Church Finance: Dealing with a Business That is Not a Business - Report Example

Church Finance: Dealing with a Business That is Not a Business Reviewing Albert McGarrah’s book, Modern Church Finances: It‘s Principles and Practice And Joseph Claude Harris’ book, The Cost of Catholic Parishes and Schools Name of Client Name of Class Name of Professor Date 2 In Albert McGarrah’s book, Modern Church Finances: It‘s Principles and Practice, a glimpse into the beginning of church boards and ministers learning that there is a business side to running a church can be experienced by this piece of literature written at the beginning of the 20th century. It is fascinating to note that McGarrah says that “Minister’s salaries must be raised to a minimum of $1200 and a house, and to an average of $2000, throughout the country”[1]. While the figures may not reflect current standards, the theories still hold value and the book can be utilized to witness the beginnings of the business of running a church, while ascertaining fundamental principles that remain solid concepts in the current administration of church funds. The terms of success within the financial development of a church is based on sound money management principles. McGarrah lists “Honest payment of all bills and obligations incurred” [2] as the first responsibility in administering the finances of a church. Using this tenant as a basis on which to make decisions about how funds will be used allows for the church to be a solid representation of what is honest and good. Arranging for goods and services to be given in donation should be done before jobs are completed or goods are delivered. To accept an obligation without the intent to make good on the contractual promise creates a poor example to the community and diminishes efforts towards the community in bringing members into the church. As in all things, however the church conducts itself and the way in which it develops relationships is _____________________________________________________________________ 1. McGarrah, Modern Church, 9. 2. McGarrah, Modern Church, 11. 3 connected to the goals of the ministry, which should not be lessened by poor management of debt. Another issue that McGarrah addresses is the issue of the salaries the church pays to the pastor and other employees who operate the church. McGarrah suggests that to pay a pastor a “starvation salary”[3] is unacceptable and will also reflect poorly on the reputation of the church. A poor reflection will also result from improper allocation to budgets. If budgets are not large enough to meet the needs of the objects of those budgets, then programs and projects will suffer allowing the appearance of inadequate management of the church funds. It is a harsh truth that a church needs money, just like any other organization, in order to grow and provide ministering nourishment to its flock. McGarrah says that “History shows that churches which have persistently belittled stewardship and finances, which have not used money in their work, have either become spiritually anemic or have ceased to grow”[4]. While the altruist notions of living above the needs of financial development are quaint, a church must create a financially stable existence that allows for the utilization of funds to further its goals, whether a new philanthropic endeavor calling has been heard, or a new building is necessary to provide for the needs of the congregation. An interesting point is addressed when the responsibility of American churches to _____________________________________________________________________ 3. McGarrah, Modern Church, 14. 4. McGarrah, Modern Church, 25. 4 the rest of the world is presented because of the growing abundance of wealth the country was experiencing in 1916. As the country was seeing larger incomes because of industrialization and technological advancement, the wealth of the Christian churches should have, according to McGarrah, equaled the level of wealth of the people. McGarrah says that “If American churches are to perform their magnificent duties, to help perfect ideals of democracy and liberty for the benefit of the world, to develop ideal Christians, and an ideal church which shall be object lessons in all lands, and to meet the unprecedented calls for foreign mission workers to enter the world’s open doors, American churches must have unprecedented funds at their command”[5]. McGarrah encourages the church to press upon the congregation the importance of fulfilling the tithe obligation and to understand that the financial needs are representative of the means by which to fulfill the spiritual needs of the church. By fulfilling this command from God, the churches of American can fulfill a greater purpose than allowed to churches in impoverished countries. A lengthy discussion is made by McGarrah on the need for aggressive and active seeking of methods of raising funds. The first recommendation that McGarrah makes is in the creation of healthy and generous budgets for the various needs of the congregation. Once done, actively pursuing avenues of financial contribution can be organized to meet those needs. Suggestions are made of ways to raise public awareness of the needs of the church, as well as directly approaching members to encourage them to live up to their _____________________________________________________________________ 5. McGarrah, Modern Church, 27. 5 tithing obligations are given in great detail, even with examples of correspondence styles and of how to work publicity releases. As well, the use of canvassing as an approach to raise funds is firmly recommended. Methods of recruitment and of how canvassers should convey their mission are provided. McGarrah makes recommendations on how to approach the administration of finances. He suggests that all offices of financial concern be allotted assistants so that the information is never left in the knowledge of only one person. Recommendations on keeping the church support and benevolence funds in two separate bank accounts is prudent advice that is associated with a business style of operation [6]. There is also the suggestion that two treasurers exist, one for benevolence, and one for expenses. This suggestion is similar to the use of two separate employees for accounts payable and accounts receivable in modern day accounting practices of business. McGarrah discusses the role of the pastor in church financial development and claims there are two differing opinions on what role the pastor should take in this area. Some pastors take a leadership role in the raising and administering of funds, while others leave that to other leaders in the church and keep their thoughts on strictly spiritual issues. He quotes an unknown pastor as saying: Liberality is essential to growth in spirituality. If the officers are unfaithful, if the financial standards are inadequate, if the members fail to give as they should either in measure or methods, if a debt or deficit throws its chilling shadow over out faith, if unpaid bills or money raising evils discredit us in the community as unsuccessful or dishonorable; then the church suffers at every point, the Kingdom is delayed, and the name of Christ and the wisdom and power of God are dishonored. ____________________________________________________________________ 6. McGarrah, Modern Church, 181. 