July 2009
Financial Planning

A Good Crisis is a Good Opportunity

The latest saying making the rounds is, “Never waste a good crisis.” And with good reason, for whether congregations find their budgets funded through pledges or endow- ment income or both, vestries are facing hard financial decisions.

Parishes often find the number of their programs grow continually. New ideas are birthed, but rarely do ministries retract. Often staff size increases to support them, the active core of members stretches to implement them, and burnout increases. Frequently the most limited resource is not money — but intentional focus.

With the current intense financial pressure from all sides, then, the climate is right to reevaluate ministries across the board:

  • Which ministries transform members?
  • Which lead to deeper formation in Christ?
  • Where can we simplify?
  • How are all of these tied together as an expression of stewardship?

Such a situation was faced recently at Christ Church Cathedral, Indianapolis. When Dean Stephen Carlsen watched CNN coverage of the Wall Street crash during a mission visit in Brazil, he knew that his congregational world had shifted overnight.

The Cathedral, a beneficiary of philanthropist Eli Lilly, depends upon endowed funds for most of its operating income. Those funds support a professional staff, significant local outreach, global partnerships and a $500,000 contribution to the diocese. With a drop in fund values of 28 percent Dean Carlsen knew that the vestry could not wait until 2010 to make adjustments.

As do many philanthropies and endowed parishes, the Cathedral uses a “total return” model, drawing down 5 percent of a rolling, twelve-quarter average. The 2009 draw and budget had already been approved. To delay addressing the dramatically reduced endowment value until 2010 would wreak havoc on future operations. The dean and vestry spent their February retreat focused on making im- mediate budget changes and developing a plan to communicate the changes to the parish. After establishing a new endowment value “base” for sustainable spending over time, they reduced the budget by $750,000 by the start of 2011. The finance committee would monitor the need for further cuts. 

Painful but necessary cuts

Painful but necessary cuts would begin immediately, and the outreach ministry committee was given two-year reduction goals. The most startling realization was that, over the years and with good intent, the budget had grown to provide parishioners with $280,000 worth of direct benefit not recovered by fundraising or contributions — activities such as outreach and music travel and parish retreats. The endowment had allowed the church to lessen economic barriers within the parish, but had inadvertently fostered a “co-pay” model with not enough regard for true expenses or member ability to cover costs. Here was an opportunity.

The vestry prepared a communication plan and agreed to support collective decisions in private as well as in public. The dean implemented staff reductions within the week and announced them in a letter to the parish before a congregational meeting called for Sunday. At the meeting both the vestry and the dean outlined the challenges and responded to questions.

The Cathedral vestry has also called a task force to assist the parish through the challenge of moving from a “co-pay” to a “parish grants” model, where members and new projects apply for support rather than assuming it. The hope is that the outcome will be focused, sustainable ministry, generating strong congregational financial support.

Canon Rees Olander serves as senior associate of Christ Church Cathedral, Indianapolis, and is on the board of the consortium of Endowed Episcopal Parishes.

This article is part of the July 2009 Vestry Papers issue on Financial Planning