A few weeks ago I was in an investment seminar and the speaker suggested starting every meeting with account holders by asking each person in the meeting to write down an answer to a simple question:
“What is the purpose of this pool of money?”
At home that’s an easy question, many of us have funds to pay for college, retirement or just in case. And if we can choose those funds can change purposes as needed. But church funds aren’t always that clear cut.
I have seen lots of accounts with clear-cut policies, names like “organ repair fund” and committees with a common vision for how the money can be used.
But I have also seen “Rainy Day Funds” that haven’t been touched in a decade or more. I guess it just doesn’t rain at that church. Or funds whose purposes don’t seem all that relevant any more as the church has evolved but the fund hasn’t.
Understanding the purpose is significant for a couple of reasons.
First, it may guide investment decisions. A fund that will be needed six months from now to pay for a renovation should be invested conservatively, protecting it from usual market fluctuations that Murphy’s Law dictates the market will be in a slump when the money is needed, then recover fully just a day or two after the withdrawal. But a rainy day fund that may sit in the market for another decade would be able to swallow several market cycles, perhaps suggesting that it can be invested more aggressively.
Second, it is critical to know what a fund should be spent on. The donor or church leaders developed a fund to serve a purpose, like supporting missions or repairing the church building. We need to know that this money is available for such purposes. It would be a shame for a fund to go unused while the church is struggling to pay for things that the fund was intended to support. I know, this sounds strange, but I have seen it happen.
Third, it is equally critical to know what a fund should not be spent on. If the music fund policy says it can only be spent on sacred, traditional music then you cannot buy a new drum set with it, no matter how badly Ringo needs new ones. Endowments should not be used to pay salaries, utilities and other normal operating expenses.
The key to all of this, of course, is a good fund policy. You need one for each fund and they need to be updated. If you don’t have policies, shoot me an email and I will be happy to send you a sample to help get you started.
Got it all. Your usual good job. Bill McFadden
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