Wednesday, July 25, 2018

Churches and Liquidity Targets

Speaking of St. Dysfunction  Grace Episcopal and its governance/financial management, there’s a good article on churches and liquidity targets at: https://www.agfinancial.org/blog/cash-reserves-how-much-does-your-ministry-need/

Before you ask, the site is affiliated with the Assemblies of God. Given The Episcopal Church’s long history, and Bob Malm’s more than 40 years of “ministry,” it’s surely a sad day when Grace Church vestry members in most cases don’t even know what a liquidity target is, but our sisters and brothers in the Assemblies of God do.

And, as I have stated on here before, Bob Malm does the church and its vestry a grave disservice when he tells folks that “funds held for others,” otherwise known as restricted funds, can be repurposed to cover shortfalls. Unless the original solicitation clearly stated that the funds could be used for purposes other than that for which they were solicited, to do so without donor approval is illegal. Of course, given Grace’s dysfunctional record keeping, in most cases that’s going to be problematic, because there is no system under which the church tracks its restricted solicitations and restricted donations.

Moreover, at a time when the church is paying for lavish farewell parties and 100K bonuses for Bob, historically it hasn’t set aside 10 percent of its revenue for purposes of maintaining liquidity by building savings. It hasn’t set aside five percent. It hasn’t even set aside 1 percent. 

Historically, the church has set aside one-half of 1 percent in savings, or $5,000 a year, out of a budget of almost $1 million.

As a result, the church now is proposing spending what will likely total more than $60,000 in interest to borrow the funds needed to keep the HVAC on in the building.

And that is the very definition of “dysfunction.”