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| Martin S. Ewing |
This year’s financial results have been positive. At the end of 2006, your Conference realized a small growth in Basic Support from Our Church’s Wider Mission payments. Against a number of years of declining OCWM, and a projection of a further decline, the increase was very welcome news. Our operating accounts fared better than projected, and we avoided the dreaded red ink. You might say, from under their green eyeshades, the financial staff are shining!
(I’ve noticed that word “shining” has had a lot of currency in the UCC, especially at Synod. Everyone seems to have taken away a lot of energy and ideas for future work. We pray this carries over into the financial sphere!)
Besides the operating surplus or deficit, there is also our capital situation, which is best expressed through our annual Auditors’ Reports. Our audited Net Assets (effectively, our net worth) at the end of 2006 were a little over $24 million, up 7.6% from 2005. This is a result of investment gains above and beyond the 5% we normally take as income each year under Board policy.
What is the Board policy about investment income? Under the socalled Total Return policy, we take cash out of our investment funds equal to 5% of the average market value over the preceding three years. This is independent of the actual dividends, interest, or capital gains. Five percent is thought to be the maximum prudent return, over “up” and “down” years, to preserve the value of endowment funds after inflation. Many universities and other endowed institutions use a formula of this type. It is a good one for local churches, too.
In fact, 2006 was an above normal year for the markets, so our Net Assets had a nice boost. Over the next three years and beyond, this increase will result in a modest but welcome increase in funds available for Conference ministries.
The basic question the Treasurer needs to answer for the Conference is, are we in good financial shape? The numbers this year indicate that we are, but let’s look at some hypothetical scenarios that may shed some light on questions facing the Conference.
Consider three churches. The first has a membership of 1,000, an endowment of $2 million, and an average stewardship pledge of $1,000. The second has a membership of 3,000 and an average pledge of $4,000 -- and an endowment of $500,000. Then there is the church in a city center with an endowment of $10 million but just a handful of members. Which church is the healthiest? Based on these simple profiles, where would you prefer to be a member?
I would suggest that the church with strong member financial involvement but a small endowment is likely to be a very lively place, confident in its ability to grow and fund its ministries. So endowment isn’t everything.
Matthew 25:14-30 relates the parable of the talents. While Jesus’ parables were to explain the Kingdom of God, we can also read this one as a financial lesson. Recall that two faithful servants invested their talents and returned double to the master, while the fearful servant buried his money and had no earnings to show. Now consider our endowments today -- producing a 5% return, they would take 36 years to double, given 3% inflation. Does that make us faithful -- or fearful -- servants in light of the parable?
The Bible knows nothing of modern finance and compound interest. But the admonishment to use God’s gifts productively and without fear should ring in our ears. Some of our assets are legally restricted by the terms of a gift. The rest is up to us to invest and spend wisely after prayerful consideration.
Let us go forth into the world, confidently and energetically employing all our resources, to love and serve the Lord.
