Finance

Finance2018-07-13T08:36:26+00:00

“Hey Fletch” on Finance

From around the globe, people tune in on Fletch’s warm and sound advice. He’s a friend and “church doctor,” bringing an objective perspective, broad knowledge and vast experience. Your question will get a personal reply from Fletch.

Continuing Education Credit

Saturday, July 21, 2018

Hey Fletch … Is continuing education credit offered for CPA’s for the Smart Money for Church Salaries workshop?

DRF—I checked with two of our sponsors to see if they could offer this for the workshop. Certainly by content, the workshops could meet the requirements for continuing education. There is solid research and an amazing crew of speakers will be joining me (Dan Busby, President of the Evangelical Council for Financial Accountability, William […]

Scam Artist Wants Refund of Donation

Wednesday, July 18, 2018

Hey Fletch … Have you heard about this scam? According to police in Troy, Michigan, a church received a $4,500 donation for hurricane victims. Later that day, police say the donor contacted the church saying he made a mistake and meant to donate $45. The church refunded the check for $4,500. Days later, the church found out the donation check was fake.

This guy attempted to do the same thing to us yesterday. […]

Tax on Outside Groups Using Our Facility

Saturday, July 7, 2018

Hey Fletch … We charge outside groups to use our facility. Some are concerned at our church that we should be paying tax on this income. They want us to not host any outside group for this reason. Thoughts? 

DRF—There are certain situations where churches have to pay what is called Unrelated Business Income Tax (UBIT). As for UBIT, here is what the IRS says:

For most organizations, unrelated business […]

How Do Pastors Pay Federal Tax?

Wednesday, July 4, 2018

Hey Fletch … I’m new to working in a church and think that our business office got my taxes wrong. They said that federal law requires the church, as the employer, to take out withholding and Social Security taxes. Is this right?

DRF—Congratulations on your first ministry position! That is so exciting. What a great time of life.

As to your business office, how do I say in a nice way, “they totally got […]

Does a Church Pay Social Security on a Pastor’s Salary?

Thursday, June 21, 2018

Hey Fletch … For a pastor that has been licensed by the Board of Elders, my assumption is that the church should not withhold any Social Security or Medicare tax, right?

DRF—This question is one of the reasons that I wrote Smart Money for Church Salaries. This book and the 12 regional workshops in the fall of 2018 get to the heart of this and other similar questions. Issues of pastoral compensation […]

Insurance for Sexual Abuse, Part 2

Saturday, June 16, 2018

Hey Fletch … Our church has $2 million in umbrella insurance. Does that cover sexual abuse as well?

DRF—When I get a question on insurance issues, I always turn to the professionals. Insurance can be a highly technical area—and I always need a refresher course. Yesterday we heard from noted attorney, Gregory Love. Today, let’s hear from Charlie Cutler, a respected a insurance agent in southern California. Charlie is the prototype of a […]

Insurance for Sexual Abuse, Part 1

Friday, June 15, 2018

Hey Fletch … Our church has $2 million in umbrella insurance. Does that cover sexual abuse as well?

DRF—When I get a question on insurance issues, I always turn to the professionals. Insurance can be a highly technical area—and I always need a refresher course. Today let’s hear from noted attorney, Gregory Love. Tomorrow we will hear from an insurance agent.

Gregory Love—

As a sexual abuse attorney, I prefer doing prevention work—preparation to prevent […]

Percentages of Budget by Ministry Area

Monday, June 11, 2018

Hey Doc … You answered my question regarding the average percentage of General Fund that is allocated towards Creative Arts. Are there rough percentages of General Fund expenses for Youth, Children’s Ministry and Adult Discipleship which would include Life/Small Groups? Thanks for your time, brother …

DRF—Have a look at this. It should give you that data! These are just averages, so you numbers may vary.

Area Percentage
Worship, IT & […]

Giving Away 50% of Church Income

Thursday, June 7, 2018

Hey Fletch … In all of the church connections you have, do you know of other churches that are attempting to give away large percentages (50%+) of what they receive annually? If you do, would it be possible for you to connect me with them?  I’d love to talk with my counterparts in those churches.

DRF—I wish that I had a list a mile long of churches that gave away 50% to local ministries. […]

Legal Issues with Songs on a Church Website

Wednesday, June 6, 2018

Hey Fletch … We live-stream our worship service and also have some recorded worship songs on our website. Someone asked me if that is legal. Thoughts?

