Model Financial Management Policy
Blaine Robison, M.A.
[This document uses generic terminology, which may be changed to conform to any congregationís organization.]
The purpose of this document is to set forth the financial management policies and procedures for [name of congregation].
These policies and procedures are applicable to all congregation officers, including constituent auxiliaries, congregation board members, and members of [name of congregation].
3. Biblical Principles.
The policies herein are based on these principles,
a. Stewardship. The Scriptures teach that God owns all things, that He gives man the ability to produce wealth, that men are His stewards of both life and possessions, and that men will be held personally accountable for the exercise of their stewardship. (Deut. 8:18; Matt. 25: 31-46)
b. Support. The Scriptures also teach that God's design for supporting the work of ministry is through tithes and offerings. Such a response is called forth from God's people as a thankful and generous appreciation for God's extravagant and undeserved grace and love in providing for our salvation. (Gen. 14:18-20; 28:20-22; Lev. 27:30; Neh. 13:10-13; Mal. 3:8-12; Matt. 23:23; 1Cor. 9:7-14; 2Cor. 8:1-15; 9:6-15)
c. Submission. Christians are called to live in submission to the Lordship of Jesus Christ and those congregation authorities appointed over them. As a body, the members are expected to submit to one another for the good of all. (Matt. 18:18-20; Rom. 13:1; Eph. 5:21; 1Thess. 5:12-13; Heb. 13:17; 1Pet. 2:13)
a. Congregation Board refers to the ruling body of the corporation, which is vested with authority to establish policy for the congregation and accountable to the state for maintenance of the corporation.
b. Auxiliary is a subsidiary ministry or activity of the congregation such as children's or youth ministry, Bible study groups, missionary society, and day care for which budgets are developed and financial records are kept.
a. These policies comply with [identify external guidelines, if any]. Hereinafter the number(s) in parenthesis at the end of sentences or paragraphs represent citations from said guidelines.
b. The following policies also follow the guidelines established for congregations and ministries by the Evangelical Council for Financial Accountability.
6. General Policies
a. The fiscal year shall close June 30th each year or such other time as set by the congregation board.
b. Any consideration of the purchase, major remodeling, erection or leasing of real estate or buildings must be submitted to the congregation board for their consideration, advice and approval.
c. Any real estate transaction involving the purchase, sale, mortgage, exchange or otherwise disposing of the same must have the approval of a two-thirds vote of the members of the congregation present at an annual or special meeting.
d. The real estate of the congregation shall not be mortgaged to meet budgetary or operating expenses.
e. No debt may be incurred on the strength of pledges, nor are pledges to be counted as assets.
f. The congregation or any of its members shall not engage in any activity which purports to be sponsored or operated primarily for the benefit of members of the congregation and makes solicitations of the members without written approval of the congregation board.
g. Employees, officers, board members and other ministry heads (and their family members) of the congregation may not accept finders fees, commissions or payments of any kind from any person or entity doing business with the congregation without full disclosure of all the material facts to and approval of the congregation board.
7. Fundraising Policies
a. The congregation should not engage in any method of fundraising that would detract from dependence on tithes and offerings. The congregation shall refrain from engaging in the sale of merchandise or food to raise funds for the support of the congregation and its missionary program.
b. No officer or member of the congregation shall send appeals, solicit money or financial assistance or for any interest said congregation may support from other local congregations, their officers or members without the written approval of the pastor and the congregation board.
c. Fundraising for special projects by ministries of the congregation, such as children or youth, may be performed under specific conditions. [The congregation board may wish to determine when and whether commercial products may be sold for in-house projects on congregation property.]
d. Solicitations for missionary or kindred activities shall not be accepted apart from agencies approved by the congregation board.
e. All representations of fact, description of financial condition of the congregation or any narrative about events utilized in fundraising efforts must be current, complete and accurate.
f. Fundraising appeals must not create unrealistic donor expectations of what a donor's gift will actually accomplish within the limits of the congregation's ministry.
g. All statements made in its fundraising appeals about the use of gifts must be honored by the congregation and its officers. Conversely, the express intentions and designations of a donor must be honored.
h. No part of funds raised for designated agencies outside the congregation shall be used for congregation or other charitable purposes.
i. The congregation or its constituent auxiliaries must provide a report on any project or program for which funds were solicited when requested by its members or donors.
