How Church Works: Annual Budget & Endowment

Loyal longtime readers of The Messenger know we carry many articles about mission projects and spiritual growth opportunities. This year, we are blending in articles about how things work at SUM behind the scenes.

Today’s topic is financial: what is the difference between the annual budget and the endowment?

SUM’s annual operating budget is similar to a household budget. On the revenue side, we estimate next year’s income from pledges, unpledged donations, and sometimes a profit from our childcare operation (Little Lambs & Ivy). This is akin to a household estimating next year’s salary, bonus, tips, government benefits, etc. Pledging is very helpful to our financial team because the percentage actually received tends to fall within a predictable range. Unpledged donations, of course, are great. They just fluctuate more widely year to year, making budget work harder.

On the expense side of the budget, we predict the cost of routine items, just as a household might. They include salaries and benefits for clergy and staff, utilities, our apportionment of the New York Annual Conference’s budget, snow removal, insurance, and so on.

The endowment is similar to a household long-term savings account. Just as a family might set aside money for college, retirement, or an emergency, SUM has an endowment intended for non-routine operating expenditures. It has been funded over many years by generous donors who explicitly have given the money (or real estate or stock) to the endowment. Sometimes the donor restricts the use of the money and its earnings to certain purposes. About one-third of the endowment is unrestricted.

One common use of the unrestricted funds is for major repairs to the Hopmeadow campus and the parsonage. Another is upgrades and infrequent large maintenance projects to those properties. An example is the outside painting of the Annex. Lastly, the Board of Trustees, who manage the endowment, have seen fit to support a minor portion of the annual budget in a lean year. This might be in the form of a loan or outright grant and has been done very sparingly.

The chairs of the Finance and Trustees teams meet regularly with the clergy, Church Council Chair, Staff Parish Relations Chair, and two Lay Leaders to assess current and future developments.

If you have any questions, please reach out to Finance Chair, Clayton Cutler or Trustees Chair, Art Schwartz.

         - Bruce Hale

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