DRF—That is a huge can of worms. Actually it is two cans worth. The first issue is live-streaming your worship and the second is recorded songs on your website. 

You will want to get this one right, otherwise the penalties can be stiff. There is an organization […]

Mrs. Gold and the $300,000 Check

Tuesday, June 5, 2018

Hey Fletch … On Sunday, Mrs. Gold (that’s really her name) handed me an unmarked envelope with a letter in it. When I got back to my office and opened it, the handwritten note only said, “Use this for church expenses.” There was a $300,000 check. I’ve never seen a check for that much money before. I know that you encourage folks to not assume motives, so can you help me understand […]

Weekly Financial Reporting Spreadsheet

Friday, June 1, 2018

Hey Fletch … Would you mind sharing an example of a Weekly Financial Reporting spreadsheet?  I’d love to see it and incorporate it.

DRF— A weekly financial reporting spreadsheet should contain a church’s actual income and the budget forecast. The following numbers are from WheatFields Good News Church. This church is the basis of my book, Smart Money for Church Salaries and the upcoming 12 regional workshops on the topic.This is […]

Pay Staff to not Take Health Insurance

Wednesday, May 23, 2018

Hey Fletch … Thanks again for such a great XP-Seminar. It is truly run with excellence and is so helpful to me. Here’s a quick question for you or whoever you may refer me. The question is regarding full-time employees who are eligible, but do not need or engage in the medical benefits offered by our church. What is your opinion and how do most churches handle this situation regarding additional […]

Raised $10 Million for a Building and Now What?

Monday, May 21, 2018

Hey Fletch … I’m an XP and we just raised $10 million for a new building. Now what?

DRF—The simplicity of the question has profound implications. It reminds me of the movie “The Candidate.” Though Bill McKay (played by Robert Redford) has no hope of winning a Senate race, he succeeds. A final shot is McKay getting into a car and saying, “What do we do now?” McKay had a plan on running […]

Knowing the Giving of Congregants

Tuesday, May 15, 2018

Hey Fletch … What is your position on the XP knowing the financial giving of a) the entire congregation, b) volunteers and key leaders, c) staff & elders and d) none at all.

DRF—Whew, those are tough questions! The answers are based on the culture of each church. The congregations where I have served took the position that pastors should have no knowledge of any person’s giving or giving pattern. They based that […]

Church Accounting Software

Friday, May 11, 2018

Hey Fletch … Thank you for putting together another successful XP-Seminar. I enjoyed it once again and look forward to it each year! I was wondering if you had any insights in the area of accounting software. We currently use Quickbooks Desktop and are in the process of evaluating Quickbooks Online for our church’s accounting software. I was wondering if you knew of any solutions that other XPs are using or […]

Key Salaries in a Church

Saturday, May 5

Hey Fletch … Where should I email the compensation survey questionnaire I filled out for you?

DRF—XPastor has a Compensation Guide available for $49. You can get a $15 discount if you submit information using the provided spreadsheet. The XPastor survey is smaller than other online compensation data guides. But it gives, in table format, all the key positions in a church, like this:

1,400 in Worship […]

General Fund Robbed by Disaster Donations

Wednesday, April 18, 2018

Hey Fletch … I have been a fan of your work and website for several years. I have a question and would love your insight. As a board member, let me say that our church has a history of taking special offerings whenever there is a disaster. Our congregation loves to give to emergency causes (wildfires, hurricanes, earthquakes, famine) and tends to give generously. However, our general fund often drops significantly during […]

Is Deficit Budgeting an Act of Faith?

Saturday, April 14, 2018

Hey Fletch … Our church is barely keeping the payroll and bills paid and we enter the budget process in June. Our elders keep casting a vision that requires 10% or more of deficit budgeting. Historical data says we will not receive from donors the needed amount. They say we should budget by “faith.”  As a member of the finance team, I have a problem with continually asking the members to […]

Percentage of Overall Budget for Worship

Saturday, April 7, 2018

Hey Fletch … I doubt you remember me but I was part of a group in 2011. I am currently an XP of Operations. I serve under two Co-Lead Pastors…two young guys who are great! I wanted to ask if you have any metrics/information on the percentage of an overall church budget that goes towards the entire Worship, Arts, Marketing, Media department? We are a church of 1000+ with an annual budget […]

Online Donations Confusing for a Church School

Thursday, March 22, 2018

Hey Fletch … Our school is owned by our church. They are the umbrella. All online donations are being completed through the church. For example, if I want to donate to our school, I press the ‘donate now’ button on our website but get redirected to the church website in order to donate. How can I get around this? Folks who wish to donate to our school get confused when they get […]

Pastor & Assistant Falsifying Timecards

Wednesday, March 21, 2018

Hey Fletch … A pastor here at the church allows his assistant to work overtime and then they don’t put it on the assistant’s timecard. I have warned both of them but what more can I do?

