PARISH ADMINISTRATION & FINANCE ENEWS

April 12, 2017

"Letters from [Canon] Louis" -
Investment Management in ECCT

by Canon for Mission Finance & Administration Louis Fuertes

In this month's Administration and Finance eNews, I'll share some thoughts and suggestions about how your parish can improve the management of its investments. 

Based on Parochial Report submissions, the 164 parishes in the Episcopal Church in Connecticut collectively held $178MM in investment assets in 2015. Most of these parishes reported holding less than $1MM, but all of these parishes have responsibilities for managing investments with great care, regardless of their value.

Fiduciary Care - the foundation of parish investment management  
Parish investment funds reflect contributions made by those who have come before us and the careful financial management of past parish leaders. In turn, they are to be held in trust for current and future benefit of our parishes and the communities we serve. Vestry and clergy are asked to act as "fiduciaries" in the management of these assets. Investipedia.com expounds on the meaning of the term "fiduciary":
Essentially, a fiduciary is a person or organization that owes to another the duties of good faith and trust. The highest legal duty of one party to another, it also involves being bound ethically to act in the other's best interests. A fiduciary might be responsible for general well-being, but often it involves finances - managing the assets of another person, or of a group of people, for example. Money managers, bankers, accountants, executors, board members, and corporate officers can all be considered fiduciaries.
Someone willing to act as a fiduciary in a parish setting must be committed to act in the best interest of the parish and also needs to have the skills, training and experience to fulfill the responsibilities required to manage parish financial assets going forward, as well as an understanding of the history of the assets themselves.
Is Your Parish meeting the "Fiduciary" Standard?
Here are some questions that can help answer this question:
  • Does your parish have a group of three or more unrelated individuals with depth of knowledge and experience that meets at least regularly, at least twice a year, to review the performance, risk and expenses incurred in managing its investments? Are these individuals willing and capable to take on the responsibilities of fiduciaries for parish assets?
  • Is the relationship between this group and the parish's Vestry formally documented and communicated clearly to your congregation?
  • Have the members of this group signed conflict-of-interest statements, pledging to manage investments or to select investment managers or advisers in a manner that will not favor family members or associates?
  • Does this group have ready access to information about donor restrictions limiting how much of the endowment can be drawn down or how investment funds can be used? Is the group committed to honor these restrictions in managing parish investments?
  • Does your parish have a formal Investment Policy Statement specifying: 
    • the range of permissible investment categories,
    • a percentage limit on the amount that can be invested (directly or indirectly) in a single company
    • the target asset allocation percentages (or percentage ranges) for parish assets,
    • the frequency with which its portfolio must be brought back into the specified asset allocation ranges
    • the allowable annual draw from investments to support operations
  • If the parish uses investment managers or investment advisers, do these firms have the size, capability and track record to be entrusted with parish assets?
  CLICK HERE TO CONTINUE READING this article online (PDF available). Additional sections on: 
  • ... What do the canons say about investment management?
  • ... A few words about Donations & Bequests
  • ... Day-to-day interactions with Donations & Bequests
  • ... Respecting history - Where did the money come from?
  • ... Managing investments for current (and future!) needs
  • ... So, what is a reasonable amount to draw from parish investment holdings?
  • ... What's the limit on endowment withdrawals?
It's LIFO:
How we process your payment remittances to ECCT

by Karolyn Nicolaides, Accounts Receivable, Financial 

Over the past several years the Episcopal Church in Connecticut's Finance Department has been diligently working to improve the efficiency of our operating procedures and increase our focus on financial management. 

In 2016, we created a new monthly statement that informs parishes of payments received, new charges past-due balances. Less visible but significant in its impact on our workflow was the implementation of a process that greatly streamlines our processing of your monthly remittances to ECCT. This change was made possible because of the passage of the Common Mission Support resolution by ECCT's 2014 Annual Conventions which shifted from a diocesan pledge framework to the Common Mission Support obligation (based on 10% of trailing year "Line B" Operating Revenues). This change placed Common Mission Support, Property & Casualty Premiums and Life & Dental Insurance premium obligations on the same logical foundation as payment obligations. 

