Becoming an Effective Treasurer

Tool Kit for Congregational Leaders

Saint Paul Area Synod, ELCA

David E. Laden

February 23, 2019

Finance and the Church

• Ministry

Now you are the body of Christ, and each one of you is a part of it. And in the church God has appointed first of all apostles, second prophets, third teachers, then workers of miracles, also those having gifts of healing, those able to help others, those with gifts of administration, and those speaking in different kinds of tongues.

(1 Corinthians 12:27-28 NIV)

Introductions

• Name

• Congregation

• Role

• Your expectations for this session or a question you hope to have answered during this session

Income

Expenditures

BudgetAccounting

System

Financial Statements

AndManagement

Reports

Congregation

Congregation Council

Audit

Internal Controls

• Process • designed to provide reasonable assurance regarding achievement of organizational

objectives such as

• the reliability of financial reporting,

• effective and efficient operations, and

• compliance with laws and regulations.

Internal Controls Control environment

Identification and analysis of risks

Control activitiesInformation and communication

Monitoring

Budget

Budget

• The congregation is authorized to approve the annual budget (C5.03.e)

• Financial plan

• Used to monitor financial activities

• Set guiding principles

• Involve many people in process

Line Item Budget

• Income • Offerings• Program Income / Fees• Earned Income (rents, interest)

• Expenditures• Benevolence, Mission Support• Program Expenses (Education, Evangelism, Stewardship, Worship)• Personnel Expenses (Salaries, Benefits, Payroll Taxes)• Building and Grounds (Custodial Supplies, Repairs, Maintenance,

Utilities, Furnishings and Equipment)• Administrative Expenses (Office, Telephone, Computers, Insurance)

Line Item Budget

Narrative Budget

Income

Handling Income

• Typically counting and depositing offerings are handled by someone other than person who pays the bills

• Two unrelated people should be involved

• Several people should be involved on a rotating basis

• Written acknowledgements or statements should be sent to donors

Handling Income

• IRS Donor Record Keeping Rule• For contributions of cash, check or other monetary gifts

• Donor must retain a record of contribution

• Bank record (such as cancelled check)

• Written communication from charity (such as receipt of a letter)

• IRS Substantiation Rules• Single contributions of $250 or more

• “Quid pro quo” contributions of $75 or more

• Donations of property – describe property, but do not state value

Handling Income

• Written Statement should include:• Name of organization

• Amount of cash contribution

• Description (but not the value) of non-cash contribution

• Statement that …• “no goods or services were provided in return for the contribution” OR

• Description and good faith estimate of the value of goods or services provided in return

• Except for “intangible religious benefits”

*IRS Publication 1771, Charitable Contributions Substantiation and

Disclosure

Handling Income

• Designated and Restricted Gifts• Honor donor intent

• Keep track separately

• Have sufficient cash balance to cover these funds

• Grants may have specific reporting requirements and may require return of unspent funds

Methods of receiving contributions

• Cash

• Check

• Credit/Debit Card

• Automatic Transfer

• Stock Gifts

• Gifts from Donor Advised Funds

• Qualified Charitable Distribution from IRA

Expenditures

Handling Expenditures

• Supported by proper documentation

• Receiving and approval

• Separation of duties

• Secure blank checks

• Sales tax exemption

Use of Credit Cards

• Policy on use of credit card (e.g. what cardholder is authorized to use card for)

• Personal expenses not allowable

• Cash advances not allowable

• Setting reasonable limits (e.g. $1,000 per month)

• Signed agreement with cardholders

Payroll and Taxation

• Employees vs. Independent Contractors

• Ordained ministers have dual status treatment

• Housing allowance for clergy

• Consider using payroll service

Housing Allowance

• Lesser of:• Amounts actually paid for housing and related expenses

• The fair rental value of the home

• The amount actually paid or declared by the congregation as the housing allowance

• Must be requested in writing

• Approved by the official body of the congregation (congregation council)

• Recorded in minutes of meeting.