DRF—How do you spell ‘hot water’? Let me get started by saying that Churches can be exempt from the enterprise coverage of the Fair Labor Standards Act. However, there are some finely tuned rules that invoke […]

Ultimate Tax Avoidance?

Monday, March 19, 2018

Hey Fletch … Someone who is a supposed tax expert emailed me the following letter in response to a question: “If you buy everything you need or want in the name of the church, everything is deductible. As an employee of a corporation, you have no “income.” The church corporation receives the church donations and you are in charge of their dispersion. You own nothing but have the use of everything. You […]

One Size Fits All Retirement Plan

Saturday, March 17, 2018

Hey Fletch … My question is regarding retirement and employer contributions. We’ve had a one size fits all approach but now our staff has grown in numbers and levels of responsibility and we need to revisit it asap. I’m wanting to know how others categorize which staff gets what for retirement.

DRF—That question may be out of my pay grade (pun intended). Let me copy Dixie Beard at GuideStone on this as she […]

Stolen W-2s: Follow-up

Friday, March 16, 2018

Hey Fletch … There was a column on January 14, 2018 that all of a church’s W2s vanished. Some insurance policies have coverage for this and the church may have a legal obligation to monitor the credit of those employees that had their personal information stolen. In California, if it was stolen electronically, cyber hack or a lost computer, there is a protocol for how this needs to be handled. If it is paper […]

Church Without a Tax-Exempt Status

Friday, March 2, 2018

Hey Fletch … I just began as the pastor of a rural midwestern church with 150 in worship. We do not have a tax exempt status. We pay tax on what we purchase, but we haven’t paid tax on our income. Maybe that’s not related to being 501(c)3, but I don’t know. I’ve not had to look into this before. Many thanks.

DRF—Congratulations on your new role. That is exciting! Don’t get to […]

Lifetime Salary from a Church

February 16, 2018

Hey Fletch … A guy just told me that he has a lifetime salary from his church. What are your thoughts about that kind of retirement plan?

DRF—In a GuideStone presentation at the XP-Seminar, one year we learned about Rabbi Trusts. They are valid unless the church goes bankrupt. I never thought that I would hear about it again. According to news reports, the Rev. Robert Schuller learned a hard lesson when the […]

Weekly Financial Reporting

February 5, 2018

Hey Fletch … I’m working my way through the Finance 1 course on XPastor. There was a spreadsheet in class 5 on “offerings received” with an accompanying analysis of current week versus the income budget. More broadly, I’m looking for resources to help our finance reporting so anything you may be able to share with me would be greatly appreciated!

DRF—My favorite reporting mechanism is a 52 row spreadsheet, one line for each […]

Recording Songs in the Worship Service

February 1, 2018

Hey Fletch … Someone suggested that we record some songs during our worship service and create a CD from them. Any thoughts on this?

DRF—Off the top of my head, I can think of three issues. First, you will have to pay royalties if you perform a published song (see a lawyer). If the song was created in-house, you will want to have an IP agreement in place, if you want the composer to […]

Church Finance 101

January 23, 2018

Hey Fletch … I’m looking over this PDF that you taught at Dallas Seminary on Church Finance 101. Could you send me the full copy of this topic?

DRF—For several years, I gave that lecture on “Basics of Church Finance.” The 36 slides in the PDF constitute the entire lecture. I enjoyed giving the talk because the audience was so unaware of the issues. They came alive when they learned the upsides […]

Stolen W2 Statements for All Staff

January 14, 2018

Hey David … A shipping firm claimed they left the W-2s for all of our employees at the church’s front door. No signature was required and they left the package at 9:00 pm. Financial data, social security numbers, addresses … all vanished.

DRF—I haven’t heard of that one before! I’m so glad that you looked into identity theft protection for all of those affected. All I can suggest is that you go electronic next […]

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