Communicating Financial Information January 2018...2 Stewardship Briefing Paper: Communicating financial information – January 2018 copyright Stewardship 2018 t: 020 8502 5600 e:

Stewardship, 1 Lamb’s Passage, London EC1Y 8AB

t: 020 8502 5600 e: [email protected] w: stewardship.org.uk

Communicating Financial Information

January 2018

Stewardship Briefing Paper

2 Stewardship Briefing Paper: Communicating financial information – January 2018

copyright Stewardship 2018 t: 020 8502 5600 e: [email protected] w: stewardship.org.uk

CONTACT DETAILS Stewardship 1 Lamb’s Passage, London EC1Y 8AB t: 020 8502 5600 e: [email protected] w: stewardship.org.uk Stewardship is the operating name of Stewardship Services (UKET) Limited, a registered charity no. 234714, and a company limited by guarantee no. 90305, registered in England. © Copyright Stewardship 2018

COPYRIGHT

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Stewardship Briefing Paper: Communicating financial information – January 2018

copyright Stewardship 2018 t: 020 8502 5600 e: [email protected] w: stewardship.org.uk 3

Table of contents Page

1 Introduction .............................................................................................................................. 5

2 Why Communicate Financial Information? ................................................................................ 6

3 Who Is It That We Are Communicating With? ............................................................................ 8

4 What Are We Seeking To Communicate? ................................................................................ 10

5 How Do We Go About Communicating Well? .......................................................................... 12

6 Conclusion .............................................................................................................................. 13

7 Contact Us.............................................................................................................................. 13

Appendix 1: Top Communication Tips ............................................................................................. 14

Appendix 2: Example Operating Budget and Variance Analysis (xx church) ...................................... 17

4



About Stewardship

Our vision

Our vision is for the world to encounter Jesus through the generosity of His church. We do this by:

Making giving easy

Inspiring greater generosity

Strengthening Christian causes

Since 1906, Stewardship has been helping the Christian community in the UK to give and receive. We

love making giving easy and help over 25,000 individuals to give around £60 million each year, to our

database of over 19,000 charitable causes.

We are committed to strengthening Christian causes, by offering practical, tailored support to help

Churches and Christian charities to transform the world.

And we inspire greater generosity from this community too, through our wealth of resources, courses and

campaigns for individuals and churches alike, including the multiple award winning 40acts campaign

and website.

http://www.40acts.org.uk/



1 Introduction

1.1 Background and Context

Money and generosity are topics which are explored from different angles again and again

throughout the Bible. Here at Stewardship we have drawn three themes from 2 Corinthians 8

which we believe are important for churches to better understand if they want to develop and then

demonstrate a good and healthy relationship with money. These themes of attitude,

administration, and accountability (which we refer to as the “triple A rating” or “AAA” for short)

are explored in our briefing paper Raising the Standard: Transforming the Culture of Money in

the Church (available at stewardship.org.uk/briefingpapers) and represent what we believe to be

the “gold standard” for churches when handling money.

What is striking about 2 Corinthians 8 and other similar passages is that the quantity of money is

not important (amounts and percentages are rarely mentioned), but rather it is that money is seen

as an issue of the heart. Often the emphasis of these Bible passages is on generosity, in the case

of the Macedonian church in 2 Corinthians its “rich generosity”, and its place right at the centre

of the Gospel message.

We see this heart attitude towards money as integral in a gospel partnership between givers,

receivers and God and the more that churches can grasp the excitement of such a partnership the

more we believe they will become “partners in the gospel”.

This paper forms part of that heart changing journey for churches towards generosity and

partnership as we see the communication of financial information as an important element of

accountability, one of the themes of AAA.

1.2 Introduction

At its most straightforward, communication is the act of transferring information from one place

or person to another. Sounds simple… but as anyone who has tried to communicate even the

most straightforward idea will know, that is often far from the case. For communication to be

successful, we need to understand why we are communicating; who it is that we are trying to

reach; and what it is that we want to say.

