An Interview by Laura Leonard for Outcomes Magazine
As president of ECFA, Dan Busby is out to help churches and Christ-centered organizations operate with sound financial practices. ECFA offers accreditation for organizations that meet the ECFA standards. Outcomes spoke with Busby about the importance of wise financial stewardship for Christian ministries.
How does accreditation with ECFA help ministries excel in terms of sound financial management and securing charitable resources?
The ECFA standards provide the guardrails for operating with integrity in areas of governance, financial management, and stewardship. The independent board concept — in other words, the majority of the board members being independent, which helps translate to board decisions made in the best interest of the church or charity — is a key item. Then compensation approval, would be an important concept. We just initiated a new standard on compensation that requires members to be more diligent in the way that they set compensation of the top leader.
ECFA standards also require avoiding conflicts of interest. When an insider at a church or charity receives a gift that is not commensurate with the services provided to the church or charity, that often can result in a conflict of interest that can be devastating for the organization. Appropriate transparency: ECFA requires its members to provide a copy of its most recent financial statement to donors, prospective donors, or to the media. They’re also required to provide a copy of a summary of financial data for any project for which a donor has contributed.
In terms of resource raising, truthfulness donor communications, and tracking donor-restricted gifts and then using them for the intended purpose, are just a few of the key principles embedded in the ECFA standards that organizations would find helpful.
What are the key financial focus points for ministry leaders?
These are challenging financial times for many ministries. Looking at past financial data tells us where we have been—not where we are going.
Here are some of the key items on the dashboards of many ministries:
- Cash has been and will always be king. Maintaining adequate cash reserves at the lowest cash point in a ministry’s year is one of the most fundamental concepts for a ministry.
- Monitoring debt is important. This is an era for debt reduction for most ministries.
- Avoiding the borrowing of funds designated for projects is very important.
- Analyzing total revenue and important elements of revenue such as gifts or fees is vital.
We just completed a church stewardship survey asking large U.S. churches about their budgeting practices. That report reveals that churches that are really moving ahead budget 10 percent below projected expenses. They have some room in case gifts turn down or other situations arise that would impact them financially. Large churches that budget every anticipated dollar simply don’t have flexibility to handle changes in financial patterns.
What are some of key issues on the horizon for ministries?
One of the biggest issues is trust. In today’s media environment, innuendo equals guilt. People are dying to trust churches, they’re dying to trust charities, and yet trust is giving way to a nation of cynics. While most churches and Christ-centered charities operate with a genuine commitment to integrity, we need to do better if we expect believers to be obedient in their stewardship of money and material things.
Today’s post is an excerpt from the 2014 Summer edition of Outcomes Magazine.
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