Operations 103 Finances: Class 2

1. Operations 103Finances: Class 2

2. Level 1:Certificate in Operations Operations 101—Staffing Operations 102—Communications Operations 103—Finances Operations 104—Finances Operations 105—Facilities

3. Operations 103—Finances Class 3—Expenses

4. Scripture 1 Chron. 29:11 Yours, Lord, is the greatness and the power and the glory and the majesty and the splendor, for everything in heaven and earth is yours. Yours, Lord, is the kingdom; you are exalted as head over all. Prov. 3:6 in all your ways submit to him, and he will make your paths straight. 1 Chron. 10:31So whether you eat or drink or whatever you do, do it all for the glory of God.

5. “I know my expense report is 2 weeks late, but I have been working on singing Happy Birthday to my wife”

6. “I lost my receipt, so I will just handwrite it”

7. “I can justify my expense account–not with facts and figures”

8. Will I be able to explain this expenseto the New York Times?

9. Expenses Three Keys for Success 1. Organization 2. Communication 3. Knowledge

10. ExpenseDefined ex.pense /ik’spens/ noun 1. the cost required for something: the money spent on something synonyms:cost, price, charge, outlay, fee. tariff, levy, payment; More 2. the costs incurred in the performance of one’s job or a specific task, esp. one undertaken for another person. plural noun:expenses “his hotel and travel expenses” 3. A thing on which one is required to spend money. plural noun: expenses “tolls are a daily expense” synonyms: overhead, costs, outlay, expenditures(s), charges, bills, payment(s): verb 3rd person present: expenses 1. offset (an item of expenditure) as an expense against taxable income.

11. Fund Accounting Fund Accounting reports and track information that is most important to you, your board and your supporters. Fund accounting records what types of direction the donor gave when giving and how then the funds were spent. Each fund has a distinct purpose, ranging from operating expenses to funding the various activities of the organization.

12. Allowable/Non Allowable Expense The IRS has no specific listing of expenses that the church are prohibited from spending money on beyond the three categories below. 1.Inurement and Private Benefit (Unreasonable Compensation or Personal Expenses) 2.Substantial Lobbying Activity & Political Campaign Activity (Politics) 3.Illegal Items (Illegal Substances) Tip: The IRS offers a quick reference guide of procedures for Churches and Religious Organizations to help them comply with tax laws. http://www.irs.gov/pub/irs-pdf/p1828.pdf

13. Expense Documentation Established a policy that all expenses are an arrangement to either reimburse or advance an employee's business expenses. Follow the rules of an accountability plan where every reimbursable expense must meet three requirements: (1) it involves a church connection (it serves a purpose for the church); (2) it requires the employee to sufficiently explain why the expenses were necessary; and (3) it requires the employee to return any excess amounts that don’t comply with the policy. Employees must provide the organization with sufficient information to identify the specific business nature of each expense and to prove the necessity of each expense. It is not sufficient for an employee to lump expenses into broad categories such as "travel," or to report expenses through the use of non-descriptive terms such as "miscellaneous business expenses." Institute the "Three P" policy on every receipt, which includes 1. Purpose, 2. People, and 3. Place. A description and date should be on each receipt that is turned in, which is then entered on the proper expense reports.

14. Income/ExpenseTrips • Create a separate Fund Class for each event • Create a system that identifies income and expense • Predict the budget but make sure staff understand if they don’t hit the income they can’t spend it.

15. Expense Review • Send out Actual vs Budgets Reports once a month • Do spot checks and compare balances • Set up quarterly financial meetings with Board • Have double signatures on all expenses • Have someone do the bank reconciliations that doesn’t write the checks.

16. Internal Controls Internal controls are what CPA’s do to ensure: • What we want to happen will happen • What we don’t want to happen won’t happen

17. Contracts Capital Purchases Contracts 1. Have two sets of eyes. 2. Have a lawyer review it if it's large or too complicated Capital Purchases 1. Always have multiple vendors 2. Be sure to save for purchases 3. Use the Google Drive to track progress

18. Chart of Accounts Chart of accounts is a way to identify expenses. Just like passwords for the internet, you don’t want to many of them or you will forget. Just like theology, you don’t want different interpretations of the same core scripture (expense).

