2020-21 Budget Letter from the Grace Church Elders
Fiscal Year Financial Review and Budget Proposal
We have been blessed with great financial gifts from God. As Elders, we are responsible to express these gifts transparently to the Congregation, steward them wisely for God’s Kingdom, and use them to express the generosity that God has shown Grace to others. What follows is the “nuts and bolts” financial details and a budget of how we propose to live these values.
Our Financial Goals
The Elders have the following financial goals:
1. Have General Contributions and other cash income cover all cash operational expenses.
2. Maintain a free cash reserve (cash not committed to Designated Funds) in excess of $100,000.
3. Pay down personal loans at the rate of $100,000 per year until fully paid back.
4. Pay both interest and principal on our commercial loan.
5. Grow General Contributions by investing slightly ahead of income in staff that both grows our congregation and relieves more challenged areas of volunteer support.
While $14,000 behind goal 1, we believe the following draft budget accomplishes these goals.
Operational cash Income
· General Contributions grew by approximately $10,000 from 2018-2019 to 2019-2020. We are estimating similar growth next year in our budget – but this is likely our greatest challenge. Since January, our giving has been flat to slightly declining. We are extremely grateful for the support we have been given in these difficult times and pray that it continues.
· Other Cash Income has also increased over the past two years. In particular, a gift of $200,000 for staff housing now generates $8000 a year of income that is applied to pastor housing support. In April a government PPP loan for $28,900 which will be forgiven augmented income. This was needed, as we lost virtually all events income and significant rental income We do not expect events income to recover significantly. We are supporting Iglesia Jehova-Sama to continue using our church until they can recover and return to supporting Grace financially.
Operational Cash Expenses
· Up: Payroll expenses increased approximately $47,000 over the past two years due to increases in pastor salary and the addition of two new staff positions, Administrator and Director of Children’s Ministries. These additions are important investments in our ability to grow Grace into the future.
· Up: Maintenance and Supplies expenses have increased by approximately $7000 over the past two years. On maintenance we have taken on more contracted help in the areas of cleaning and pest control. We have also been more diligent in paying for needed supplies versus the unintended help of volunteers. Finally, we are investing approximately $5000 in an irrigation system for the grounds.
· Up: Ministry expenses have increased about $4000 over the past two years as we invest in new children’s curriculum, on-line worship, and upgrading our audio-visual systems.
· Down: Administrative expenses including accounting and legal fees by approximately $11,000 over the past two years.
· Down: Commercial Loan Expenses: We are paying approximately $6500 a year less in bank payments – and we are paying down principal!
Net Operational Cash Income
· Overall, with the proposed budget we are expecting to have a loss of approximately $14,000 in cash. As we continue to invest in staff, we feel projecting a slight deficit is appropriate.. As you will see below, we have approximately $119,000 of free cash so we expect to remain above our $100,000 free cash balance goal.
· Benevolence Fund: We have collected approximately $13,000 in Benevolence Fund Gifts of which approximately $8400 have been distributed. We will continue to raise these funds with separate gift asks as the needs arise. Thank you so much for your generosity!
· Personal Loan Gifts and Paydown: We received special gifts that will allow us to pay down the personal loans by $117,000 from $417,000 to $300,000. Over the past two years we have reduced our outstanding loans by more than $530,000.
· Reserves: We attempt to maintain $100,000 in free cash reserves (cash not committed to any other designated fund like staff housing or benevolence) as this covers approximately 3-4 months of operational expenses. With the personal loan paydown, we will have approximately $119,000 of free cash reserves. We wish to have this slightly higher reserve going into next year to 1) cover the projected cash deficit of $14,000 and 2) cover the increased perceived risk created by Covid-19.
· Commercial Loan: Over the past fiscal year we will have paid down our $700,000 commercial loan by approximately $13,000. We will pay down a slightly higher amount next year.
Overall, let us praise God for over the past few years seeing us through near bankruptcy into this much more secure financial condition. Let us praise God that so far we have been able to be sustainable financially through this Covid-19 crisis. The Elders wish to thank you for your generosity shown in giving through General Donations and special gifts.
Dave Hatfield (Treasurer) on behalf of the Elders of Grace Church of the Roaring Fork Valley