Financial Guidance and Support
From Maria Gillespie, Chief Financial Officer
Budgets and money are not always at the top of the list of topics clergy and lay leaders want to think about when trying to lead church members to Jesus and provide pastoral direction. However, we must embrace the truth that operating a church is not free. Having this conversation with church members is an excellent idea, and not just during stewardship season. Explaining needs can be a vulnerable situation but is necessary, especially during a crisis.
If the you are a leader who has relinquished most involvement in the finances of the church to committees and boards, this is now the time to re-engage.
Diocesan Council has also taken action.
BREAKING NEWS: INFORMATION REGARDING SECOND ROUND OF PPP LOANS
On January 8, 2021, the U.S. Treasury Department released information about the upcoming second round of PPP loans. The information released is incomplete, but indications are that the next window for applications may open as early as early as the week of January 11, 2021. The SBA website does not yet reflect the most recent information, but it is expected it will be updated in the coming days.
Here's what you can do to be ready:
1. Make a plan to contact and re-establish your relationship with your bank as early in the week as possible to know when they will begin accepting this second round of applications.
2. Plan to be on the leadership call on Tuesday, Jan. 12 at 8:30a.m., as Maria Gillespie will provide an update on the information we have and what you need to know about the second round of applications (applications will be divided between first-time and second-time recipients).
3. Take a look at the key updates provided on the U.S. Treasury announcement. If you have received a PPP loan already and plan to apply for a second round, there is additional 2020 information you will need to provide.
4. Monitor this page for additional information, as we will continue to post updates as we received them.
CLERGY PENSION ASSESSMENT WAIVERS NOW AVAILABLE UP TO FOUR MONTHS
None of us expected this pandemic to be as disruptive as it has been for so many people and for so long. Earlier this year, we announced that we would be accepting applications for temporary waivers of clergy pension assessments for up to two months. Given the duration of the pandemic and the impact it continues to have on struggling congregations, we have extended the potential waiver period to four months. Diocesan Bishops of The Episcopal Church can apply for waivers of clergy pension assessments one month at a time up to the four-month limit per cleric. Credited service will continue to accrue during the waiver periods.
Some of you already have applied for waivers for some of your clerics. You can use the same process to request additional waivers up to the four-month limit. Note that the original financial need criteria continue to apply. Please do not hesitate to contact your IBAMS account manager if you have any questions.
Email completed form to Maria Gillespie.
The Small Business Administration has released the application for forgiveness of the Paycheck Protection Program loans.
The loan is forgiven in full if, during the eight-week period beginning when the church receives the loan, the money is spent entirely on:
- payroll costs
- group health care expenses
- interest on any mortgage obligations
- rent, including rent under a lease agreement
- interest on debt incurred before February 15, 2020
If salary or wages of an employee are reduced by more than 25% during the period February 15, 2020 through June 30, 2020 (for an employee who made less than $100,000), loan forgiveness is reduced by the amount of the salary or wage reduction in excess of 25%.
COLLECTING ONLINE DONATIONS
The Diocese has set up an online donation portal through Stripe for all of our churches during this time of suspended in-person worship. While churches are encouraged to continue with whatever online giving programs they have already established, this option is available to support churches that have not yet established online giving. Upon clicking the button, donors will have the option to choose to donate to any church in the Diocese - or to a general church assistance fund the Diocese will distribute to the churches most in need during this time.
To add the link to your website, just copy and past this address: https://givingtools.com/give/1182/1995.
If you are interested in researching other online giving portals, we recommend the following:
ASK FOR HELP
for accounting, business and financial experience in your church and community partners. Partner
with business and members who have talent that can make your church prosper. Networking and getting to know your neighbors is more important than ever. Use internet searches and local maps on the web to reach out to potential partners through email or mail.
Be aware that the Diocese does not have sufficient financial assets to bail out churches. Each church must exercise its own financial prudence. Clergy and lay leaders have this responsibility to both the church’s members and to the Diocese. Along those lines, a church remains responsible for paying its debts, including any mortgage on the property. Note that all diocesan policies regarding preapproval of real estate transactions remain in effect.
Before applying for a diocesan church adaptation grant, made possible by the North Carolina Church Foundation, please examine your budget using the guidance further down this page. The application will ask for the steps your church has already taken to adjust its budget and explore non-diocesan funding.
HELP FROM CHURCH INSURANCE COMPANY
Effective immediately, Church Insurance Company will be extending payments for 90 days beyond the effective/due date before cancellation. It will take them time to make adjustments to the system-generated notices. Please be in touch with their billing department in order to make the necessary adjustments. The toll-free number is 1-800-819-2984.
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) contains important provisions that will affect HSAs, HRAs and FSAs:
- HSA-qualified health plans can now cover telehealth and other remote care service expenses below the HDHP statutory deductible limit, or at no or low-cost sharing, without affecting an account holder’s ability to continue contributing to their HSA. This provision will last until December 31, 2021.
