The Sting (part 3 of 3)

In prior weeks I told a rather unbelievable story that happened to me many years ago. Embezzlement happens in some church in America every week. Be aware of the opportunities for theft and prevent them.

 Here’s my suggestion for all churches: that the church treasurer and the church financial assistant/accountant coordinate each year to do a test of the cash handling by the tellers using the system outlined above.

On 3 or 4 pre-selected weeks, the church accountant put in the offering plate $50 in cash (1 twenty dollar bill, 2 ten dollar bills, 1 five dollar bill, and 5 one dollar bills). Before putting them in the offering plate, the bills must all be photocopied to capture their serial numbers.

After the tellers have counted for that week, then church treasurer and church accountant will go through the offering together – it is vital that this be done jointly to ensure there isn’t a potential for a false accusation. They will compare the actual cash received to the photocopied bills to ensure the cash was received in the offering plate.

  • If the photocopied cash was in the counted offering, then all is well and they can use that same $50 for the other weeks of the operation.
  • If the photocopied cash was NOT in the counted offering, then they need to bring a couple of lay leaders and together determine a course of action. That action should include continuing the photocopied cash when different members of the tellers are not present to eliminate suspects. By all means, keep this quiet – if it got out, it would be disastrous for the member’s confidence in the church’s financial operations.

Lead On!

Steve

 

 

The Sting (part 1 of 3)

The story below happened to me. I wrote it up as a case study for a class I taught. Every word (except the name of other people) is true – including the twist at the very end. I promise it isn’t made up.

As you read it, think about what you would do in my situation. Over 20 years have now passed since this happened, but embezzlement happens every week in some church in America. Be aware of the opportunities for theft and prevent them.

 

The Story

The administrator had been at the church for about three months when Rachel called. Rachel was in her 70s and a long-time Finance Office volunteer. She was a sweet lady known for helping and occasionally putting her nose in where it didn’t belong; she always meant well but she had her quirks. Rachel told Steve that the church’s Sunday School secretary, Jody, was stealing money. Rachel was good friends with a man who worked with Jody. Every Monday the man made a bank deposit for the company and every Monday Jody gave the man about $60 in ones and fives to deposit into her personal bank account. Rachel made the accusation that the cash was stolen by Jody each week from the church.

Steve didn’t know what to do. It would have been ridiculous for him to accuse Jody. For 20 years she had been volunteering at the church and her dad did the same job for 20 years before that. It was a revered family and it was still recovering from the early death of Jody’s mom just a few years before. Jody was in her 50s and Steve was just 33 and brand new to the church. Steve told Rachel that there wasn’t anything he could do until Rachel had some proof. Rachel scoffed at that and said that because it was all done in cash, there wasn’t any proof. Steve did nothing and told no one.

Steve continued to work with Rachel and Jody for the next several years, never forgetting that accusation. Three years after that first call, Rachel walked into Steve’s office and closed the door. “Steve, she’s continuing to steal money. I don’t have proof, I just know that she’s doing it. Why else would she have cash every Monday to be deposited? She’s taking money from the church. It’s not much, about $30 each week, but that adds up over the year.”

By now Steve knew Rachel – she had a good heart, loved her church, volunteered often, and was not mean-spirited. By now Steve had built up a good reputation at the church and was a trusted staff member. Steve knew that Jody was always well-intentioned, much beloved at the church, always willing to help anyone in anyway, and just a nice person.

Steve decided to share this confidentially with two church leaders: Larry, the church’s legal counsel and Bob, the Administration lay coordinator (lay member responsible for all non-ministry things such as the building and finances). Both Larry and Bob were also church elders and highly respected members. Steve asked both of them to meet him off-site and told them the story.

 

Background Info

The church had an 8 a.m. Sunday early worship and an 11 a.m. Sunday regular worship. The ushers were trained to place all tithes and offerings from the early worship in a bank bag which was then left in the church’s Sunday School office in Jody’s care. Jody got to the church every Sunday about 7 a.m. and stayed in the office till the 11 a.m. worship. The ushers at the 11 a.m. service also collected their offerings into a bank bag; they took their bag and the 8 a.m. worship bag (which they got from the Sunday School office) to a church safe next to the Finance Office. Two ushers always accompanied the bank bags as they traveled around the church. Every Monday, the church treasurer and volunteers got the money out of the safe and counted the offerings. Then, the money went to the bank about 2 p.m. on Monday.

Steve knew that the combined Sunday morning cash was only about $250 each week and that about $75 of that came from the early worship service. If Jody was taking $30 each week from the early service she was probably also taking money from the Wednesday Supper receipts which had about $500 in cash each week. Every Wednesday a volunteer collected supper payments and put all the money in a bank bag. The volunteer left the bank bag in the Sunday School office under Jody’s care till the church treasurer finished eating. Then the church treasurer took the bank bag to the safe. Steve thought that if Jody was taking about $30 from both the Wednesday supper money and the 8 a.m. Sunday worship offerings, that would equal the $60 her co-worker deposited each week in her bank account.

 

Lead On!

Steve

 

Personal Investing

My family asked me about my personal investing. I’ve done well in the market – I’ve averages over 8% returns per year for the past 11 years (2007-2017) which includes several down or flat years.

