Questions re Accepting Credit Cards (part 1 of 5)

Churches which do not have online giving often have several questions which hinder them from proceeding. Here are some of the concerns I’ve run into over the past few years:

  • Online Giving (itself)
    • Making financial transactions online has been normalized by society in the past 10 or 15 years. Amazon and other online businesses have made us comfortable with spending money online and using our credit cards on our computers and smartphones.
    • In 2016, our society spent more on restaurants than groceries; in 2015, we spent more electronically than we did using cash and checks. We have moved inexorably into the age of electronic transactions.
    • I predict that by the year 2025 (maybe 2030) we won’t even be using credit cards anymore – transactions will be made using Apple or Android pay or some other electronic financial exchange system which is being created even now.
  • Fees paid by the church
    • All credit cards have fees ranging from about 2.3% to 5% of the transaction. VISA and Mastercard have lower fees while American Express has the highest. Most VISA and Mastercard providers have fees in the 2% to 3% range.
    • Remember that banks have fees on every check and cash transaction they process, albeit about 25 to 30 cents for each one and that is lower than credit card fees.
    • Fees on credit cards is very much a “cost of doing business” in today’s world. Just as every church has a copy machine and air conditioning, fees on credit cards are just part of being “in business” for a church.
    • Frankly, the fees aren’t that much. If a church gets as little as $10,000 in online gifts during the year, the fee for that is about $250 which seems pretty small when weighed against the $10K that came in.

Lead On!

Steve

 

Employees Should Pay for Benefits with Non-Taxable Dollars

2016 06-June 14 (11)

The rule of thumb is that you always want to pay for benefits with non-taxable dollars. If you pay for them with taxable dollars, then when you get the benefit, you have to pay taxes on that benefit. Taxes on premiums are always cheaper than taxes on benefits. The best example is life insurance: the premium on a life insurance policy is a few dollars a year (depending on what the premium is and your tax bracket) but that is certainly cheaper than paying taxes on a life insurance benefit of $50,000 or $250,000! Other examples include disability policies and benefits and long-term care.

Health insurance and its related health savings accounts are not, by law, taxable (as of when this post is written). In fact, employee payments for both health insurance and HSAs are tax-deductible and employees should be encouraged to max out their HSA amounts if financially possible (same goes for retirement).

 

Lead On!

Steve

Overtime Laws

2016 03-March 29 (8)

On December 1, 2016 new overtime (OT) rules as approved by the US Department of Labor go into effect. Actually, most of the overtime laws are over 30 years old. In May 2016 the DoL altered one major component of the OT laws but almost everything else remained the same.

 

The major change is that salaried employees must make over $47,476 (just round that to $47,500) to be exempt from OT. Salaried workers who are below this dollar threshold and who do not make executive-level decisions should keep track of their work hours. While tracking hours worked each pay period is a pain, it is necessary in order to know if the employee should receive OT compensation.

 

Some other information about DoL laws:

  • Hourly workers are never exempt from OT
  • Contractors must truly be from an independent company that has several clients and not just an outsourced former employee or two

 

Lead On!

Steve

Workers’ Comp E-Mod Factor (part 3 of 3)

2016 05-May 31 (10)

Every year each insurance organization receives an annual report from National Council on Compensation Insurance (NCCI). The report is usually a letter with a link to a website to get the actual report. Every WC policy is evaluated every year to determine if the number of claims was above or below the anticipated amount. The insurance company uses formulas to pre-determine what they expect each policy to have in annual claims.

 

The number of claims and the dollar amount of the claims affects the experience modification factor or E-Mod Factor.” The Mod Factor is the figure which is multiplied against the total premium to get the final premium. Mod Factors range from about 0.80 to 1.49 with the average being 1.00.

 

The report from NCCI will list the org’s most recent Mod Factor. If the Mod Factor is below 1.00 then the original premium will be discounted. If the Mod Factor is above 1.00 then there is an extra amount to be paid in the WC premium. Of course, if the Mod Factor is exactly 1.00 then there isn’t a discount or a surcharge.

 

Organizations want to have Mod Factors under 1.00 in order to get discounts. However, do not jeopardize the safety of your employees nor hurt them when there is an accident and they need WC coverage. Mod Factors are on a three-year rotation. Accidents and claims that happened four years ago are no longer reflected on the Mod Factor.

 

Bottom line: use WC appropriately, try to keep the Mod Factor low by having a safe work environment, pay the premiums each year, and always know your Mod Factor.

 

Lead On!

