MCC Governing Board Financial Webinar
Questions and Answers
by Dr. David Williams, Treasurer, MCC Governing Board
Dr. David L. Williams

The March Financial Webinar provided an update from the MCC Governing Board.

Topics included 2017 financial results, the 2018 budget, and 50th Anniversary fundraising initiatives. In addition to covering current financial issues, the Governing Board received the report from the Assessments Commission, which was appointed after the last General Conference.
While many of the questions were answered during the webinar, some were not due to time constraints. Those answers are available now and appear below by topic. At times, multiple participants posed similar questions. Every effort has been made to provide a clear answer based on the topic or concern.

Questions about the contents of the Financial Reports:

Do MCC financial reports use calendar years or financial years?
MCC uses the calendar year for financial reporting.

Could you clarify if the new categories on the Financial report represent a change in reporting but not really a
change in how funds are raised and distributed?
The new categories represent a change in how funds are distributed more than generated. As an example, expenses for technology are distributed across the programs and projects. Staff time on a specific project or program appear within the overall program or project costs. What this shift represents is an accounting, and accountability, to expenses related to specific programs rather than a lump sum in an office in a category such as “travel” in the past. Now, someone can look at the financial report and see what expenses go to a specific program or project.

What is the difference between Administration Expense and Governance / Strategy Expense?
The Governance expenses are within Strategic Leadership. Governance expenses include cost of Governing Board meetings, cost of staff who support the work of the Governing Board (i.e. a portion of the Moderator’s time is spent working with the Governing Board. Staff whose work directly enables the Governing Board have a portion of the salary and benefits allocated to Governance Expense). In addition to Governance expense, other items deemed important to achieving overall strategic objectives are included in this section. With the new protocol for attributing dollars to strategic or programming areas, where it is possible to attribute specific administrative expenses to our strategic work, those administrative expenses are included under the Strategic Leadership heading. When administrative expenses are more general in nature and incurred to support a number of different project areas, those expenses are posted under the Administrative & Finance section in the Profit & Loss reports. A full list of line items in each section appears on the Profit & Loss reports that are posted monthly on the website: http://mccchurch.org/how-we-work/finances/

Is Iberoamerica Partnership income like assessments?
Iberoamerica Partnership income is received and recorded as designated income from individual donors and partner churches that are supporting churches in Iberoamerica. These funds are sent by UFMCC to the designated churches, and appear as both income and expenses on the financial reports. If money is received in one year and spent in the next year, there may be timing differences between when the income and expenses are posted.

Why did MCC use Designated Funds for Non-Designated Purposes in 2017?
In 2017, $60,000 was used and noted on the December balance sheet to ensure appropriate reporting. The monies were used for the general operating fund and will be restored in 2018. While very unusual, we had an immediate cash flow crisis in meeting existing financial obligations.

What is the total expense for Staff (payroll)?
MCC’s total salary (including the cost of benefits) is $1.2M USD and total headcount is 18.0 Full Time Equivalent people. There are several part-time staff, so this equivalent number represents more than 18 actual people. The actual number of staff is 16 full-time (37.5 hours/week), 5 part-time (ranges from 2 hours/week up to 20 hours/week) and 2 consultants.

Is it a viable business model to continue to cut staff?
It is not our business model to continue cutting staff to meet business needs. A major reduction in staff occurred in September 2015. Since then, staff roles and adjustments have been made to meet the business needs without incurring additional payroll costs.

Why did assets drop so much in 2017?
Assets declined in 2017 because of cash payouts, including cash used to fund $300,000 in expenses incurred over and above the amount of actual income received versus the projected income in 2017. The projections were off due to some churches not paying or withholding their assessments due to financial or other undisclosed reasons.

If our income is not sufficient to our expenses, and we still spend money beyond that income, isn’t that the definition of overspending?
The budget is based on sources of income and the costs related to programs or projects, which include payroll. Assessments from churches are a significant source of income, which is considered “collectible” unless an agreement is formed between the church and UFMCC.

There has been a practice over the last decade to write-off Accounts Receivable that are deemed uncollectable. Below is a chart describing the Net Income History, which includes write-offs.

