The Long View

We live in a 24-hour news cycle, results-now world. In contrast, our God takes the long view.

Seeking immediate results is rarely more common than when our ministries are impacted by an economic recession. All of our measurement tools are in place to report short-term measurable “success.” We impatiently scan our ministry reports for positive data indicators.

Are concerns about short-term data important? Yes, par­ticularly if questions of sustainability of the organization are in play.

Yet sound guidance of a ministry is more like running a marathon than a sprint. It is focused on the Great Commission with an appropriate desire to attain short-term effectiveness.

Matthew 14:15 records the recommendation of the disciples to Jesus as they told Him, “This is a remote place, and it’s already getting late. Send the crowds away so they can go to the villages and buy food for themselves.” In his recent book, The Longview: Lasting Strategies for Rising Leaders, Roger Parrott, president of Bellhaven College, suggests “the committee’s decision seemed like a reasonable solution.”1

But Jesus took a long view perspective in mentoring these disciples, knowing the solution had sweeping ramifications beyond where to get dinner. Bolstered by the miracle on the hillside, Peter found the faith to step out of the boat and walk on water. That evening had long view implications.

God often builds his church using the long view principle. William Carey, the first missionary to India, worked for seven years before he had his first convert. Robert Morrison, the first Protestant missionary to China, labored for a quarter century and had fewer than a dozen converts.2 When taking the long view, the following principles are fundamental.

• Remembering. We are often so focused on the current challenges that we do not take time to remember. How has God helped us in the past? Has he ever failed us? What lessons did He teach us in past challenging times?

• Reflecting. Identify the season your organization is in by reflecting on your environment. Bill Hybels refers to the seasons of growth as consolidation, transition, malaise and reinvention. He traces the seasons idea back to Ecclesiastes 3:1, which says that “there is a time for everything, and a season for every activity under the heavens.”3 Simply naming the season we are in is the basis of determining the implications of the season.

• Vision-casting. “God’s vision for your ministry will not change quickly, nor will it be something you will accomplish rapidly. His vision will require years of active pursuit. The vision itself may even outlive you!

“Thus, the heart of the vision will remain unchanged over a prolonged period. Some of the details lying at the outer edge of your understanding of the vision may shift somewhat over the course of time. But the core of the vision—the people you have been called to reach, the task you have been called to do, the purpose for which you exist—will remain constant. “Because He is not a God of confusion but of order, because He is a God who is in control, because He takes great pleasure in seeing us find success in our service, He will be faithful in His support of the vision.”4

Reflecting on these principles, have you made short-term decisions in the last 12 months impacting the budget, programming, personnel, and much more? You probably have and this was important to do in the short-run. But even the short-term decisions can and should be made with the long view foremost in mind.

1 The Longview: Lasting Strategies for Rising Leaders, Roger Parrott, David C. Cook, 2009.

2 Ibid.

3 Axiom, Bill Hybels, Zondervan, 2008.

4 The Power of Vision, George Barna, Regal, 2009.

Perspective

Our seven-year old grandson, Daniel, is autistic. We are blessed that he lives only a few blocks from my wife and me. This close proximity allows us to spend time with him on almost a daily basis. When Daniel was diagnosed with autism at age four, it was especially traumatic for our daughter and her husband. Their dreams for Daniel—the dreams all parents have for their children—seemed to vanish. That was based on their perspective at the time. Hundreds of hours in hyperbaric chambers, myriad therapy sessions, and a multitude of prayers later he was ready for his first tee-ball experience this summer—playing with other autistic boys and girls, some several years older than he. The first game was not enough fun and he nearly opted for early retirement after opening day. But he tried another game and then another. And in a short time-span, he went from not sharing the ball to fielding balls and running over towards first base, handing the ball to Bob who plays first base (Bob’s disabilities prevent him from catching a thrown ball) and Bob completes the play. They are quite the teammates. From our perspective today (and that of his parents), Daniel is a terrific boy—the delight of our lives! God has the unfailing power to bring good from all circumstances that come our way. But what we see as “good” often depends on our perspective. There are times when it is difficult to understand how “all things work together for good to them that love God” (Romans 8:28). Yet, with proper perspective we can “consider it pure joy...whenever you face trials of many kinds” (James 1:2). What is your perspective of where you are right now? Feeling overwhelmed by the challenges of fewer resources and increasing expenses for the ministry in which you are involved? Having difficulty coping with the realities of cutting programs—perhaps even laying off staff? Or perhaps God has helped you gain a proper perspective—gaining a grasp of the cur­rent realities for your organization and realizing the future will not be like the past. This may be a good time for you to take a blank sheet of paper and draw a horizontal line in the middle. Remember the good things that God has done for your church or ministry and note them above the line. Then, recall the dark, deep, troublesome times that threatened to engulf your organization across the years—perhaps including some current challenges. All of the items on the page can be committed to Him. He is the God of the top list and the God of the bottom list. He is just as much the God of our challenges as He is the God of our successes. Listen to what God is saying to you and your organization through the experiences of this economic decline. He wants to help you with perspective!

