Dan Busby is the President of the Evangelical Council on Financial Accountability. He has over 40 years of experience with the church and nonprofit community.
Q What kind of budget adjustments should churches make if they project a growing population of older members?
A Make adjustments to the budget as giving levels change. A recent ECFA survey reflected that leading churches budget conservatively. Leading churches (those that had the characteristics of large, growing churches) set their budgets about 10 percent below their giving levels, indicating a fiscal conservatism; the other churches set their budgets just 1 percent below their giving levels, leaving little cushion. If a church has a growing population of older members, this may be even more reason to set budgets 10 percent below giving levels, providing some protection against a dip in giving – for whatever reason.
Q Should pastors opt out of social security?
A Rarely does a pastor qualify to opt out of social security. Opting out of social security is often abused by pastors – unfortunately, there are too many financial advisors that unwittingly encourage pastors to break the law in this arena. Opting out of social security is only an option for clergy who are opposed, either conscientiously or because of religious principles, to the acceptance of any public insurance (with respect to services performed as a minister), including Social Security coverage. Either opposition must be based on religious belief. This includes an opposition to insurance that helps pay for or provide services for medical care (such as Medicare and Social Security benefits). Many pastors are opposed to paying Social Security tax but in my travels from coast to coast, speaking to thousands of clergy, I rarely find a member of the clergy who is opposed to receiving Social Security or Medicare. Signing the Form 4361 to opt out of Medicare without opposition to receiving Social Security or Medicare, based on religious belief, is simply breaking the law.
Q Should a church accept and dispose of gifts of non-liquid assets?
A It depends. Some non-liquid assets are relatively simple for a church to receive and sell. For example, a gift of publicly-traded securities is generally easy to receive and sell through a broker. Other types of non-liquid assets are much more challenging. A gift of privately-held securities may be very difficult to value. A gift of real estate may present environmental issues that should be resolved before accepting the gift. The gift of a business generally requires the assistance of professionals.
This article originally appeared in the NAE Insight.