So in this paper we look at four aspects of communicating financial information:

1. Why communicate financial information?

2. Who is it that we are trying to reach?

3. What is the message that we want to communicate?

4. How do we communicate financial information well?

Then in Appendix 1 we take a look at our top practical tips for good communication.

http://www.stewardship.org.uk/briefingpapers

6



2 Why Communicate Financial Information?

2.1 Open, Transparent and Accountable

As we have already mentioned, at Stewardship, we promote an AAA1 approach towards churches

and money recognising that churches which have a good relationship with money will develop

and demonstrate all three attributes:

• Attitude: Having the right attitude towards handling money and generosity.

• Accountability: Building accountability for those within the church who handle money and

finances.

• Administration: Developing a good financial control framework and administrative processes

to handle financial transactions well.

Churches which handle money well, will demonstrate all three attributes and we see the sharing

of financial information as being significant in churches which are seeking to build good

accountability. 2 Corinthians chapter 8 shows the importance given to financial accountability,

this time in the context of receiving the offering for the Jerusalem church.

In verse 17, we read that the well-respected church leader Titus is being sent to receive the

offering, but in verse 18 we read that he is not going alone and; not only is he not going alone,

but the person sent with him is someone “…praised by all the churches for his service to the

gospel”. Why were these two senior and well-respected church leaders sent together to collect

this offering:

• To avoid criticism about the way the gift is handled (verse 20);

• To be seen to do what is right in the eyes of the Lord, but also in the eyes of man (verse 21).

Paul recognised that money has a power far beyond its intrinsic value; a power that can easily

corrupt, and so went to great length to show that Titus was accountable and that the gift was

handled in a way acceptable to both God and the world. The brother was not sent with Titus

because he was not trusted, he was sent so that “the world” could see accountability and so that

the church could not be criticised.

Building accountability into all areas of church finances is both good practice and also what

would be expected in the “eyes of man”. Furthermore, in Acts 4:35 we read of gifts being placed

at the apostles’ feet before being distributed to people in need; the adoption of a collaborative

approach providing a level of accountability.

2.2 Where Does Financial Communication Fit In?

So often in churches the world of finance can be hidden away. Money is handled by the few and

is difficult for others to understand due to the jargon and secrecy that often surrounds it. The

sharing of financial information within the finance team, from the finance team to the leadership

team and with the wider church adds another layer of accountability. The world of finance is

brought further into the public domain, further into the light.

1 For more on AAA, please see our briefing paper Raising the Standard: Transforming the Culture of Money in the Church



Where information about church finances is not shared, mistrust can easily grow forming a

division between leadership and congregation. Only recently we spoke with two disillusioned

young church members who felt that although their church was continually raising the issue of

giving and asking the church to give more, there was very little information shared regarding how

this money was used and where it went. This was obviously a cause of considerable concern for

them.

Churches, especially those which operate as charities, are there for ‘public benefit’ and there is

therefore, quite rightly, public interest. Churches tend to handle:

• Money from donors (congregation and external grant providers).

• Money from people who use their premises and services.

• Money from the government in the form of Gift Aid.

So it is important that churches are able to demonstrate good accountability in all of these areas.

This means having good policies and procedures including policies for the clear and meaningful

communication of financial information.

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3 Who Is It That We Are Communicating With?

There are two broad groups of people that we are trying to reach. Those inside the church;

including trustees, church leaders, and donors and those which are “outside” the church and

which include regulators, grant funders and the general public.

These groups are different in the type of information they require; the level of detail they want;

and in how they will use the information.

3.1 Those Inside the Church

Trustees and church leaders will want good, clear financial information to help them run the

church effectively and everyone will want confidence that church finances are being properly

managed.

It is particularly important that donors do not give under compulsion but out of a desire to be a

part of God’s plan for the church as “cheerful givers”, feeling engaged in what is happening and

part of the gospel partnership. To feel fully engaged, donors will need to be committed to the

church’s vision and plans but will also want confidence that the finances are being handled

properly.