19. Chart of Accounts Salaries and Wages Employee Benefits Advertising Banking Expense Benevolence & Missions Technology Depreciation Direct Program Expenses Education Honorariums/Gifts Interest Expense Building Expense Meals and Entertainment Office Expense Professional Fees Rent Travel Utilities

20. 51000 Payroll &Employee Benefits 51100 . Salaries & Wages 51101 . Salaries 51102 . Bonus 51103 . Housing Allowance 51303 . Employee Honorarium 51104 . Payroll Taxes 51200 . Employee Benefits 52702 . Workers' Comp Insurance 51201 . Medical Insurance 51202 . Dental Insurance 51203 . Life Insurance 51221 . LTD 51222 . STD 51223 . EE Life 51224 . AD&D 51204 . Vision Insurance 51205 . Voluntary Insurance 51211 . 403(b) Match 51213 . Taxable Employee Benefits 51220 . Other Benefits 51300 . Honorariums/Gifts 51301 . Honorarium/Gift 51302 . Gifts

21. 52000 Operations Accounts 52100 . Rent 52101 . Rent Building Space 52102 . Equipment Rent 52103 . Event/Other Rentals 52105 . Ground Lease 52200 . Utilities 52201 . Trash 52202 . Cable/Satellite TV 52203 . Electric/Gas 52204 . Water 52300 . Building Expense 52301 . Equipment Maintenance 52302 . Building Maintenance 52303 . Cleaning Services 52304 . Cleaning/Restroom Supplies 52305 . HVAC Maintenance 52306 . Security Monitoring 52307 . Pest Control 52308 . Snow Removal 52309 . Landscaping 52310 . Common Area Maintenance 52701 . Building Insurance 52801 . County and CA Taxes 52400 . Professional Fees 52401 . Auditing/ Accounting Fees 52402 . Legal Fees

22. 52000 Operations Accounts, cont. 52403 . Consultant Fees 52404 . Background Checks 52405 . Permit/Association Fees 52407 . Payroll Processing Fee 52500 . Interest Expense 52503 . Interest - Howard Bank Loan 52504 . Interest - Church Loans Loan 52505 . Interest - Bentley-Forbes Loan 52506 . Interest - BB&T Loan 0001 52507 . Interest - BB&T Loan 0003 52508 . Principal - BB&T Loan 0001 52509 . Principal - BB&T Loan 0003 52600 . Banking Expense 52602 . Online Merchant Fees 52603 . Bank Fees 52604 . Credit Card Fees

23. Ministry Accounts 53000 . Direct Program Expense 53100 . Direct Program Expenses 54104 . Books/DVDs/Teaching Resources 53101 . Ministry-Specific Equipment 53102 . Ministry-Specific Supplies 53103 . Resource Ctr Inventory 53104 . Food Supplies 54000 . Technology/Equip/Office 54100 . Office Expense 54101 . Office Equipment 54102 . Office Furniture/Decor 54103 . Office Supplies 54105 . Postage 54106 . Printing 54200 . Technology 52406 . IT 54306 . Hosted Software 54307 . A/V Equipment 54201 . Cellular Phone 54202 . Local/Long Distance Phone 54203 . Phone System 54301 . Computer Equipment 54302 . Software 55100 . Meals/Entertainment 55101 . Meals

24. Ministry Accounts, cont. 55102 . Entertainment 55200 . Travel 55201 . Lodging 55202 . Transportation 55203 . Mileage Reimbursement 55300 . Education 51212 . Education/Tuition Reimbursement 55301 . Conference 56000 . Advertising 56101 . Programs/Flyers 56102 . Business Cards 56103 . Newspaper/Radio Advertising 56104 . Public Relations 56105 . Directories 56106 . Signs / Banners 57000 . Benevolence/Missions 57100 . Benevolence/Outreach 57101 . Financial Assist./Benevolence 57102 . Domestic Outreach 57103 . International Outreach/Missions 57104 . Outreach Supplies

25. Non Cash Expense Accounts 59000 . Non-Cash Transactions 59101 . (Gain) Loss on Disposal of Fixed Asset 59201 . Depreciation

26. Tools Income Collection: • City & ACS Technology: Collecting and Recording of Income • ServiceU & Shelby: Collecting and Recording of Income • mGive: Communication and Giving via Text • Square and Quickbooks Merchant: Collecting income from Cafe and Resource Center Accounting Software: • Quickbooks Electronic File Room: • Corpsystem Workpaper Manager Communication: • Google Drive: Centralize Purchasing, Collection of Data • Evernote : Organizing thoughts, ideas and task

27. A Few Finance Forms Please feel to use any of these forms https://drive.google.com/folderview?id=0BzMarO-L4topcTBWQUNIZ2UxR00&usp=sharing These forms are also on the class website. Please don’t hold us legally responsible.

28. Q & A Send Questions via Chat

29. Matt BenfordThoughts for Money MattersChapter 5 Generally speaking, the authors mention that setting a strategic budget and analyzing it should fall within the parameters they suggest. What would you say some of the reasons are that your church does or does not analyze their budgets strategically?

30. Thoughts for Money MattersChapter 6 The authors mention how power can influence the analysis and allocation of budget and resources.What is the relationship, if any, between a church’s governance style/ polity and the giving strategy of its members? What we see in the book is that a lot of the power to influence the budget is tied in up in the people who help lead the church (formally and informally). What are some of the ways a monitored, strategic budget can utilize both the “power players” in church as well as making sure that the church moves forward as a unit, committed to the Great Commission?