- Over-the-counter drugs and medicines can be paid for or reimbursed through an FSA, HRA or HSA without a doctor’s prescription.
- Menstrual care products are now considered a qualified medical expense and are eligible for payment or reimbursement through an FSA, HRA or HSA. All expenses incurred after December 31, 2019 qualify, and the provision has no expiration date.
- Learn more.
EXAMINE YOUR BUDGET
When you step into the realm of numbers, there are so many variables. However, churches often limit total compensation for all (staff) personnel to no more than 50% of their budget. Below I have identified some changes that can be made to budgets before re-examining personnel costs.
This is a pause button for fiscal year 2020 until all things realign in the world (and they will. They always do.)
- Scrutinize your budgets.
Ask financially savvy parishioners to help look at costs that can be adjusted. Let them know up front what your priorities are before the process begins. (It is strongly encouraged that priorities are defined between the focus group and clergy before engaging additional help.)
This process should have different phases. The priest should have a direct and active role during all phases of this process. Financially trained professionals usually know how to tactfully discuss and navigate difficult decisions. If you don’t have members who have these skill sets, please reach out to your canons.
- Phase One: 80% of Annual Income
- Do a deep clean of the church, and then suspend the process until in-person gatherings resume.
- Ask for volunteer services to cut cost in areas like lawn care. (Parishioners may have more time then extra funds right now, and in-kind donations are a big help.)
- Cap supply purchases, and reduce consumption of supplies. Note that paper consumption will fall naturally because worship bulletins are not being printed at present. When worship services resume, redesign bulletins to conserve paper. Likewise, the budget for flowers, communion bread and wine, visiting musicians, coffee, etc., can be reduced.
- Suspend continuing education for the time being, and possibly for the year.
- Limit travel budgets and mileage to that which is absolutely necessary.
- Re-examine software needs.
- End or pause monthly subscriptions.
- Evaluate utility costs and adjust thermostats and lights to reflect a closed building.
- Reduce funding to clergy discretionary accounts.
- Evaluate employee benefits. Can any employees go on a spouse’s insurance plan instead of the church's insurance plan?
- Rethink processes that are outdated.
- Review church insurance needs.
- (After restrictions on in-person gatherings are lifted) consider renting space to third parties. Some businesses will have to give up expensive office space in the coming months.
- Examine cellphone expenses for possible savings.
- Cancel or postpone out-of-town vestry or parish retreats.
- Postpone building renovation
- Phase 2: 60% of Annual Income
- Consider insurance cost sharing with employees for the remainder of 2020.
- Hours can be cut if positions require less than 30 hours per week but more than 20 hours per week. Insurance benefits can be suspended as a cost to the church, but the employees can stay on the plan and pay for the costs through a pre-tax payroll deduction.
- Freeze hiring and eliminate empty positions. Reallocate workload across current employees and volunteers.
- Create a new approval process for any expenditure over a fixed amount, such as $100, even if it was already budgeted. Ensure that approvals are obtained before money is expended, rather than after it is has been expended and a parishioner is looking for reimbursement.
- Analyze salaries. Note that YOU MUST contact the bishop in advance before changing salary, working hours, etc., of a priest.
- Phase 3: 40% of Annual Income
- Please contact a regional canon, the canon for congregational mission or a missioner to discuss additional options.
- Manage cash carefully.
Although no one wants to make more financial adjustments than hindsight will prove to have been necessary, it’s also true that the longer one waits to make adjustments, the more severe they will have to be. Start watching your church’s cash balance on a weekly basis.
One recommendation: Take measures to achieve a net zero monthly cash flow by May 31, 2020 and to maintain at a net zero monthly cash flow for the remainder of 2020.
Avoid drawing down your church’s operating financial reserves too quickly. Once they are depleted, not only are you in a more difficult financial bind, you will find that it’s not possible to restore the reserves until 6 or 12 months after the crisis has passed. One recommendation: Try not to draw down more than 20% of your operating financial reserves in the first half of 2020, and no more than 50% this year.
Liquidating endowments in order to raise cash means selling investments at a deep discount. This is not recommended; exhaust all other options first.
After scrutinizing and analyzing the budget, the focus group needs to switch to fundraising. This is where you will need to engage your tech savvy members because fundraising will take lots of creativity right now. Get to know your local town managers and endowment fund managers. Lots of them right now are offering assistance. If you find some in your area, share with other local churches.
We will not only survive, but thrive, as we emerge from this disaster. Working together has never been more necessary because we are all being affected at the same time. Losing faith and hope is not an option. I like to look at this as a pause button and beginning to a new way of doing things in the future.
IRS Tool for Economic Impact Payment Support for Non-filers
Some people who normally don’t file a tax return may not realize they’re eligible for an Economic Impact Payment. Share this tool, created by the IRS, to help non-filers get Economic Impact Payments. Visit IRS.gov/coronavirus for more information on tax relief related to coronavirus.