Sharing financial budgets as part of a church vision (see our briefing paper: Financial Planning

and Budgeting for Churches, available at stewardship.org.uk/briefingpapers) is important in

communicating vision, direction and priorities and in securing that engagement; providing

periodic relevant and meaningful accounts helps to build greater trust and confidence.

Deciding what level of detail to provide is a matter of judgement, balancing transparency with

confidentiality. For example, we would not expect individual levels of donations and giving to be

shared widely with the church, and possibly in the normal course of activities not even shared with

every trustee. Salaries are potentially another tricky area of confidentiality, although under the

2015 charity SORP a degree of transparency is required where employees are also trustees (a

common situation in many churches).

To provide the greatest level of accountability, transparency needs to win out over confidentiality

and dare we suggest that there are times when the banner of confidentiality becomes convenient

to keep some transactions hidden from donors. Playing the confidentiality card too often creates

suspicion and can break-down trust.

3.2 Those Outside the Church

Grant funders

For those churches where grant funding is an important income stream, good communication of

financial information to grant funders is essential if grants are to be forthcoming. In general,

grant funders will receive more requests for grants than they have funds available, and so a well-

constructed grant application including good, clear and ‘easy to follow’ financial information is

more likely to bring success than one in which the financial situation is muddled or remains

unclear.




Often larger grant providers will have a prescribed application form requiring financial information

to be completed in a set format. Smaller grant funders may allow more freedom in the way that

financial information is presented.

3.3 Regulators

Regulators have the responsibility of regulating (and many would say protecting) the sector which

they oversee and for churches and others in the charity sector the main regulator in England and

Wales is the Charity Commission2 with all charities also subject to HMRC rules. Providing financial

information in the form of annual accounts, annual returns and as part of corporation tax or other

bespoke returns provides the basis of accountability by the church to the regulator.

Recent financial scandals in the charity sector have served to increase the pressure on charity

regulators to ensure that money is handled properly. As a result, charity finances are coming

under more and more scrutiny. The public want to have assurance that charity funds are being

used properly and that Gift Aid is being claimed appropriately.

3.4 The General Public

The repeated financial scandals in the charity sector have already created an air of unhealthy

scepticism in the minds of a large proportion of the general public about charity finances. Add to

that the apparent glee with which the press greets a financial scandal inside the church and the

importance of providing good open and transparent financial information becomes clear.

The main source of this information for the public will most likely be the annual report and

accounts. Much of what is included in the annual report and accounts, particularly for those

churches reporting under FRS102 SORP, is prescribed in some detail.

However, there are aspects of the accounts where more discretion can be applied and when

communicating with the public, remember the power of the trustees’ report. Here is your chance

to explain the exciting vibrant vision of a church impacting its local community. Sadly, what we

tend to see more often are reports aimed either at church insiders or perhaps even worse, reports

consisting of a rather dry list of church activities.

2 OSCR in Scotland and the Charity Commission for Northern Ireland.

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4 What Are We Seeking To Communicate?

For those inside the church where we want to inform and encourage, budgets and periodic

‘management’ accounts are important.

4.1 Budgets

Generally speaking normal operating budgets are for the benefit of the church; trustees, leaders

and the wider congregation. Project budgets serve the same groups, but are also important for

churches seeking external grant funding. We believe that well-constructed and clearly

communicated financial budgets have many merits including:

• Helping the church to prioritise its actions and resources.

• Helping the church congregation take ‘ownership’ for the future, linking the vision to action

and what funding that will need.

• Used properly, budgets provide an early indication of situations where a church’s actual

financial position deviates from what was expected. (This is just as important in cases where

available funds exceed expectations as where available funds fall short of expectations.)

• Budgets add a layer of accountability within the church’s financial controls.

• Proper use of budgets demonstrates good practice, doing what is right in the “eyes of man”.