6 The irony in reading Joseph Claude Harris’ book, The Cost of Catholic Parishes and Schools, from 1996 is that the same issues of impoverishment within the churches and a lack of proper participation from the parishioners is discussed. Ninety years after McGarrah published his book on church finances, Harris has published a book that addresses the same issues of fund-raising needs. Harris reports that “Chancery fiscal problems became prominent, however, when the archbishop of Chicago complained publicly of crippling deficits”[7]. The political ties and the enormity of the Catholic church, unlike the segmented populations of the various Protestant denominations, creates an environment that puts a diocese in a position to create press releases about the financial health of their territory. In the press release of the Chicago diocese the bishop created a poor image of the administration of church funds, but also was able to announce the need for donations in a very public forum. Harris does an examination on the giving habits of parishioners in chapter two. According to Harris, “the average Catholic’s household gift to charity plummeted from $575 in 1991 to $385 in 1993”[8]. One important factor that Harris considers, though, is that incomes vary and that there is “a positive relationship between income levels and participation”[9]. Although this factor has a strength during the consideration of why parishioners may not give, Harris states that a more compelling reason may be that “Americans give a share of their wealth according to the strength of their religious _____________________________________________________________________ 7. Harris, The Cost, 3. 8. Harris, The Cost, 24. 9. Harris, The Cost, 30. 7 convictions” [10]. Since these two factors contribute most to the level to which a parishioner will give to the parish, it is the responsibility of the church to raise the level of spiritual commitment through messages of faith and by creating involvement by members of the church in order to support the loyalty and spiritual development of each individual. While the income is outside the control of the church, influencing the spiritual commitment is part of the responsibility of the church, which can increase the level to which a family within a parish might give of themselves. One important distinction that was made by Harris is that while many parishes in 1993 operated at a deficit, the fault did not entirely fall on the contributing parishioners. It is shown by data collected that the average amount collected was $9 higher per household, while the expenditure was on the average increase in expenditures was $33 per household. In Chicago, there was a need for an average of $42 per household additional funds to cover expenses. The added revenue needed to pay the expenses was through grants from the archdiocese. Harris diverges from the thoughts that McGarrah presents when he discusses the impossible task presented at the suggestion that the church operate like a business. He says that “any attempt to understand church finances from a business perspective doesn’t work” [11]. He goes on to say that “the operation of a church lacks the market dynamic of competition. It really isn’t rational to market Methodist salvation as a superior product _____________________________________________________________________ 10. Harris, The Cost, 32 . 11. Harris, The Cost, 58 . 8 to the Catholic version of an eternal reward” [12]. When asking for a donation, there is not concept of a product to be sold. When parish managers make a concerted effort to ask for donations in a purposeful and planned action to increase revenue parishioners will usually come through for the church. As in the examples given by McGarrah of ways in which a church may increase its revenue, Harris also suggests that a planned action that includes the simple act of asking will generate revenue for a church. Where both Harris and McGarrah agree is in the appearance that comes from poorly managed funds. Confidence decreases when a church is shown to be under funded. It is imperative to approach congregants with the purpose of raising funds with the understanding that investment in the church is an investment in the community that they enjoy within that church. Investing in the church allows for the continuing good work of those who minister, who provide education from the church and provide charitable endeavors. In dealing with the finances of a church, it is important to pay close attention to the honesty and the care with which bills and debts are handled. Financial officers of the church may be volunteer members of the congregation, however it is important the competent checks and balances, as well as good oversight from leadership be instituted to insure that all matters are dealt with the way in which the majority will view as in good faith practices. It is always important to maintain an understanding of the main purpose of the church as what is done in the financial portion of the administration will have an _____________________________________________________________________ 12. Harris, The Cost, 58 . 9 impact on the ability of the church to fulfill its function as a spiritual leadership for congregants. In insuring honest relationships within the financial deals that are created for the purpose of maintaining expenses and, hopefully, expanding the church, a sense of the truth of the spiritual ministry will shine through. Remembering that a church is not a business, but a social body of people who choose to share beliefs will allow good practices within the administrative duties of those appointed to control financial interests. 10 Bibliography Harris, Joseph Claude. The Cost of Catholic Parishes and Schools. Kansas City, Mo: Sheed & Ward, 1996. McGarrah, Albert F. Modern Church Finance, Its Principles and Practice. New York: Fleming H. Revell Co, 1916. Read More