  1. It’s all in mutual funds in Vanguard
  2. I re-balance my funds about once a year unless there is a major world event in which case I’ll immediately re-configure my investments (think war, economic collapse of a country/region, etc.)
  3. I’m invested 80% in equities and 20% in bonds. The bonds are a hedge against the stocks. You can be more aggressive by having more equities or by having more aggressive equities (emerging/international markets and/or small cap).
  4. My specific investments and percentages
    1. VFIAX    Vanguard 500 Index Fund Admiral Shares – 40%
    2. VEMAX  Vanguard Emerging Markets Stock Index Fund Admiral Shares – 15%
    3. VWETX  Vanguard Long-Term Investment Grade Fund Admiral Shares – 20%
    4. VSGAX   Vanguard Small-Cap Growth Index Fund Admiral Shares – 25%
  5. This means that my portfolio is a good mix of aggressive and conservative, US and international. This is a secret to investing – diversification! That can’t be stressed enough – don’t put all your eggs in one stock or even one mutual fund. Here’s my mix:
    1. 40% invested in large US companies (stable growth)
    2. 15% invested in international companies (stable with some speculation)
    3. 20% invested in bond (conservative part of my portfolio)
    4. 25% invested in small cap or aggressive companies

A few rules for investing

  1. “A rising tide lifts all boats.” When the market is going up, you don’t have to be particularly smart or good to do well.
  2. “Be a pig, not a hog. Pigs get fat, hogs get slaughtered.” Go for gains of all kinds but don’t get greedy and chase after the high flyers each week or even each month.
  3. “Never fall in love with your investments.” They don’t love you back. Investments are tools, nothing more. Be willing to bail on them whenever necessary.

Lead On!

Steve

 

Questions re Accepting Credit Cards (part 5 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:

  • Commercialism
    • Some fear that by accepting credit cards, the church is becoming too commercial. It isn’t. It is using the mechanisms created by this world in order to do the work of the Kingdom. Jesus encouraged his followers to be as shrewd as the people of the world (Luke 16:8) and this is one way of doing just that.

 Online giving doesn’t solve all of a church’s financial woes. It does eliminate (or minimize) hurdles and excuses for people to give to their church. They can no longer claim they forgot their checkbook or don’t have cash in their wallet. I know they have their credit card in their wallet because they’re going to eat at a restaurant after church and that restaurant accepts credit cards. They can use that credit or debit card to be generous with their church – hopefully even more generous than what they’ll spend on lunch.

Make it easy for people to give to your church – give them the option of online giving.

Lead On!

Steve

Questions re Accepting Credit Cards (part 4 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:

  • Promotion
    • To be successful, there must be a promotion/awareness/visibility campaign to let members know they can now giving online. The best way to do this is as a teaching opportunity rather than crass marketing. Just as we let members know about different Bible study times and other events, we need to inform people about the different ways they can support their church. They want to give their money to their church – we’re simply providing information and ways for them to do that.
    • There are a variety of methods to get the word out using bulletins, pulpit announcements, website, giving cards in the pews, etc. All of these must be used to make this a success.
    • If we do not give easy ways to support their church, we’re putting hurdles in front of our donors. That is simply not wise or good.
  • Accounting and Reporting
    • The finance office will need to be diligent in ensuring that all online financial transactions are posted to the General Ledger so that the monthly bank reconciliation is accurate and the end of month financial reports are correct. That office also needs to ensure that any reporting provided to the church during the month contains the online gifts. This will require the staff to adopt new patterns and checklists.

 

Lead On!

Steve

 

Questions re Accepting Credit Cards (part 3 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:

  • We’ll Get That Money Anyway
    • Some people feel that money given by members via credit cards would have come to the church via cash or check if the church didn’t have online giving. Personally, I’ve put things back on the shelf when I realized the shop didn’t take a credit card and I didn’t have cash to pay for it.
    • I don’t believe all of that money would. Some would come in but not all. The convenience of credit cards eliminates hurdles to giving and allows for giving more.
  • Back office administration
    • The finance staff in the church has to get the donations posted to members giving records and to the church’s financial records. The worst way to do that is manually and the best way is to do it electronically with few or no human touches.
    • Digital donation providers are continually working to ensure their systems can seamlessly “talk” with church financial records systems. Also, the online giving platforms have a way for members to access their giving history and even download a document suitable for their tax purposes (which means less contact with the church’s finance office).

 Lead On!

Steve

 

Questions re Accepting Credit Cards (part 2 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:

  • Portal Fees
    • Digital donation providers themselves have a fee which usually depends on the size of the church (number of Sunday morning worshippers).
    • This is the fee paid to the provider their services
      • A portal that makes is easy and friendly to give
      • Back office assistance to post contributions
      • Help in creating categories for gifts
      • Continuing training to existing and new staff at the church
      • Ideas for successful marketing and implementation
    • This fee is to the digital donations provider just as we’d pay the plumber for their labor (that is, the portal fee) and we also pay for parts (that is, the credit card fees) – two different expenses paid to two different companies.
  • Debt by members
    • Some churches are concerned that members will get deeper in debt by using their credit cards to pay their tithe. There are two ways to address this within the church:
      • Encourage people to use a debit card or an ACH transfer (bank to bank). These are cheaper for the church and don’t create credit card debt.
      • Have a class teaching members wise money management using materials from Financial Peace University and/or from Crown Ministries. These classes can really help people get their financial house in order AND tithe.
    • But some people want to use their credit card to earn rewards points and they will pay off their credit card balance each month.

 Lead On!

Steve

 

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