Church Finance Committee members are naturally cautious. I have been around Finance Committees in large churches and in small churches, and universally, we don’t like taking risks, and we don’t like losing money. That’s because we feel deeply our fiduciary responsibility for the money that has been entrusted to the church.
Now, I am not talking about your weekly offerings or your annual budget money. I am talking about those funds that came to the church as bequests, legacy gifts, foundation monies, memorial funds and other large chunks that both bless the church and cause a bit of turmoil.
In one of my churches, we were given a large amount of stock. We debated for a very long time whether we should hold onto the stock in hopes it would go up in value, or sell the stock immediately for fear that it would lose value. Ultimately, the Finance Committee voted to sell it as quickly as they could. The rationale was that if the money was given in today’s dollars, that amount should be credited to them, and added to the church’s reserves. They even passed a policy that any future donations of stock would be sold as soon as they were received so that we never risked the principal that was given.
All churches take seriously the obligation to do what’s best for the church regarding monies that are given for the future well-being of the church. But “holding a position,” meaning making sure you don’t lose any of the principal’s value, may actually be working against that objective.
Many churches use CDs for their reserve funds, foundations, building funds, or other monies they don’t plan on using in the near term. Six-month and year-long CDs are a typical tool, and right now they are paying less than 1% over the life of the CD.
The US Bureau of Labor Statistics is tasked with determining the Consumer Price Index or CPI for the purposes of calculating cost of living increases. Wall Street and many other financial organizations also have tools for calculating current inflation. Right now, inflation so far in 2022 is 7.48% according to ycharts.com. Last year it was only 1.4%.
If your church’s money is tied up in a “safe” CD or Money Market Fund, or some other instrument that is fixed and predictable, you are losing money every single month in terms of future purchasing power. Suddenly being “conservative” and safe with money looks like a losing proposition.
That is why it would benefit your church to speak to a representative of the Foundation about how you can hedge against inflation by investing your church’s assets in funds that will keep up with inflation, and still be very safe instruments.*
Rev Dr Bruce A Jones
Pastor, Concord UMC, Seaford, DE
*All investments carry some level of risk. The Foundation works with local churches to determine the Finance Committee’s or your church foundation’s risk-tolerance and objectives.
Please call us at 888-569-1250 for a conversation, or to schedule a time with one of our representatives.