1. DISCIPLES OF CHRIST 2009 FINANCIAL REVIEW Prepared by the Kelley School of Business, Indiana University – team members include Drew Patterson, Matt Reid, and Tom West

2. Disciples Mission Fund Contributor Makes donations to one of the organization’s funds, provides funding for the organization’s operational and outreach activities. Treasury Services Accounts for the contributions and ensures that the funds are properly allocated to their designated purpose or receiver. Withholds some funds for its own operations Receiver Receives disbursement of contributor’s gifts from Treasury Services and uses funds to carry out operational activities and outreach efforts.

3. Disciples Mission Fund  Decreased Giving and Scale  The Disciples, like most non-profits, have experienced a drastic decrease in giving following the 2008 recession. This decrease has created stress on operating budgets and organization functionality. In times like these, it is vital to have an established system that aides in monitoring the financial health of an organization and its affiliates.

4. Disciples Mission Fund

6. Summary of Financial Review  The Disciples Mission Fund supports over 72 ministries within the United States and around the world.  Each ministry depends on these dollars to continue their respective work. Monitoring the receivers’ use of the Mission Fund dollars is key to ensuring longevity of this organization.  This Financial Review uses an statistical approach to monitor the use of Mission Fund dollars.

7. Summary of Financial Review  How it works…  Using an analytical measure, known as a Composite Financial Index (CFI), each recipient of Mission Fund dollars is assigned a score. This score is then collected for the population and subject to a normality test. If any organization is outside of the normal distribution (in this case, 1 standard deviation away from the population mean) it is identified as an “outlier” or outside of 95% of the population.

8. Summary of Financial Review  A closer look at CFI.  Because each recipient has a different functionality the receivers have been categorized and assessed in units according to their functional purpose. Institutes of Higher Education and Seminaries Primary Reserve Ratio35% Net Income Ratio10% Return on Net Assets Ratio20% Viability Ratio35% Financial Ministries Primary Reserve Ratio20% Net Income Ratio15% Return on Net Assets Ratio25% Viability Ratio40% Program Ministries Primary Reserve Ratio30% Net Income Ratio5% Return on Net Assets Ratio35% Viability Ratio30% Regional Ministries Primary Reserve Ratio30% Net Income Ratio5% Return on Net Assets Ratio25% Viability Ratio40%

9. Summary of Financial Review  To derive value from each CFI score, each receiver’s audit of financial statements is reviewed and recorded into the custom built database that is designed to not only track an organization’s CFI, but also monitor other financial markers on an annual basis.  In addition to tracking an organization’s CFI, Mission Fund dollars distributed to the receiver are also tracked.

10. Summary of Financial Review  After the financial information for each receiver has been compiled in the database and each receiver has been assigned a CFI score, the scores are transferred to a statistical analysis program. In this program the population scores are subjected to the normality test.  Remember, for this review we want to identify the receivers that are 1 standard deviation (or outside of 95% of the population) away from the population mean.

11. Questions? “It is not enough to do your best; you must know what to do, and then do your best.” -W. Edwards Deming  Thank you for your time, we welcome all your questions.  Please email questions to Tom West at twest@ogmp.disciples.org