The format, layout and presentation of budgets should reflect the organisation which they serve

and be compiled in a way that is clear and easy to understand. No two budgets are the same,

because no two churches are the same and the complexity and format of a budget should reflect

the operations of your church and allow you to better understand the finances of ministry.

For more about what to think about when constructing a church budget, please see our briefing

paper Financial Planning and Budgeting for Churches available at

stewardship.org.uk/briefingpapers

4.2 Periodic ‘Management’ Accounts

In the same way that no two budgets will be the same, there is no prescribed format for setting

out management accounts and each church should consider what it is that they are trying to

communicate and construct a report which best achieves this.

The level of detail shared by churches in financial reports will vary, but remember the dual

purpose of all internal church communication is to improve understanding and ownership by the

church and to build accountability and trust. Appendix 2 gives an example of a reporting format

that you may want to adapt for your own church.

So if budgets and management accounts are important to church “insiders”, what is important for

those “outsiders”, where our aim is to inform, demonstrate good practice, build confidence and

trust and in some cases even introduce them to the church for the first time? Here it is the annual

report and accounts which form the bedrock for communication, supported by regulatory returns

and other bespoke financial reports.

4.3 The Annual Report and Accounts

Almost all churches will need to produce some form of annual report and accounts and churches

which are charities will have prescribed formats and content to follow. Churches which report on




an accruals basis are required to meet the regulations set out in the FRS102 Charity SORP, whilst

churches reporting under the receipts and payments basis have more of a free hand to determine

what goes into their report.

Financial accounts that are relevant, meaningful, clear, and well- presented give confidence that

a church has control over its finances and that money is being properly handled.

Alongside the figures, there is normally a trustees report, explaining the purpose, vision, activities,

and future plans of the church. This report serves to provide a context into which the numbers can

then be better understood. The trustees’ annual report is an important and evolving element of

your church’s communication to the outside world. People who are new to the area, local media

carrying out research and others making general enquires may all read your report which is

openly and freely available via the Charities Commission.

Sadly, here at Stewardship we see many trustees’ reports that are, quite frankly, dry and dull.

They communicate the basic factual information, but provide little insight into how, as a vibrant

church, they are impacting their local communities in exciting and innovative ways. Churches are

an integral part of the rich mosaic of community life and yet so often we fail to effectively

communicate and convey this.

4.4 Bespoke Financial Reports

These will tend to be reports requested by a particular person or organisation for a specific

purpose e.g. a grant funding request or a regulatory return. There is often little discretion when

completing such reports and so a clear understanding of what information is needed and

accuracy in reporting that information supported by correct figures is generally what is required.

12



5 How Do We Go About Communicating Well?

5.1 Methods of Communication

Communication is generally a combination of things working together to give a message. These

include;

• Verbal: what we say and the language we use.

• Written: what we write either formally or informally.

• Non-verbal: our demeanour and body language.

• Visualisation: our use of pictures, graphs, and charts.

For example, when presenting a financial report to your church you may give a formal verbal

presentation, supported by written notes with some ‘on-screen’ visualisation; whilst at the same

time being aware that anything you do or say will be interpreted in the light of your body

language and other nonverbal signals that you might give off.

The aim of good financial information is to help whoever the audience is to better understand

what is happening and to better receive the messages that you want to give. Hopefully some of

our practical communication tips set out in Appendix 1 will help achieve this.

5.2 The Communication Exchange: Breaking through the ‘Cage’

Hugh Mackay (a social psychologist) in his book titled Why don’t people listen3 developed the

concept of the ‘cage’ as a way of explaining part of the communication process. He imagines

that everybody has a cage around them constructed throughout life from experiences and beliefs.

This cage acts as a filter to ideas and other inward forms of communication allowing each person

to interpret those ideas and messages in a way in which they understand. No two cages are

identical but over time each cage strengthens as it ingrains experiences, prejudices and biases

thereby producing an ever stronger filter.

He argued that for communication to take place at all, messages need to break through the cage

of the communicator, suffering the distorting effect of their filter, and then break through the

cage of the hearer suffering further distortion as their filter does its job. It is easy therefore to

imagine a huge game of Chinese whispers with the recipient receiving a message far removed

from that intended by the communicator.