Health Care Reform May Impact Fringe Benefits for Nonprofits

“Cap and Trade” will be a focus on Capitol Hill for 2009…but it will pale in comparison to the debate on health care reform. It appears Congress realizes the revenue sources must be identified to fund health care reform. It is not something to be funded by the federal government like another stimulus package. The 10-year cost for revamping the health care system is estimated to exceed $1 trillion. With health care cost savings expected to pick up about 40% of the tab for overhaul, that leaves Congress needing to find more than $600 billion in revenues. You will hear a lot about a possible new consumption tax as a way to foot the bill for health care reform. After carving out exemptions for food, prescription drugs, and maybe housing and utilities, a value added tax (VAT) of perhaps 6% would be required. This is high enough to prompt most officials who want to be reelected to beat a hasty retreat. So, a VAT on top of the income tax does not appear to be in our near future. Another option being considered by taxwriters is to charge a surtax of 2% or more on upper income bracket taxpayers—the same taxpayers targeted by the Administration, letting the 33% and 35% top marginal rates rise to 36% and 39.6%, respectively. Many of the other options under discussion by the Senate and the House would impact the taxability of employer-provided health insurance, the reimbursement of out-of-pocket medical expenses, or the deductibility of unreimbursed medical expenses. Here a few of the options:

• Limiting employer provided health coverage that is excludible form gross income. The limit could be based on the value of the plan or the income of the insured, or the limit could be a combination of both.
• Repealing the tax exclusion for employer-provided health coverage. In exchange for repealing the tax-free benefit for employer provided health insurance, employees would get an extra standard deduction. (For employees who have no income tax liability, such as many pastors, the extra standard deduction would provide no benefit to the taxpayer.)
• Modify or repeal the itemized deduction for medical expenses. The 7.5 percent AGI threshold for the itemized deduction for medical expenses could be raised or eliminated.
• Increasing payroll taxes or levy on employers. This could include raising the Medicare tax from its current 1.45% rate to 1.8% or higher (for the self-employed, this would mean an increase from 2.9% to 3.6%). Another option under discussion is imposing a new payroll tax on employers of 3% or so of the amounts they spend on health care for employees. For employers that do not provide health benefits, one option is to impose a levy of 8% of payroll.
• Modify health savings accounts. HSA contributions could be limited to the lesser of the individual’s deductible under the high deductible health plan or the dollar amount of the maximum allowable aggregate HSA contributions. The additional tax on distributions from an HSA that are not used for qualified medical expenses would be increased to 20 percent. Distributions from an HSA would only be excludible from gross income as an amount used for qualified medical expenses if the expenses are substantiated by the employer or an independent third party.
• Modify or repeal the exclusion for employer-provided reimbursement of medical expenses under flexible spending arrangements and health reimbursement arrangements. A limit would be placed on the amount of salary reduction contributions that may be made to a health FSA that would be excludible from gross income. Alternatively, the exclusion for salary reduction contributions to a health FSA could be eliminated. Similar changes could be made to the exclusion for reimbursements for medical expense under an HRA.
• Limit the qualified medical expense definition. With respect to medicines, the definition of medical expense for purpose of employer plans (HRA’s and FSA’s) and health savings accounts could be conformed to the definition for purposes of the itemized deduction for medical expenses. Thus, for example, the cost of nonprescription medicines would not be reimbursed through a flexible spending arrangement.

