Top 10 Finance & Administration Tips for Vestries
If you are new to the vestry, I welcome you and thank you for agreeing to serve in this important role. Vestry members are the legal representatives of their church, charged with upholding the canons of the Episcopal Church and local, state and federal laws. In this list, I will share with you key learnings and best practices based on my experiences that I hope will help you perform your role more effectively.
#10 Know your resources: The Episcopal Church has compiled a remarkable document called The Manual of Business Methods in Church Affairs. It is available online at http://www.episcopalchurch.org/page/manual-business-methods. The manual contains chapters on everything from parochial reports to taxes. If you require a detailed explanation of any church-related task or responsibility, this manual is your go-to guide.
In addition, your diocesan staff can be a resource if you have specific questions regarding financial and human resource administration.
#9 Adequate insurance: All churches are required by canon to have adequate property insurance as well as treasurer bonding. But this is just a subset of what is needed to protect your church. If you are insured with the Church Insurance Agency, they will assure you have adequate coverage.
#8 Safeguard God’s people: Your people are your most important asset. You can protect them by conducting background checks on all your employees and by making sure that all employees and key volunteers have taken the “Safeguarding God’s People" training. It is available online but check with your diocese to understand their policy and requirements.
#7 Maintain property and your property reserves: After your people, your building is your most important asset. In this day of limited resources, it is tempting to defer maintenance and not save for major replacement needs. If you do so, you are borrowing from your future. Resist this temptation!
#6 Comply with employment laws and church canons: Employment law varies from state to state but all states are subject to a minimum wage. Make sure your employees are properly classified and are paid appropriately. Only managerial employees (exempt) that are more highly compensated are able to be paid a salary and not an hourly wage (exempt minimum wage varies from state to state). Hourly employees (nonexempt) should fill out a time sheet and must be paid overtime if they work it. They should not volunteer for a job that they are paid for (e.g. you can’t have your church sexton volunteer to mow the lawn or your parish secretary volunteer to print the bulletin). Independent contractor status can only be used in limited cases, primarily for individuals that are providing services through a bona fide business (e.g. a janitorial company).
The Episcopal Church has established a “denominational health plan” that requires church lay employees to be offered the same health insurance benefits as clergy. In addition, all school, thrift shop, and church lay employees working over 1,000 hours per year are required to be provided a lay pension plan. Clergy receive a clergy pension benefit.
#5 Use a payroll service: Payroll processing can be complicated and requires filing quarterly reports, submitting payroll taxes and providing W2’s. The liability of failing to comply with any or all of these is not something you want to worry about as a volunteer. One option to consider is the Episcopal Payroll Services for an accurate and effective way to manage payroll.
#4 Make sure internal controls are in place: It is easy to believe that no one would ever steal from a church but in fact churches are one of the most common targets because they tend to be trusting. The business manual discussed in #10 above has an entire chapter devoted to internal controls. Key internal controls include segregation of duties (all steps in a financial transaction should not be handled by one person), clarify who has authority to approve and expend funds, and make sure your documentation and record keeping is effective. As a vestry member, ask to see the internal controls policy of the church.
#3 Conduct a stewardship campaign: Make sure your stewardship planning begins early in the year. Ideally, your congregation will engage in year-round stewardship that includes teaching and preaching on the theology of stewardship, personal financial management, telling of stories, and sharing of the church’s financial resources and needs. Follow-up after the official pledge drive is critical.
#2 Conduct an annual audit: All churches are required to conduct an annual audit. Many dioceses have developed guidelines for their churches to follow. Most dioceses allow churches (often depending on size) to conduct an internal audit; the business manual has clear instructions on how to proceed with one. Be aware that all accounts are subject to audit including the priest’s discretionary account.
#1 Approve and manage a balanced budget – Perhaps the most critical vestry’s financial role is to prepare and approve a budget. The budget is a missional document; it is a statement of what the priorities of the church are. Also, it provides the roadmap for financial management by the vestry. Be sure that the budget is balanced and includes all needs for cash including any principal payment of mortgages or loans as well as funding planned capital improvements and a replacement reserve.
Your financial statements should include the year-to-date budget so you can see how you are doing in comparison to the budget. A balance sheet should also be provided; in smaller churches, the cash balance is a key indicator of financial well-being. Lastly, be sure that you receive financials on a monthly basis. Not having access to these documents can be a red flag pointing to financial mismanagement.
And above all else, be respectful of each other, hold each other in prayer, and remember the sacredness of the position to which you have been called.
Julie Young is Canon for Finance and Administration and Diocesan Treasurer for the Episcopal Diocese of San Diego.
- Authentic Tough Talk by Dick Kurth, Vestry Papers November 2003
- Audits: Practicing Internal Controls by Martha Goodwill, Vestry Papers May 2014
- Knowledge is Power by William A. Doubleday, Vestry Papers May 2012
- The Vestry Hand-Off: Orientation for new members, a resource sheet by Linda Grenz
- Vestry Orientation, an ECF webinar led by Miguel Escobar and Brendon Hunter, January 2016
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