Our practical top tips (see Appendix 1) hopefully address some of these issues as we seek to raise

our game and make church finances more understandable to more people.

3 Why don’t people listen; solving the communication problem. Pan Macmillan Publishers Australia 194



6 Conclusion

Good communication of financial information is not easy. Sometimes the underlying concepts are

difficult to explain and sometimes there is a level of complexity and detail which is hard to

simplify, but we would argue that good communication of church finances;

• Is important for accountability within the church and more broadly among regulators and the

public;

• Is an essential ingredient in communicating vision and church priorities;

• Brings the sometimes shaded world of finance out into the open; and

• Creates better ‘ownership’ of financial matters within the church as a whole.

These are all good reason why we believe that taking the time to think about what you want to

communicate and then how to go about it are just as important for a church treasurer and

finance team as making sure that the balance sheet balances!

7 Contact Us

For further help or information, please contact us on 020 8502 5600 or email [email protected]. You can also visit our website at stewardship.org.uk.

mailto:[email protected]

http://www.stewardship.org.uk/

14



Appendix 1: Top Communication Tips

These are our tips on how to communicate well either verbally, in written form, or as part of a

presentation.

1. Take care of the words that you use

Wherever possible, use simple words which most people will be able to understand and which have just

one meaning. Try to avoid the use of what are known as weasel words; those are words which can guide

or mislead an audience. Words like ‘obviously’; making an audience think twice about asking a question

about something that is apparently so ‘obvious’ to the communicator.

Also take care of the types of words that you use when introducing a topic. Listen to the next available

news bulletin and see how much you are guided on a topic by the way that it is introduced. A stock

market fall of 5% might be prefaced as a ‘crash’, a similar sized rise might be prefaced by a term such as

‘stabilised’. These words provide a very different ‘feel’ to what are essentially equal events and create a

context for what comes next. Wherever possible, try to use neutral introductory words.

2. Remove the jargon

Remove as much of the jargon as you can. The average church member has no interest in what a SORP

is, and may never have heard of accruals or amortisation. The more experienced you are within the world

of finance, the more likely it is that you will have absorbed and adopted some financial jargon along the

way. If you have the chance, run your presentation or report past someone with little or no financial

background and see what they make of it.

3. Speak clearly

When making a verbal presentation, speak clearly and include opportunity for summary and clarification.

Remember you are likely to have been working on the presentation for some time and so the ideas will be

firmly embedded in your mind. However, for your audience, this is likely to be the first time that they

heard what you have to say, and may even be the first time that they have been introduced to a

particular issue. Summarising and leaving space to clarify what you have said will help people to grasp

new concepts quicker.

4. Use everyday examples

Where possible, use every day examples to support what you are saying. Remember when Margaret

Thatcher compared the national finances to running a household budget; and see how often Jesus uses

every day examples in the parables that he told. If you can find something that engages the audience

and makes what you say more relevant to them, then they are more likely to understand what you are

trying to put across.

5. Non- verbal signals

Commercial organisations spend large budgets ensuring that their presenters and sales people are

trained in how to speak and dress in the right way (even down to the colour jewellery that they wear) so

as give the right impression; reassurance where that is needed, vigour and dynamism where that is

needed. Whilst we do not suggest that this is important in church, you should be aware that

subconsciously those listening will draw something (for better or worse) from the way that you talk and

look.



Body language is very important. At Stewardship, we feel that people handling money at churches

should be accountable, and that means being open, approachable and working in ways that are

transparent. Closing down approaches, questions and enquiries with a brusque attitude, a wrong tone of

voice or with less than open body language sends out all the wrong messages.

6. Answer questions courteously

Where you are asked questions, take care to answer these courteously. For some people, and particularly

in larger more public meetings, it is difficult to ask a question which might make them look as if they do

not understand the issue and nobody wants to be made to look silly. Treating people less than

courteously will no doubt stop them, and others, asking similar questions in the future; and rest assured

for every person that does ask a question there will be many more that are thinking the same thing but

are not willing to speak out.