The political struggle will probably take months to play out but if some of these options are enacted into law it will bring increased pressure on churches and other Christ-centered organizations…and their staff. Reductions in tax-free benefits means employees have less take-home pay in their pockets. Because of the economic trough we may be in for several years, many churches and other nonprofit organizations will find it difficult to raise salaries to offset benefit reductions. Stay tuned!

The Trust Factor

There is a crisis of trust and confidence in our country...in the world. 

Trust in Wall Street has been shattered. Major portions of retirement accounts are gone. Investment portfolios of nonprofits have experienced staggering losses. The largest Ponzi scheme in history has been revealed. The unemployment rate continues to spiral.  

Trust in government and its officials has been diminished as the national debt rockets into the stratosphere.

Our trust is not heightened by ominous proposals which could impose new restrictions on churches and other charities. The combination of higher taxes and potentially increased restrictions on charitable deductions could be significantly burdensome to donors.

Who can we trust? The Bible tells us a lot about trust. “Put your trust in the light” John 12:36. “In God I trust; I will not be afraid” Psalm 56:4. “Trust in the Lord with all your heart and lean not on your own understanding” Proverbs 3:5. “Whoever trusts in riches will fall” Proverbs 11:28. One thing is clear. Deciding in whom and in what we trust is very important.
   
Olan Hendix, ECFA’s first executive director, once wrote, “Christians are very trusting by nature—looking for the best in other Christians and Christ-centered organizations. Trust is the vital element in the very beginning of the Christian life. We believe in or trust Jesus Christ in order to become a Christian. It is trust that enables us to claim God’s promises.” The trust that is so highly emphasized in our spiritual lives must not be neglected in the life of the organizations we represent.  

Donors decide which churches and charities they can trust. In financially challenging times, donors are asking some fresh and tougher questions. How these questions are answered will impact resources available for ministry.  

Trust is enhanced when leaders do the right thing. There is generally more than one path a leader may take; more than one way to address various opportunities with which we are presented. In his book, Leading Without Power, Max DePree suggests that “trust grows when people see leaders translate their personal integrity into organizational fidelity.”  

Trust increases as churches and other charities meet their obligations. The failure to meet obligations is a poor witness—corporately or personally. The importance of meeting obligations to vendors, lenders, and staff does not diminish during tough economic times. Clear communication with vendors and financial institutions is vital if the timely payment of obligations cannot be made. Meeting our obligations starts with a clear plan to balance resources and expenses—even when hard decisions are required.  

Trust includes keeping commitments to donors. Especially when funds are tight, our word must be our bond with donors. Economic challenges are never an excuse to exercise anything but the highest integrity. The commitments we make to donors, written or verbal, explicit or implicit, must be upheld. The use of donor-restricted funds for operating purposes should rarely occur. 

  Trust in organizations requires an accountability structure. ECFA provides this accountability structure for its members. The initial membership application process is designed to demonstrate accountability, as is the annual membership renewal. ECFA’s field review program provides on-site accountability as trained reviewers look over the shoulder of its members. Our compliance process provides a communication channel for those who are concerned about Standards-related practices of members.  

Final thoughts. History suggests that during times of uncertainty, leaders communicate less to constituents with the rationale that waiting for more definitive answers will better assure people. However, waiting lowers trust levels among constituents.  

Donors are looking for trust­worthy organizations. Trust will either be enhanced or diminished during the current economic valley. It is up to each one of us as Christian leaders to take the high roads that enhance trust.

Looking Back, Looking Forward

Looking back, 2008 was truly a financial tsunami for many people, replete with bankruptcies, lost jobs, and home foreclosures.

But the financial upheavals were not restricted to individuals, big corporations, and governmental entities, they also took a toll on nonprofit organizations, both secular and religious, with one segment of the religious community especially hard hit by the alleged Madoff Ponzi scheme.

As the “talking heads” searched for terms to describe what would have saved us from the financial crisis, they dusted off old-fashioned words like “integrity,” “transparency,” and “accountability.” Interestingly, those are the watchwords of the evangelical community—particularly ECFA members. The secular media promoted our fundamental concepts!

Looking forward, the current financial crisis and economic downturn could have a very positive effect on Christian organizations. Yes, this is counterintuitive but very possible.

Prosperity can insulate nonprofits from reality. Innovative changes in nonprofit organizations come when the tension is greatest and resources are the most limited. That’s when nonprofits become more open to rethink the fundamental way they operate.