8. Handling Contributions
a. Tax deductible gifts may not be used to pass money or benefits to any named individual for personal use, or to pay tuition or other expenses that should be a personal expense.
b. When property or gifts in kind are received by the congregation, a written acknowledgment of the gift describing the property or gift and signed by the Congregation Treasurer shall be provided to the donor in accordance with IRS requirements. A request by a member of the congregation for reimbursement of any expense incurred on behalf of the congregation cannot at the same time be treated as a contribution-in-kind.
c. In dealing with prospective deferred gift donors, every effort must be made to avoid accepting a gift or entering into a contract which would knowingly place a hardship on the donor or place the donor's or heir's future well-being in jeopardy.
d. Should the congregation receive funds for programs that are not part of its present or prospective ministry, the congregation shall either attempt to carry out the donor's intent or return the funds to the donor, if the donor is available. Donations may only be diverted to other ministry purposes with the written permission of the donor.
9. Congregation Board.
The congregation board has important responsibilities with respect of finances. The congregation board shall
a. Determine the salary and benefits of the pastor, paid assistants and employees of the congregation.
b. Make provisions for traveling and moving expenses for a newly called pastor.
c. Establish any standard honorarium to be paid guest speakers.
d. Provide for the development and adoption of an annual budget for the congregation, all auxiliaries, projecting income and expenditures.
e. Assign a Finance committee for monitoring the congregation budget, reviewing all financial proposals that the congregation board shall consider, reporting to the board on the financial conditions and concerns of the congregation and other such duties as the board shall assign. Treasurers of the congregation, the Day Care and the auxiliaries shall be ex-officio members of the Finance Committee.
f. Review the salaries of the pastor, paid assistants and employees of the congregation at least once a year and provide ways and means for the support of the pastor, the pastoral supply or any other paid worker of the congregation.
g. Determine the financial support and allowances an evangelist should receive and notify the person of such minimum support at the time of the call by the congregation board.
h. Elect a treasurer at the first meeting of the new board, to serve for one year, which may be renewed, until a successor has been elected and qualified, unless another method is provided in the congregation by-laws.
i. Ensure that a careful account is kept of all money received and disbursed by the congregation, including all auxiliary ministries.
j. Provide a committee, no fewer than two unrelated members, which shall count and account for all money received by the congregation in all public services and meetings.
k. Appoint an auditing committee which shall audit or arrange for an audit, at least annually, the financial records of the treasurer of the congregation, the auxiliaries, and any other financial records of the congregation which shall make a report to the congregation board of the results of the audit.
10. Congregation Officers
a. The pastor shall
1) Arrange with the congregation board the raising of the budget.
2) Refrain from contracting bills, creating financial obligations, counting monies, or disbursing funds for the congregation unless authorized and directed by majority vote of the congregation board. Such authorization shall be recorded in the minutes of the congregation board.
b. The congregation board secretary shall
1) Ensure that all financial decisions of the congregation board are duly recorded in the minutes of the congregation board.
2) Sign, in conjunction with the pastor, all conveyances of real estate, mortgages, releases of mortgage, contracts and other legal documents not otherwise provided for in the bylaws of the congregation.
c. The congregation treasurer shall
1) Receive all moneys not otherwise provided for, and disburse the same only on order of the congregation board.
2) Keep a correct book of all funds received and disbursed.
3) Present a detailed monthly financial report for distribution to the congregation board.
4) Present an annual financial report to the congregation meeting.
5) Deliver to the congregation board the complete treasurer's records at such time as the treasurer shall cease to hold office.
11. Finance Committee.
The Finance Committee shall
a. Analyze giving history of the congregation and forecast potential giving for the next fiscal year.
b. Develop plans to educate members in biblical principles of giving, to inform the congregation on financial condition and to raise funds.
c. Evaluate financial needs of the congregation and develop a congregation operating budget to include personnel, building and administrative expenses. The congregation operating budget does not include the auxiliary ministries.
d. Prepare a recommended budget incorporating the congregation operating budget, proposed budgets of the auxiliaries and submit the same no later than the second meeting of the new congregation board for adoption.
e. Track the raising of budgets with assistance of the congregation treasurer and report the current status to each monthly congregation board meeting.
f. Study financial proposals that involve incurring debt, risk or conflict of interests for the congregation and present findings and make recommendations to the congregation board regarding such proposals.
g. Recommend to the congregation board priorities for disbursements by the congregation treasurer and methods for preventing unauthorized expenditures and for keeping within budget guidelines.
h. Oversee the compliance with approved financial management policies and review any breach of said policies for appropriate corrective action.
a. The Director, President or Superintendent of the auxiliary will submit an annual proposed budget to the Finance Committee for inclusion in the comprehensive budget to be adopted by the congregation board.
b. The auxiliary is to be self-supporting for personnel and daily operational expenses.
c. Funds for the auxiliary will be raised through offerings taken in the auxiliary and constituent ministries, or through means approved by the congregation board.
d. No person under age 18 shall be elected as an auxiliary treasurer.
