud. And, (3) we need objective advice to determine whether our procedures need improvement, with attention to good checks and balances.
The appropriate scale and cost of the financial audit or review depends on the size of the organization. If you hear the argument “We've never had to do it before”, that's a sign that you do need a review. We can get set in our ways of doing business and easily overlook unpleasant problems or miss important opportunities if we do not seek objective advice. As Paul said, “Be transformed by the renewing of your minds, so that you may discern what is the will of God.” (Romans 12:2) Good advice for financial officers!