Innovative thinking may also cause ministries to collaborate in new and significant ways.

The economy should have at least three positive impacts on Christian nonprofit organizations. They are:

1. The focus on staff. While balancing the budget is fundamental, equally important is the proper care and respect of staff—yes, even in times of salary freezes and layoffs.
   
   The Bible implores us not to borrow concerns from tomorrow. “So don’t worry about tomorrow, because tomorrow will have its own worries. Each day has enough trouble of its own” (Matt. 6:34). Still, many employees are anxious about their future with your organization.
   
   Morale doesn’t have to plummet just because times are uncertain. Ensure open communications between ministry leaders and staff and be consistent in the day-to-day treatment of staff. Look for ways employees may contribute to the organization’s efficiency and effectiveness goals. Ask employees for help in developing possible solutions.
   
   Peter Drucker often said, “People are not a cost. They are a resource. Every organization must assume full responsibility for its impact on employees.”
   
   
2. The focus on donors. When money is tight, the historical tendency of charities, even many Christian ministries, has been to “turn up the heat” on donors—use “emergency” language, place a large “URGENT” stamp on the front of appeal envelopes, and increase the frequency of appeals.
   
   These techniques are diametrically opposite of the philosophy shared by Wes Willmer and his colleagues in Revolution in Generosity. If there was ever a need to focus on transforming givers’ hearts and lives towards God-focused stewardship, it is now!
   
   This is a time to minister to donors—many of them have been significantly impacted by the economy. It is a time to clearly communicate accomplishments—to focus on ministry outcomes, not just outputs.
   
   Donors want to hear how your ministry is doing—in fact, they are curious. But they don’t want to hear how many days you expect to keep your doors open. They want to hear what steps your ministry has taken to live within your budget—what innovative concepts you have adopted to better steward the resources God is providing.
   
   Like a functioning economy, the evangelical community is held together by a web of trust between donors and the ministries they support. This is a day to enhance that trust factor with your donors.
   
   
3. The focus on your mission. Revenue streams may be tightening, expenses may be rising, the clock is ticking, and your board and employees may be getting nervous.
   
   The IRS is increasing the pressure for more governance policies and disclosure. Your auditors want you to raise the emphasis on fraud prevention. And, to please the Internet raters, you try to keep your overhead low without threatening sustainability. What a balancing act!
   
   It is similar to being on the football field when the game is on the line. Executing under pressure equates to making decisions, calling plays, and managing the clock.
   
   In times like these, it is challenging to keep your focus on your mission—and yet, focus we must! These are days to be crystal clear about what your ministry intends to do, why it intends to do it, and how much progress is being made toward the mission.
   
   

Closing. My prayer is that, during this economic crisis, Christians and Christian organizations will powerfully demonstrate to a watching world the importance of seeking God’s goals and abiding in His peace.

Winds of Change

Take a step back for a moment and consider a long view of what could be the future for nonprofits. The revisions to the Form 990 have just been completed, but it seems the winds of change are blowing again with a forecast that could potentially bring a tsunami.

The Senate Finance Committee has oversight of charitable laws for the Senate while the Ways and Means Committee has a similar role in the House. Measures must ultimately be reconciled and approved by both Houses of Congress and then signed by the President before any laws are changed. So it’s a long process which is why, in part, no sweeping changes have been made in charity law in nearly forty years. But the climate is clearly different now as lawmakers see what has long been considered a lightly regulated “industry” in need of an overhaul.

Nearly five years ago the Senate Finance Committee set off alarm bells throughout the charity world with a “discussion draft” that envisioned new regulations that would have seriously imposed intrusive and costly requirements on charities, including most ECFA members. Finance Committee hearings were held, and an advisory Panel was convened by Independent Sector at Committee Chairman Senator Charles Grassley’s (R-IA) encouragement. The Panel, which included ECFA representation, issued a series of reports on suggested changes to the law and a long list of best practices that many charities have adopted voluntarily as a way of preempting the need for new legislation. Only minor changes were made to the law as a result of the initiative.

But the issue has not gone away. Some nonprofits continue to make the news by pushing the law or ignoring best practices regarding raising and spending money that is subsidized by the government in the form of tax deductions for contributors and property and income tax exemption for nonprofits. This keeps lawmakers stirred which leads to new proposals to change the law.

