There are many parallels between retirement planning and managing church finances. The recent investment market ups and downs are troubling to those who are, or soon will be, retired. They are anxious that their income should continue to meet their living costs for as long as they need it. Similarly, a volatile market can keep church endowment, investment, and finance committees on edge. They wonder if the church can recover if invested funds were to suffer another big market slide. Has your own church become too dependent on the returns of endowment or investment funds?
Discussing investment markets is part of the fiduciary responsibility of local church leaders. Today’s investment market worries aren’t misguided. According to Kiplinger’s market research, from 1928 through March 2022, there have been 26 “bear markets” as defined by a decline greater than 20% and lasting more than two months. The potential for investment loss is real as the average bear market since 1928 has generated more than a 35% decline. By contrast, stocks gain 112% on average during a bull market, but it is almost impossible to predict when a bull market will return.
The good news is there are ways to protect church assets and income from the inevitable market downturns. In the same way that a good financial advisor helps with retirement planning, with careful income planning a church can allow for emergencies, sustain a market decline, and remain invested for future market upturns and growth. Management of church investment and income can be summed up in a phrase: Church income should depend on your stewardship plan, not just the investment markets.
The Bible often mentions jars, pails, and buckets that are used in daily life. They are vessels filled to transport liquids for today, store liquid for future use, and in the case of water into wine, a bit of transformation. Perhaps this is a way to think of a church’s liquid investment assets. By doing a little math, a committee can fill buckets for each purpose; the purpose of today, tomorrow, and future church transformation.
Let’s take a look at the basic buckets for retirement or endowment plans.
Unexpected emergencies are a way of life both in retirement and in the life of a church. The roof can leak, plumbing problems arise, heating costs can spike, and all sorts of other emergencies just seem to crop up when least expected. While we cannot plan for the specific emergency, we can anticipate we will have them. The safety bucket is created as an emergency fund. The amount needed will vary from retiree to retiree and church to church, but in both cases an emergency fund is important for financial safety.
A retiree’s income bucket may come from a variety of sources including pensions and social security. Our church income bucket is primarily filled with annual pledges, weekly plate offering, fundraising efforts, and supplements from endowment income. When planning the church budget, the committee will need to consider growing the monthly income to meet all necessary expenses and increases from inflation. Gaps in the annual budget are often filled by setting a goal for income to be received from a church endowment fund.
Retirees who have invested funds in addition to their pension or social security income generally have a more secure outlook. Growing annual income in the church is also important. A church has the added need to grow funds for capital improvements and build planned gifts for endowment funds. Having a robust endowment policy and a plan to invest for the future is critical to ensure mission and ministry continue into the future.
Every church makes a commitment to grow Christian stewards as a part of disciple making. As the income needs grow in our church, so should the goal of filling our buckets. Developing a culture of generosity within your congregation is the surest way to achieve this.
Growing church income through discipleship and personal sacrifice will need the development of a plan. This plan should then be shared with all in the congregation. Our members know expenses are rising. A well-crafted stewardship plan will touch each person’s heart and all who worship Him will have ability to respond.
Church income shouldn’t depend on the investment markets alone. Church income should also depend on developing a culture of generosity within your church. Just as it has for thousands of years, Christianity will continue to lead on in good and bad investment markets. The plan today is a plan for our future and the Foundation can help.
*Our investment advisors at Fulton Financial Advisors hold monthly webinars to discuss market conditions. Watch the latest one here.