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BWC offers additional financial relief to local churches

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ANNOUNCEMENT: The Stewardship Teams of the Baltimore-Washington Conference are continuing to evaluate the multi-layer framework by which they can lend support to local churches during the COVID-19 pandemic. Three new initiatives have been developed to assist churches with their financial liquidity in the coming months. 

  1. Board of Pensions is providing Small Church Grants

 Building on the prior announcement by the Board of Pensions, which waived local church benefit obligations for three months beginning in April 2020, the Board has developed a comparable relief benefit for churches that do not have pension and medical benefit obligations. Called the "Small Church Grant Initiative," local churches that did not benefit from the waiving of local church benefit obligations will receive a grant that is of comparable value. The Small Church Grants will begin in April 2020 and continue for three months. Details about the grants can be found in the FAQ, below. This measure undergirds the BWC's commitment to the health and financial wellbeing of its smaller churches. 

  1. Board of Trustees is Deferring Local Church Loan Payments for Three Months 

There are 30 churches that are repaying loans to the Conference Endowment Loan Fund, which is managed by the Conference Board of Trustees. The Trustees are deferring local church loan payments starting in April 2020 for a total of three months. The loans will incur no interest during the three-month deferral. A letter has been sent to the local churches that are involved.                  

  1. Council on Finance and Administration (CFA) Actions 

The CFA met online on March 25 to implement the following actions:

  1. Approved a $1,100,000, or 8% reduction, in the 2020 budget, effective immediately.
  2. Approved a reallocation of $615,000, or 4.4%, in the 2020 budget to local church relief.
  3. The CFA committed to meeting monthly through the end of this year. 

In addition, CFA encourages all churches to carefully read and implement information outlined in the online giving resources posted on the Conference website. Most vendors are offering special introductory rates and subscriptions along with a 24-48 hour account setup. 

For more information on collecting tithes from a distance, visit: https://www.bwcumc.org/article/collecting-tithes-from-a-distance/  

Our local churches play an essential role as we respond with preparation and hope to the unfolding coronavirus pandemic. We give thanks to the Stewardship Teams whose members serve as disciples, empowering local churches and pastors as we work together, united as one.  

Frequently Asked Questions 

The Baltimore-Washington Conference Board of Pensions is providing Small Church Grants:

  1. What churches will qualify for the Small Church Grant initiative? 

Churches that do not have pension and health benefit obligations as of March 1, 2020, are considered "Qualified Churches" for this initiative. The Conference has 252 churches in this category. 

  1. How much funding is required to support the Small Church Grant initiative and what is the source of the funds? 

The three-month Small Church Grant Initiative by the Baltimore-Washington Conference Board of Pensions will provide Qualified Churches with supplemental funding that totals $321,000. The funding is from the undesignated reserves of the Board of Pensions. Checks will be sent to Qualified Churches the week of April 10. Additional information will be sent to individual churches ahead of the payment. 

  1. What is the rationale for using Board of Pension reserves to support the small churches that do not have current pension and health benefit obligations? 

The undesignated reserve funds were created as a result of actions by Wespath to provide periodic rebates to the Conference in response to lower than expected claims and plan management costs. It is recognized that most of the small churches in the Conference had pension and health benefits obligations at some point in their history and thus are participants in creating the current reserves balance.  

  1. How will the Small Church Grants be calculated? 

The Plan Compensation for clergy in a Qualified Church is used as the basis for the calculation. Plan compensation is cash salary plus housing allowance, or cash salary plus 25% of cash salary for pastors living in a parsonage. The Plan Compensation is converted to a monthly value and multiplied by 22.0% to derive the monthly grant amount. 

An Example: First UMC's pastor is appointed one-quarter time with a Plan Compensation of $21,430 with no benefits. A monthly Plan Compensation of $1,785.83 is derived by dividing by 12. Using the multiplier of 22.0% or 0.22, the grant is calculated to be $392.88 per month ($1,785.83 x 0.22) for a 3-month total of $1,178.64 ($392.88 x 3). The church will receive a check in the amount of $1,178.64 the week of April 10th. 

  1. How was the multiplying factor of 22.0% derived?  

The benefit waiver that was provided to larger churches in the initial COVID-19 Financial Relief Notice (dated March 20, 2020) reduced the local church's cost for clergy's compensation and benefits by an average of 22% over three months. This average reduction in clergy compensation costs will now be provided to Qualified Churches for the same period. 

  1. Is there specific guidance for how churches are to use the Small Church Grants?  

No. However, the payment of staff salaries should be a high priority.  

  1. Will churches be asked to repay the Small Church Grants? 

No. But, if a future General Conference action requires churches that are leaving The United Methodist Church to repay grants received from the Conference, the funds provided under this initiative will need to be repaid to the Board of Pensions before a church departs. 

Council on Finance and Administration (CFA) Actions:
 
  1. What is the status of the Conference's finances? 

The 2020 Conference budget is built on a collection rate assumption of 91.0%. The year-end forecast through February projected a collection rate of 84 to 85%, which would yield a shortfall of approximately $1 million. It is early in the year, so a low forecast in February can usually be improved in subsequent months during normal times. When the COVID-19 impact was added in, CFA decided it was best to introduce an immediate 8% reduction in the 2020 budget of $1.1 million to cover the currently forecast shortfall. 

  1. What is the expectation regarding mission-share giving by local churches? 

The management of the Conference's finances is a balancing act. It is currently very hard to forecast how the collection rate will respond to all the short-term and possible long-term turmoil. At the same time, it is an important part of the Conference's financial relief plan that significant and immediate measures have been taken by the Board of Pensions and the Conference Trustees to give churches three-months of relief in benefit and loan obligations that are normally paid to the Conference. Comparable relief has also been given to churches that do not have benefit obligations. It is with these measures in mind that the CFA is asking churches to do their best with making mission share payments.   

The CFA does not make this ask without knowing the complexity it imposes on each church. But, at the same time, CFA also knows that the gift of mission shares is fundamental to our connection and cannot be taken lightly. Our mission shares connect and hold us together as one in the service of God.  

We thank each church for the perseverance it is going to take to make it through 2020. The CFA also commits to each church that they will continue to monitor the Conference finances closely and make future adjustments to the comprehensive finance plan accordingly.   

  1. What is involved with the actions that established Local Church Relief funding? 

The CFA also acted yesterday to reallocate $615,000 or 4.4%, from the 2020 budget to local church relief grants. The reallocation is made available, in part, by expected savings in travel and the postponement of conference events. The funds will be added to the existing sustentation funds managed by the district superintendents. 

  1. What are the next Financial Relief initiatives that CFA plans to announce? 

The CFA is focused on the availability of low-interest loans and grants that are starting to appear on the horizon that may be offered by governmental bodies and other institutions. CFA will summarize these findings as soon as they become available for local churches.

 

 

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