Net Income history: (all amounts are in US Dollars)
At the time the West Hollywood property was sold in 2007, MCC owed $1,000,000 in external debt (loans). One of those loans was repaid from proceeds of the sale of the property. The other loan was for the purchase of the Sarasota property, and was paid off in 2011.
2009: -$18,000 (includes A/R write-off expenses of $38,000)
2010: $142,000 (includes A/R write-off expenses of $138,000)
2011: $40,000 (includes A/R write-off expenses of $9,000)
2012: -$187,000 (includes A/R write-off expenses of $388,000)
2013: $142,000 (includes A/R write-off expenses of $87,000)
2014: -$213,000 (includes A/R write-off expenses of $4,000 and GB approved programming investments of $118,000)
2015: -$462,000 (includes A/R write-off expenses of $111,000 and GB approved programming investments of $87,000)
2016: -$2,000 (includes A/R write-off expenses of $7 and no GB approved programming investments)
2017: -$280,000 (no A/R write-off expenses)

Why are resources to Congregations and Leaders dropping to 6% from 8%?
The primary reductions in this area include using up funds from a Carpenter Grant received to support the SSOL in 2016 and 2017, in addition to a small shift in staff support from resource development into support for existing ministries in the 2018 budget.

Questions about Assessments:

How many churches are in arrears on assessments and what is the total?

 Assessment Rate  Number of Churches
 11.5%  56
 10.1% up to 11.4%  16
 6.1% up to 10%  16
 3.1% up to 6%  13
 3% or less  9
 0%  8
 Simple averae
Assessment Rate
 9.7%

Thirty-eight (38) Churches in North America, Australia, and Europe have an assessment agreement in place for a reduced rate.

Eight (8) Churches in North America and Europe are not reporting or paying assessments, and are not currently communicating with MCC staff or Governing Board about it.

How much money is missing from unpaid Assessments?
To do this estimate, we used the year 2016 because there was much more actual reported data, which means that less data had to be estimated than if we had used 2017.

If all churches paid each month at the 12% rate for that year, assessments from churches in North America, Europe, and Australasia would have been approximately $415,000 USD higher. On a percentage basis, that represents about 40% over assessments actually received. MCC does not receive reports or assessments from churches in Iberoamerica, so no there is no basis from which to make estimates.

Such a significant unrealized difference is averted in the annual budget by adjusting the expenses to more closely align income received. If every church in 2016 paid according to the assessment rate there would have been $415,000 more to invest in living out the Mission, Vision, and Values of MCC.

How much are churches in arrears in assessments due, total?
At General Conference in 2013, it was reported that the MCC Balance Sheet was carrying approximately $500,000 USD in Accounts Receivable (AR) assessments from churches. When the auditors completed the audits of 2012 and 2013, they advised writing off a total of $475,000 ($388,000 for 2012 and $87,000 for 2013.) These amounts represented the accumulation of AR over a number of years, and were deemed by the auditors to be uncollectable. When these amounts were written off, they reduced AR on the balance sheet and were posted as operating expenses to our Profit & Loss report for each year.

AR levels fluctuate from year to year, but stood at $47,000 at year-end 2017.

Do you want churches to send in reports, even if not paying for that month?
To document data tracking, it is important for churches send in reports, even if they are paying a reduced amount or not paying at the time the report is submitted.
At the time we wrote off the old AR amounts, the Governing Board enacted a policy that when a church sends in reports from past years, if that church has an Assessments agreement that is likely to result in forgiveness of old amounts, then those amounts are no longer added to AR. Receiving reports, even without payment, affords a more realistic view for AR and potentially more accurate financial snapshot.

Are you going to send out the Assessment Commission Report?
Yes, the Assessment Commission Task Force Report will be part of the materials for a Special Virtual Business Meeting in July 2018. The Business Meeting materials are released 60 days prior to the meeting date.