The latest edition of proposals, this time from a member of the House Ways and Means Committee, is perhaps more striking than any in memory. With Federal deficits mounting and budget battles increasing, Congress is looking for more revenue—and that was before the $700 billion bail-out was conceived! The charitable deduction is being viewed by some as a source of income and this is a concept which could get traction. One of the steps for Congress to raise more revenue would be to redefine a charity or a church, providing less tax-exemption shelters for organizations that now enjoy this benefit.

Some have suggested a greater incentive for gifts to help the poor and a lower or no deduction for gifts to arts or education. The faith based initiative could be revised to require all ministry recipients of federal funds to fall under EEOC hiring guidelines in order to qualify.

None of this is imminent, in fact it is probably a long shot, but come Spring 2009 we could begin to see if any of these ideas have traction in a new Congress or Administration. Realistically, the more likely early targets could be nonprofit hospitals—which some believe look and operate too similar to for profit hospitals—or colleges and universities, which are often mentioned because many continue to grow enormous endowments even as tuitions go through the roof.

In any of this, ECFA will give voice to its membership. We will continue to provide the latest information in these pages, on its website and in its regional seminars and other conference venues.

Meanwhile, pursue your mission with passion and excellence. Implement best practices intentionally. Trust the Lord to supply all your need now and in the future—come what may!

Staying the Course in Changing Economic Times

What should a leader do in 2008 as change swirls and carefully prepared goals for the ministry seem threatened? Who could have predicted the disruptions that would be caused by $4.00 gas prices, shrinking home values, a stock market in decline, which impacts 403(b) and 401(k) retirement accounts, rising unemployment and the specter of inflation raising its ugly head after many years of not being a major factor.

As consumer confidence drops, how far behind can be donor withdrawal? I pray it will not be so. But now is the time to revisit mission strategies and prepare for operating in an environment we haven’t seen for quite awhile.

There is no scriptural promise that is conditioned on the economy. God’s Word never changes and it declares Christ is the same yesterday, today and forever. Christian leaders and donors who lived during the Great Depression probably understood that better than today’s generation.

All through history, whether in good times or bad, the Church of Jesus Christ has endured every hardship as God placed His hand on men and women who partnered together to meet the needs of their day and proclaim the “good news” of the Gospel.

Think of this: Today’s ministries have tools at their disposal that no previous generation has had. The ability to communicate quickly and efficiently, to analyze and plan and to put creative ideas into action has never been better. But they all must be carried out in the framework of time tested biblical principles.

A common tendency in addressing income shortfall is to simply increase fund-raising activity. It’s one thing to make donors aware of a need or situation—it is something else to engage in manipulative, guilt-trip or “gimmicky” tactics. God does not need that kind of help. The recent published book, Revolution in Generosity, edited by Dr. Wes Willmer (available from ECFA or your local Christian bookstore), underscores the promise that there is no shortage with God.

If you haven’t reviewed your operational costs lately, now is a good time. Strong income covers operating inefficiencies and mistakes while weak income exposes them.

For most churches and charities, many dollars spent have been donated. Be sure that certain costs such as travel and other visible spending don’t convey a poor image to your donors or the public. Revisit expansion plans; it is not unspiritual to delay or change direction when conditions indicate an unwise risk to the basic mission of the ministry.

Ask board members to join together in prayer with and support of the CEO and staff. Scripturally, there is protection in the wise counsel of many. Times of challenge are an opportunity for a team to pull together!

Today’s environment suggests a possible cycle that has occurred before—a tighter economy resulting in lower contributions at the very time that charitable needs increase. This is an election year with change in the air for 2009 and beyond regardless of who is elected to federal, state and local offices. New tax laws, tightened charity regulation and cultural changes could all impact your ministry. Plan now for various possibilities, including building partnerships, to reach your goals.

Most of all, acknowledge one more time that the ministry to which God has called you exists for His glory. Avoid turning your faith into presumption. At the same time, don’t be afraid to exercise your faith by stepping out of the box and taking prudent risks to accomplish some extraordinary things for God and His Kingdom. As has been said, “You cannot discover new oceans unless you have the courage to lose sight of the shore.”