• Operates prospectively (i.e. declared ahead of actual expenditures)

• Reported on W-2 as information item in box 14.

Expense Reimbursement

• Accountable Plan• Expense must have a business connection

• You must adequately account to your employer within a reasonable period of time

• You must return any excess reimbursement within a reasonable period of time

• Non-Accountable Plan• Must include total reimbursement on W-2

Mission Support / Benevolence

• Remit to Synod Office regularly• Sign up for Simply Giving®

• Mission Support• 55% / 45% SPAS / ELCA

• Designated Benevolence• Synodical Ministries

• ELCA Churchwide Ministries

Accounting System

The Accounting System

• Basis of Accounting• Cash

• records contributions & revenue when received

• records expenditures when paid.

• Accrual

• records contributions & revenue when earned

• records expenditures when incurred

Financial Statements

• Statement of Financial Position (Balance Sheet)

• Statement of Activities(Statement of Revenue, Expenses, and Changes in Fund Balance)

• Management Reports

Statement of Activities (aka Income Statement)

Statement of Financial Position (aka Balance Sheet)

Management Reports

Management Reports

Management Reports

Fund Accounting

• The church needs to keep track of the specific designations of contributions and ensure that the funds are used for the stated purpose.

• Two different fund groups:• Net assets with donor restrictions

• Net assets without donor restrictions

Accounting Software

• General Accounting Software• Sage 50 (formerly Peachtree)

• QuickBooks

• Church Management Systems• Shepherd’s Staff (Concordia Technology Solutions)

• Shelby Systems

• ACS Technologies

Audit

• An Audit Committee of three voting members shall be elected by the Congregation Council. Audit Committee members shall not be members of the Congregation Council. Term of office shall be three years, with one member elected each year. Members shall be eligible for reelection.

(C13.03)

Additional topics for consideration

• Insurance

• Financial contingency planning

• Data security

• Identity theft

Key Resource

• Congregational Treasurers’ and Bookkeepers’ Financial and Accounting Guide

• Evangelical Lutheran Church in Americawww.elca.org

• About

• Office of the Treasurer

• View Financial Resources

• Congregations

• Financial and Accounting Guide

Resources

• Evangelical Lutheran Church in AmericaOffice of the Treasurerwww.elca.org

• Congregational Treasurers’ and Bookkeepers’ Financial and Accounting Guide

• Congregational Audit Guide

• Internal Control Best Practices

• Contingency Planning for Congregations

• Administration Matters – An Electronic Newsletter for Church Leaders

Home > News > ELCA Blogs > Administration Matters

Resources

• Saint Paul Area Synod, ELCAwww.spas-elca.org

Resources > Forms and Reports• Information for Treasurers and Accountants

• Generic Remittance Form for Directing Money to the Saint Paul Area Synod

• Greg Triplett, Financial Administratorgreg.triplett@spas-elca.org651-224-4313

Christianity Today

www.christianitytoday.com

www.churchlawandtax.com

Resources

Resources

• IRS Publications – www.irs.gov• Tax Guide for Churches and Religious Organizations

(Publication 1828)

• Charitable Contributions—Substantiation and Disclosure Requirements (Publication 1771)

• Compliance Guide for 501(c)(3) Public Charities (Publication 4221-PC)

• Travel, Entertainment, Gift, and Car Expenses (Publication 463)

• Business Expenses (Publication 535)

Finance and the Church

• Ministry

Now you are the body of Christ, and each one of you is a part of it. And in the church God has appointed first of all apostles, second prophets, third teachers, then workers of miracles, also those having gifts of healing, those able to help others, those with gifts of administration, and those speaking in different kinds of tongues.

(1 Corinthians 12:27-28 NIV)

Contact Information

• David E. Laden

Como Park Lutheran ChurchE-Mail: laden@comoparklutheran.orgPhone: 651-646-7127 Ext. 211

or 651-488-6774