Questions about Conferences:

What would 2016 P&L Statements look like if General Conference was included?
What was the cost of General Conference?
The total cost of General Conference in 2015 and 2016, including the Be A Gem program, was $332,000. Income was $322,000, resulting in a loss of approximately $10,000 on the conference. The 2015 financials included a positive impact from income and expenses for the conference. The 2016 financials included a negative impact from income and expenses for the conference. Combined across the two years, the conference overall resulted in a net loss of approximately $10,000.

2016 Overall Net Income (excluding General Conference): -$2,000 USD
2016 Overall Net Income with General Conference): -$18,000 USD

How many people attend the general conference?
General Conference attendance varies depending on whether the conference is held in the United States or in another country. Generally, 1,200 – 1,500 attend General Conferences held in the United States. Conferences in other countries experience more variability in attendance. In 2010, about 900 people attended General Conference in Acapulco. The 2016 General Conference in Victoria had about 1,100 in attendance.

How is the PAD conference funded? What funds does the denomination contribute to the conference?
The PAD Conference, like General Conference, is funded from conference registration income, donations from individual supporters, and sponsorship income from advertisers and expo exhibitors. MCC supports both PAD Conference and General Conference by providing staff time to work on planning the conference and actually making it happen on site. It is important to note that both conferences also rely heavily on volunteers for everything from registration to programming and worship. In the case of PAD Conference in 2017, the conference lost approximately $4,000, which was was covered by the overall denominational budget. This amount was approximately 9% of the total PAD conference budget.

Questions about MCC globally and forming a new non-profit:

Isn’t this how the Global Justice Institute was imagined?
The Global Justice Institute is a social justice Non-Governmental Organization (NGO) registered in the US as a non-profit, and non-religious, entity. This classification allows access to funds and the ability to engage in social justice work in areas of the world that MCC, as a religious organization, is unable to participate.

The concept of a Foundation is much broader to include programs and scholarships for training and mentoring for leadership, education, spirituality programs, and the possibility to assist with infrastructure needs for churches, and more.

Trends in philanthropy among Christians demonstrate the need for an organization or institutional structure that reaches an audience broader than a worshipping community or denomination to attract major donors. While 73% of Americans give to religious organizations, the local church is not the largest recipient of gifts. Recent research shows 41% of gifts go to congregations directly, 32% is given to charities with religious ties, and 27% to organizations without religious ties (McKitrick, M., et al, Connected to Give: Faith Communities, 2013). While more dollars may be given to churches, the amount of the gift may be smaller. As an example, a generous gift of thousands to a church may be millions to an educational or social action institution. As we watch giving to churches decline, shifts in methods, and motivations, MCC must adapt. Donors are willing to give. Our goal is to offer something donors believe will be present in the next generations.

The relational and fiscal equity built through a separate Charitable Foundation also allows an option to reduce the UFMCC budget. Key programs not directly supporting local churches and leaders may be considered as programs of a foundation.

The impact would be to modify the current staffing structure to meet the immediate needs as outlined in MCC’s Bylaws. For the new Charitable Foundation, the Executive Director and a few key staff could be moved from UFMCC staff and payroll into strategic roles within the foundation. This would mean UFMCC focuses on supporting new and existing churches and leaders with new church starts, transitional ministry, conflict resolution, governance, and training and credentialing of leaders. The shift in staff and payroll would ensure UFMCC is sustainable through local churches, ministries, education, and licensing fees.

An MCC Charitable Foundation would need affirmation from the UFMCC Governing Board and would be a Non-Governmental Organization, which would define it as an Association of MCC. This designation includes UFMCC representation on the Charitable Foundation board and regular reporting. While it would not need a General Conference vote, because it is within the Bylaws, the impact upon local churches and leaders would need to be discussed early in the formation process.

This project is in the early stages of discussion and more study is needed.

General Questions

Is the 2018 Budget approved?
Yes, it was approved at the February Governing Board meeting.

Does MCC have a new database?
Yes, MCC was previously using a variety of data management tools, and in late 2016 contacted SalesForce NonProfit to develop a single database for MCC. The database was created, data collection and organization continued throughout 2017. Data is confidential and there are varying levels of access for staff. Records include contact information, significant milestones, assessments, and other key data for churches, ministries, clergy, lay leaders, networks and registrants for denominational events and educational programs.