Financial Planning Support for Parish Planning

Larry W. Boone, Ph.D.Management Department

The Peter J. Tobin College of BusinessSt. John’s University

Email: boonel@stjohns.edu

Agenda:

1. PARISH PLANNING PROCESS (Overview)

Purpose & future direction Mission, Vision, Goals, Strategies

2. FINANCIAL PLANNING

Support function for parish planning

3. EXAMPLE

3 strategies/initiatives

Excel-based scenarios

OVERVIEW of the Planning Process

MISSION Who we are - broad purpose

VISION What we want to be - next 3-5 years

GOALS What we want to achieve - annual

STRATEGIES How we will accomplish goals

RESOURCE ALLOCATION LT financial plans and budgets

PERFORMANCE MEASUREMENT Scorecard

PARISH PLANNING

Establish and communicate direction and priorities for future – how we will be “better”

Motivate parishioners

Invite parishioner participation

Establish rationale for decisions (such as new initiatives and budgets)

PLANNING PARTICIPANTS

Pastor (or Pastoral Leader)

Pastoral Council or a Planning Team empowered by the pastor

Pastoral Staff

Lay Ministry Leaders

Parish Community Leaders

Finance Committee • may participate throughout the process or

at the end to evaluate financial needs and plans

ROLE OF FINANCE COMMITTEE

Encourage visioning

“Big picture” thinking; meeting parishioner needs and desires (current and future)

Encourage planning team’s creativity

do not inhibit early stage “dreaming”

Support, empower planning team’s work

Facilitate implementation of strategies

where visioning meets practicality

Provide alternatives for funding initiatives

provide “what if” funding options

ROLE OF FINANCE COMMITTEE

Example: do not say “We cannot afford this new initiative.”

Alternatively, explain what it will take to finance the initiative: special fund-raising effort

1.5% increase in weekly giving

$25,000 savings from among current program expenditures

etc.

PLANNING – ALLOCATE RESOURCES

Judge the most effective uses of limited resources people money facilities equipment time

Use the planning process to prioritize allocations

Match your existing resources to prioritized Goals & Strategies

Decide which is more feasible achieving what you can

with existing resources or

obtaining more resources

THE FINANCIAL PLAN

Document that specifies • funds needed by an organization for a period of time

• the timing of inflows and outflows

• the most appropriate sources and uses of funds.

Financial plan helps answer three questions:1. What funds will be required during the planning

period (how much)?

2. How will necessary funds be obtained (sources)?

3. When will more funds be needed (timing)?

EXAMPLE: 3 INTIATIVES IDENTIFIED

1. develop a website to promote interactive communication and online prayer groups

2. create welcoming and hospitality ministries

3. establish a sister parish in a developing country

(in this priority order)

Our parish will:

FINANCIAL PLANNING STEPS:

1. Using Excel, create a 5-year high-level parish statement of revenue and expenditures (for consumption by non-financial members of parish planning team)

2. Establish future assumptions for all revenue and expenditure categories

3. Develop feasible funding and timing scenarios for new strategies

4. Discuss scenarios with the planning team

ASSUMPTIONS - Key Role in Financial Planning

List all assumptions to expose the foundation of your planning calculations and derivations.

Change assumptions to “test” effects of alternative strategies.

Assumption examples:1. Collection revenue +2% per year (average of last 5 years).

2. Donations and bequests -5% per year due to expected relocation of parishioners.

3. Salaries +2% per year.

4. Fringe benefits +8% per year due to increased health care premiums.

5. Web site strategy - Capital expenditure of $5,000 in 2014 for new computer/server; monthly maintenance expenses of $500 for labor and site fees.

6. Welcoming/Hospitality ministries strategy – starting in 2015 $400/month.

7. Sister Parish strategy – starting in 2016 $10,000 per year.

FINANCIAL PLAN STRUCTURE- basic Excel model

REVENUE 2014 2015 2016 2017 2018

Loans (potential)Special fund-raising effortsRegular Collections $620,000 +2%/yearParish Programs 50,000 +3%/yearAuxiliary Revenue 40,500 +1%/yearDonations, Bequests 15,000 -5%/yearTOTAL REVENUE ____ ____ ____ ____ ____

