First Quarter Financial Report 2016

Colorado State University

Scott Denning Church Treasurer

As the autumn leaves blaze in golden glory, it’s time to review the financial happenings since we started our new church year on July 1.  The first quarter news is generally good: we’re on budget for both income and expenses at this early point in the year. We have a bit of a seasonal cash crunch as we do every fall, but we’ve made some changes that will get us through more comfortably than in previous years. This seasonal dip shows how important it is to pay your pledge on a regular basis if you can.

The church budget this year is $717,110.  Nearly every dollar comes from us: 91% is in pledges and donations, with the Rummage Sale, Service Auction, and Bookstore each contributing about 2% to 3% of the budget. The vast majority  (68%) of our expenses pay for our amazing staff of 6.75 full-time equivalent employees. Like a small business, we have to make payroll, pay insurance, maintain the building, and pay our utilities every month no matter what. At the end of September, we had spent 24% of our annual budget, and collected 22% of our expected income.

There’s a distinct seasonal cycle of pledge income at the church: we collect a big surplus in December, and spend it down for the rest of the year. The graph below shows the church’s cumulative net income at the end of each month over the past five years. A lot of people pay their whole year’s pledge right before New Year’s. I used to do this myself, to make sure I could deduct it on my taxes in April. Unfortunately, this means that we are chronically short of pledge income in the fall every year, so we’ve been encouraging people to pay monthly if they can. As you can see form the graph, the seasonal cycle has been getting flatter in recent years, which is good.

In addition to our regular expenses last month, we had Buckhorn and some work on the building and grounds.  This month we pay the interest on our member notes (debt owed to our members). These expenses come at a time when we’ve paid out about $10,000 more than we’ve taken in since July 1. It would really help if more people paid their pledge every month rather than in a lump sum in December!

The church has a reserve fund to get us through the lean times that happen every fall. It was completely depleted a few years ago after the Great Recession, but we’ve been steadily building it back up again and now there’s $40,000 in the reserve. We also made some changes to the way we account for end of year expenses, so we also have over $50,000 in the bank, in addition to the reserve. So we’re in much better shape than we have been in previous autumns.

Look carefully at the lines on the graph that show our cumulative net income at the end of each church year:  they always end within a few thousand dollars of zero! This is evidence of good the stewardship of our Board and staff: we develop a budget each March following the pledge drive, then plan and execute for 15 months to hit the target within 1% or 2%.

The church budget is in good shape.  Please consider pledging monthly, preferably by automatic funds transfer from your bank. This would help a lot in managing the annual fall dip in our cash flow. Look for another one of these quarterly reports when the snow squeaks under your boots in January!

chart

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