Steve

 

Workers’ Comp Codes (part 2 of 3)

2016 05-May 31 (12)

Most churches have two different types of employee classifications for WC purposes:

  • Professional staff (aka, clergy and office workers); their WC code number is 8868
  • Other staff (janitors, food service, and maintenance); their WC code is 9101

 

WC insurance assigns premium rates to each employee classification depending on the type of work on their potential injuries and severity. For instance, office staff and clergy do not engage in typically dangerous activities so their premiums are pretty low. However, kitchen staff use knives, ovens, and slicing machines; custodians use vacuum cleaners, ladders, and heavy equipment.

 

Insurance premiums are charged per $100 of income based on the employees’ actual wages as reported on the W-2. Many WC insurance companies will perform a spring time audit of W-2s and use that information to retroactively correct the prior year’s total premium. If they charged too much, they’ll send a refund and if they charged too little, they’ll send an invoice. The premium for code 8868 is in the range of 30 to 40 cents per $100 of income. The premium for 9101 is about $2.50 per $100.

 

There is a third code which affects some churches, 8869. This code covers child care workers and it has a rate of about 60 to 75 cents per $100. Working with children, especially their poop and their biting can be dangerous to employees. Remember, WC does not cover the children, only the employees.

 

Lead On!

Steve

 

Workers’ Comp Insurance – a primer (part 1 of 3)

2016 05-May 24 (5)

Workers’ Compensation Insurance is legally mandated for employers. In Virginia (and probably in most US states) it is required for all employers with more than two employees. That means that ultra-small employers (like mom & pop companies) do not need WC insurance but everyone else does.

 

WC insurance covers the medical expenses of employees who are injured or killed while working. It pays for most work-related injury expenses. However, I have seen work-related accidents which were determined by the insurance company to be non-work-related.

 

When a person goes to the hospital with an injury, especially the emergency room, one of the questions is, “Was this caused by a workplace accident?” This question should always be answered truthfully – never try to protect an employer from claims or insurance price increases by lying about the nature of the accident. Employers must encourage their employees to claim WC insurance especially on injuries which could cause chronic pain or prolonged recovery. Those long-term consequences can be expensive if the employer or employee pay for them.

 

WC insurance is obtained from the insurance company which handles the employer’s property & liability insurance. It is typically not expensive and it is based on several factors:

  • The work performed by the employee
  • The employee’s actual wages
  • A discount or premium charged based on prior claim history

 

After the terrorist attacks on the US on September 11, 2001 the insurance industry lobbied Congress which permitted a non-negotiable terrorism fee which is assessed on all WC policies.

 

Lead On!

Steve

 

Stock Gifts (part 3 of 3)

2016 05-May (10)

Several times during the year it is a good idea to place in the Sunday bulletin, the quarterly donor gift statement, or other form of communication a reminder that people can give stock to the church. Below is the bulletin “blurb” which I use regularly.

 

Many members of (insert church name) donate appreciated stock. They give to the ministry budget, to missions’ offerings, the church’s endowment, or the building campaign. You can transfer your stock electronically to (insert church’s name)’s account by contacting (insert church’s broker) at (insert brokerage name and phone number) or (insert church contact) in the church office (insert church phone number). To give electronically, your broker will need a DTC number (insert number) and the church’s account number at (insert account number).

 

Lead On!

Steve

 

Stock Gifts (part 2 of 3)

2016 04-April 26 (9)

When stock is donated, it must be acknowledged by the church. It can be posted on the person’s giving record so that there is permanent record of the gift. It is also an excellent practice to send the donor a separate letter with the details of the transaction. Below is a sample letter which I use regularly.

 

Mr. and Mrs. John Smith

1234 Maple Ave.

Hometown, US 12345-6789

 

Dear Mr. and Mrs. Smith:

 

Thank you for your contribution to Grace Family Fellowship. Your gift of stock was:

 

Name of stock:……………………………………….. Apple, Inc. (AAPL)

Number of shares:………………………………….. 25 shares

Date of transfer:…………………………………….. January 3, 2018

Stock high on date of transfer:…………………………… $412.50

Stock low on date of transfer:……………………………. $409.00

Average value per share on date of transfer:………. $410.75

Total value of contribution:…………………………… $10,268.75

 

Fund contributed to:

  • 2018 Operating Ministry Budget

 

The date of transfer is the date on which the stock was transferred to Grace Family Fellowship. The IRS requires that stock gifts be valued at the average of the high and low of the stock on the date of transfer. Grace Family Fellowship sells all stock gifts immediately. The cost of the commission and fees related to the sale is netted from the value of your gift.

 

For IRS purposes, I must inform you that the gifts contained in this letter are based on intangible religious benefits. You did not receive any goods or services from Grace Family Fellowship for this contribution.

 

Thank you again for your gift. Your continued support of the ministries of Grace Family Fellowship is greatly appreciated. If I may be of further help please let me know.

 

Sincerely,

 

Church Administrator

 

Lead On!

Steve