13. Financial Accountability
a. The congregation will follow the cash (or accrual) basis for accounting.
b. The accounting practices of the congregation treasurer and treasurers of congregation auxiliaries will conform to generally accepted accounting principles for record-keeping and reporting.
c. Congregation and auxiliary treasurers will ensure that all financial and bookkeeping records are available periodically and when requested for review. Treasurers will provide a monthly report of financial transactions (receipts and disbursements) as specified by the congregation board, by-laws or other governing document.
d. Expenses incurred by members of the congregation on behalf of the congregation may only be reimbursed by the congregation treasurer with prior approval of [designate the authority, whether an elder, deacon, minister, staff person, pastor, the congregation board or the Finance Committee].
e. Congregation and auxiliary funds will be deposited in a FDIC/FSLIC member institution. The name of the congregation treasurer and another authorized name will appear on all signature cards for checking and savings accounts. [The congregation may find it prudent to require two signatures on any check.]
f. Signature cards at businesses and firms at which the congregation or its auxiliaries maintains accounts will be reviewed annually for any needed changes. No bank account will have more than three authorized names on signature cards.
g. Congregation financial records of the congregation treasurer will be stored in a fireproof container, access to which will always be shared with the pastor and the congregation secretary.
h. Donors will be provided giving statements or receipts as required by law. The congregation will not be responsible to place a value on donated property.
i. Every auxiliary treasurer will prepare a monthly financial report to the auxiliary board. A copy of all monthly financial reports will be provided to the Chairman of the Finance Committee.
j. Any auxiliary savings or checking accounts to be opened must be approved by the congregation board.
14. Budget Management
a. The pastor, Finance Committee and the heads of auxiliary ministries within the congregation will monitor expenditures within their area of responsibility and ensure that budget guidelines are followed.
b. A priority system for disbursement of tithes and undesignated gifts received by the congregation will be followed to ensure essential expenses are met.
c. Undesignated gifts received in auxiliary classes, meetings or events will be presumed to be designated for that ministry which collected the funds.
d. No inter-fund transfers will be conducted involving designated gifts. Transfers between congregation operating budget funds and auxiliary budget funds consisting of undesignated gifts may only be made with the approval by a two-thirds favorable vote of the members present of the congregation board.
e. Intrafund transfer (within the congregation operating budget or within an auxiliary budget) may be accomplished by a majority vote of the auxiliary board or council.
f. Budget development for each new fiscal year will follow the method of justifying the forecasted budget amounts and basing figures on actual expenditures of the past, the cost of goods and services and expected rate of inflation.
g. In the event of a significant property or building emergency the pastor, or his designee in his absence, may make financial arrangements for handling the emergency, when waiting for a committee or board meeting is not prudent, by gaining the approvals of the Chairman of the Property Committee, the Chairman of the Finance Committee, the congregation treasurer and the congregation secretary or the majority of these officers available.
15. Special Needs and Offerings
a. Benevolent funds may be established for the purpose of helping the poor and others in financial crisis. The pastor will give oversight to these funds and approve all disbursements.
b. Discretion should be exercised in inviting public presentations by outside agencies or ministries to solicit funds. Members should be encouraged to consider the merits of other ministries for support and to keep their giving in balance so that the needs of the congregation will be met.
c. No more than one offering for a special need or project in addition to the regular offering will be taken in any worship service.
d. Envelopes may be provided for the convenience of the prospective donors.
e. Offerings may be taken in all public services, all Sunday School classes and other auxiliary meetings.
f. Speaker's honorarium will be provided to the guest speaker after the close of the service and before his/her departure.
16. Records Retention
a. The congregation treasurer, under the supervision of the pastor, shall ensure that all records pertaining to the financial accountability of the corporation are properly maintained.
b. Congregation board minutes, annual financial reports, bookkeeping ledgers and audits shall be maintained for the duration of the congregation.
c. The following files or records may be discarded or destroyed after five years: bank statements, canceled checks, deposit tickets, deposit receipts, donor giving records, monthly financial report, paid bills (except records of major furniture and equipment purchases), receipt books and reimbursement records, Federal forms W-2, W-3, W-4 and tax deposit records, as well as corresponding state forms.
a. The foregoing policies may be amended at any monthly meetings of the congregation board by a two-thirds vote of the board members present.
b. Proposed amendments must be submitted to the Finance Committee at least 60 days prior to the date the vote is to be taken. The Finance Committee shall distribute copies of the proposed amendment(s) to the members of the congregation board at least 30 days prior to the meeting in which the vote is to be taken.
c. Additional financial policies established by the congregation board to those described herein will be deemed attachments to this document and numbered sequentially.
A copy of this document will be distributed to each member of the congregation board and heads of auxiliary programs that may not be on the congregation board. A copy will be maintained by the congregation board secretary with the official records of the congregation and a copy will be kept in the congregation office for public review.
APPROVED BY THE CONGREGATION BOARD:
Board Secretary_________________________________ Date ____________________