Financial Planning Support for Parish Planning Larry W. Boone, Ph.D. Management Department The Peter J. Tobin College of Business St. John’s University Email: boonel@stjohns.edu

Agenda: PARISH PLANNING PROCESS (Overview) Purpose & future direction Mission, Vision, Goals, Strategies FINANCIAL PLANNING Support function for parish planning 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: What funds will be required during the planning period (how much)? How will necessary funds be obtained (sources)? When will more funds be needed (timing)?

EXAMPLE: 3 INTIATIVES IDENTIFIED Our parish will: develop a website to promote interactive communication and online prayer groups create welcoming and hospitality ministries establish a sister parish in a developing country (in this priority order)

FINANCIAL PLANNING STEPS: Using Excel, create a 5-year high-level parish statement of revenue and expenditures (for consumption by non-financial members of parish planning team) Establish future assumptions for all revenue and expenditure categories Develop feasible funding and timing scenarios for new strategies 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: Collection revenue +2% per year (average of last 5 years). Donations and bequests -5% per year due to expected relocation of parishioners. Salaries +2% per year. Fringe benefits +8% per year due to increased health care premiums. Web site strategy - Capital expenditure of $5,000 in 2014 for new computer/server; monthly maintenance expenses of $500 for labor and site fees. Welcoming/Hospitality ministries strategy – starting in 2015 $400/month. 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 efforts Regular Collections $620,000 +2%/year Parish Programs 50,000 +3%/year Auxiliary Revenue 40,500 +1%/year Donations, Bequests 15,000 -5%/year TOTAL REVENUE ____ ____ ____ ____ ____ EXPENDITURES Salaries 245,000 +2%/year Fringe Benefits 99,000 +8%/year Auxiliary Expenditures 105,500 +3%/year School Subsidy 125,000 unchanged Rectory & Household 8,000 +3%/year Building, Utilities, Maintenance 115,000 +5%/year Web Site strategy 11,000 6,000/year Welcoming/Hospitality ministries strategy ------- 4,800/year Sister Parish strategy ------- ------- 10,000 TOTAL EXPENDITURES ____ ____ ____ ____ ____ EXCESS of REVENUES OVER EXPENDITURES ____ ____ ____ ____ ____

Excel – ASSUMPTIONS SHEET Regular 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 Fringe Benefits $99,000 Increae in fringe benefits 8% Auxiliary Expenditures $105,500 Increae in auxiliary expenditures School Subsidy $125,000 Rectory & Household $8,000 Increase in rectory & household Building, Utilities, Maintenance $115,000 Increase in building, utility, maintenance 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%/year 2014 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 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 Welcoming & Hospitality Ministries Strategy 4,800 Sister Parish Strategy 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%/year 2014 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 99,000 106,920 115,474 124,711 134,688 Auxiliary Expenditures 105,500 108,665 111,925 115,283 118,741 School Subsidy 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 Welcoming & Hospitality Ministries Strategy 4,800 Sister Parish Strategy 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