7. Multi media

However much you might love numbers not everybody does!! This is particularly true when they come

one after another or there is a page crammed full of them staring up at you. So it might be time to get a

little creative and think of different ways that same information could be presented. What about some

form of graph or chart to:

• Map average weekly offering

• To analyse expenditure

• To demonstrate variances against budget

A sure way to see people’s eyes glaze over is to present pages of numbers, percentages and ratios.

8. Keep it simple

Think about the key points that you want to communicate and keep to those. For example, if you are

presenting an annual budget, the average church member will not be interested in every detail of every

line of expenditure; summarised expenditure headings will often be all that is required. There is an old

saying that ‘less is more’ and for financial communication this can often be very true.

9. Understand the audience

Take some time to think about the audience and tailor your report or presentation accordingly. A

presentation made to trustees who are perhaps grappling with whether or not to start a major new

initiative may look very different from a presentation on the same issue delivered to a church members’

meeting.

10. Be positive and smile

Sometimes it is not the words that you say that are as important as the way that you say them. The same

information presented with a positive demeanour and a smile is likely to have a different impact than if

delivered in a dour and downbeat way. That is not to say that difficult issues are glossed over, but they

can still be communicated in a positive manner.

11. Use some humour

Let’s face it, even to treasurers and the like, finance can sometimes be quite dry so where possible see if

you can introduce a little humour. Surveys suggest that this does not only lighten the mood, but actually

makes audiences more receptive to the messages that you are seeking to communicate.

16



12. Don’t cry wolf

Where there is a situation of concern or need then be prepared to share that issue clearly and openly, but

crying wolf time after time simply immunises your audience from hearing what it is you are really trying to

say.

13. Post-modern, the new norm

Neither you nor your audience may have come across the term “post-modern”, but the likelihood is that

many in your audience will unknowingly be influenced by it. For example a post-modern mind set

(people born over the last 30 – 40 years) tends to reject the idea of absolute truth and things borne out of

‘facts’ preferring a more relative approach of interpreting ideas through experience and personal

understanding. So be prepared for your message to be interpreted differently across the church.

14. Ask for questions and feedback

Always invite questions and feedback. Seeking ways to improve content or delivery are positive traits of a

teachable person prepared to grow themselves.

15. Offer more information

For those people which are more interested, perhaps suggest another time and place where you could go

a little deeper.



Appendix 2: Example Operating Budget and Variance Analysis (xx

church)

ACTUAL YTD

BUDGET YTD

VARIANCE YTD

FULL YEAR BUDGET

INCOME

Offerings and donations Gift Aid and GASDS Third part grants Charitable activities Trading income Other income

Total income XX YY XX-YY XXX

EXPENDITURE MINISTRY

Pastoral costs Staff remuneration and expenses Staff training Visiting speakers

Total pastoral staff costs XX YY XX-YY XXX

Direct ministry expenses

Outreach and evangelism Youth and children Pastoral and counselling Discipleship Worship and fellowship Mission partners and other grants

Total direct ministry costs XX YY XX-YY XXX

MINISTRY SUPPORT COSTS

Premises hire Church maintenance and cleaning Utilities Equipment: small purchases and

consumables

Licenses Church manse running costs

Total indirect ministry support costs XX YY XX-YY XXX

SUPPORT COSTS Administration support costs

Church office running costs Communication Governance Insurance Sundry

Total administration costs XX YY XX-YY XXX

TOTAL COSTS XX YY XX-YY XXX

SURPLUS/DEFICIT XX YY XX-YY XXX ‘Capital’ expenditure

Motor vehicles Fixtures and fittings Equipment

Total capital expenditure XX YY XX-YY XXX

SURPLUS/(DEFICIT) - AFTER CAPITAL EXPENDITURE XX YY XX-YY XXX

Documents

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