EXPENDITURESSalaries 245,000 +2%/yearFringe Benefits 99,000 +8%/yearAuxiliary Expenditures 105,500 +3%/yearSchool Subsidy 125,000 unchangedRectory & Household 8,000 +3%/year Building, Utilities, Maintenance 115,000 +5%/yearWeb Site strategy 11,000 6,000/yearWelcoming/Hospitality ministries strategy ------- 4,800/yearSister Parish strategy ------- ------- 10,000 TOTAL EXPENDITURES ____ ____ ____ ____ ____EXCESS of REVENUES OVER EXPENDITURES ____ ____ ____ ____ ____

Excel – ASSUMPTIONS SHEET

AssumptionsRegular Collections $620,000

Increase in regular collections 2%

Parish Programs $50,000

Increase in parish programs 3%

Auxiliary Revenue $40,500

Increase in auxiliary revenue 1%

Donations, Bequests $15,000

Decrease in donations, Bequests 5%

Salaries $245,000

Increase in salaries 2%

Fringe Benefits $99,000

Increae in fringe benefits 8%

Auxiliary Expenditures $105,500

Increae in auxiliary expenditures 3%

School Subsidy $125,000

Rectory & Household $8,000

Increase in rectory & household 3%

Building, Utilities, Maintenance $115,000

Increase in building, utility, maintenance 5%

Website Strategy 2014 $11,000

Website Strategy 2015 $6,000

Welcoming & Hospitality Ministries Strategy $4,800

Sister Parish Strategy $10,000

Financial Planning Example – Collections +2.0%/year2014 2015 2016 2017 2018

REVENUE          

Loans (potential)

Special fund-raising efforts

Regular Collections 620,000 632,400 645,048 657,949 671,108

Parish Programs 50,000 51,500 53,045 54,636 56,275

Auxiliary Revenue 40,500 40,905 41,314 41,727 42,144

Donations, Bequests 15,000 14,250 13,538 12,861 12,218

TOTAL REVENUE $725,500 $739,055 $752,945 $767,173 $781,745

EXPENDITURES          

Salaries 245,000 249,900 254,898 259,996 265,196

Fringe Benefits 99,000 106,920 115,474 124,711 134,688

Auxiliary Expenditures 105,500 108,665 111,925 115,283 118,741

School Subsidy 125,000 125,000 125,000 125,000 125,000

Rectory & Household 8,000 8,240 8,487 8,742 9,004

Building, Utilities, Maintenance 115,000 120,750 126,788 133,127 139,783

Website Strategy 11,000 6,000 6,000 6,000 6,000

Welcoming & Hospitality Ministries Strategy 4,800 4,800 4,800 4,800

Sister Parish Strategy 10,000 10,000 10,000

TOTAL EXPENDITURES $708,500 $730,275 $763,371 $787,659 $813,213

EXCESS of REVENUES OVER EXPENDITURES $17,000 $8,780 -$10,427 -$20,486 -$31,467

Financial Planning Example – Collections +3.5%/year2014 2015 2016 2017 2018

REVENUE          

Loans (potential)

Special fund-raising efforts

Regular Collections 620,000 641,700 664,160 687,405 711,464

Parish Programs 50,000 51,500 53,045 54,636 56,275

Auxiliary Revenue 40,500 40,905 41,314 41,727 42,144

Donations, Bequests 15,000 14,250 13,538 12,861 12,218

TOTAL REVENUE $725,500 $748,355 $772,056 $796,629 $822,102

EXPENDITURES          

Salaries 245,000 249,900 254,898 259,996 265,196

Fringe Benefits 99,000 106,920 115,474 124,711 134,688Auxiliary Expenditures 105,500 108,665 111,925 115,283 118,741

School Subsidy 125,000 125,000 125,000 125,000 125,000

Rectory & Household 8,000 8,240 8,487 8,742 9,004

Building, Utilities, Maintenance 115,000 120,750 126,788 133,127 139,783

Website Strategy 11,000 6,000 6,000 6,000 6,000

Welcoming & Hospitality Ministries Strategy 4,800 4,800 4,800 4,800

Sister Parish Strategy 10,000 10,000 10,000

TOTAL EXPENDITURES $708,500 $730,275 $763,371 $787,659 $813,213

EXCESS of REVENUES OVER EXPENDITURES $17,000 $18,080 $8,685 $8,970 $8,889