Despite the 2014 Common Mission Support resolution, we continue to receive requests from parishes to apply a portion of their payments to Property Insurance rather than Common Mission Support, or to Common Mission Support rather than the Group Life and Dental charges. These requests are, in practice, no longer meaningful, as the parish's total outstanding obligations to ECCT - from all its charges of all types - determines whether or not it is in good standing. If we were to apply a payment to one outstanding obligation rather than another, the parish's total outstanding obligation would not change (and we would have devoted time to an unproductive purpose). Put differently, your invoice from ECCT has become analogous to your monthly credit card bill. It would make little sense to ask your credit card issuer to apply a partial payment to the charges from Macy's but not to those from Amazon.com, as the unpaid balance would not change.

The payment processing and account crediting process that we have been using since 2016 for your church's remittance for Common Support and Insurances to ECCT is as follows: When your payment is received, it will be applied to the most recent invoice first. We call this LIFO, "Last In First Out."

1.If your payment received is in the exact amount of your most current invoice and there is an outstanding balance in arrears, it will still be applied to your most recent invoice leaving the remaining balance in arrears. 

2.If your payment is in more than the amount of your most recent invoice, it will be applied first to your most recent invoice and the remaining amount will be applied to the next most recent invoice (that is outstanding) and so on. 

a.If there is no balance in arrears, a credit balance will remain on your record and will be automatically applied when the next invoice is generated.

b.If there is no further invoice generated, we will refund to your parish within three months the total amount of the remaining credit balance. 

3.If your payment is a partial payment of the current invoice, it will be applied to the most recent invoice generated (Common Mission Support or Insurance) and the remaining balance will remain in arrears and outstanding. 

If you have additional questions about this process, please contact Karolyn Nicolaides at 203-639-3501, ext. 134.
HR Matters: Are your people classified correctly? Independent Contractor vs. Employee

By Kayla Tubolino, HR Administrator for ECCT Staff at The Commons
 
Although it may make things easier in the short term to classify job doers in your parish as independent contractors it is not always the correct thing to do. The DOL created a new website to aid employers in avoiding misclassification. 

Generally there are three questions from the Common Law Rule that can guide employers in their classification decisions:
  • Behavioral: Who has the right to direct the work- employee or employer? If you can control what will be done and how it will be done then this person is an employee despite the amount of freedom and autonomy given. 
  • Financial: Who has made a financial investment in the work and stands to make a profit or loss? Who controls the worker's job?
  • Relationship: What is the type of relationship you have with this person? Are they coming to staff meetings? Do you want to offer them health insurance? Does the person make their services available to the public? Do they work a fixed schedule? Yes to any of these questions will define the person as an employee. 
Consider this example: A group of people is hired to clean the parish. The cleaning supplies and tools are supplied by the parish. These individuals report to the Rector who determines the cleaning schedule for the week.

The people in this group should be classified as employees. The parish is making the financial investment to buy the vacuum and other cleaning supplies needed to complete the job. The individuals are reporting to the Rector for instruction on their workflow. These employees should have a Letter of Employment and Job Description on file. 
Nav igating Confirmation

By Alison Hollo, Senior Administrator for the Office of the Episcopate 

As you may know, confirmation services are offered two ways. Either by Region confirmations, offered multiple times during the year (typically in May and June and on All Saints Day and Baptism of Our Lord), or, at any of a bishop's visitations to a parish. All confirmations must be followed by the submission of the confirmation log ( fillable form) which must be printed and mailed to ECCT for archival purposes.

To join a parish for a Region confirmation, please email or phone the contact person listed to see if there is space available for your confirmands. Once space is confirmed, please contact the Office of the Episcopate to register the number of confirmations and receptions for your parish. Signed confirmation/reception certificates are sent directly to participating parishes prior to the region confirmations from the Office of the Episcopate.

Confirmation should be a meaningful affirmation of one's life in Jesus made in the public community - an adult response to one's baptismal vows. Bishops Douglas and Ahrens will also meet in an informal setting to meet the confirmands at a Bishops and Confirmands Dinner on April 27 at The Commons. Please register confirmands here. Click  here  f or an updated confirmation schedule. 

If you have any questions, please contact Alison Hollo, 203-639-3501 x112.
Parish admins invited to join a listserve

Want to chat with colleagues about ACS vs PowerChurch? Offer tips on more successful mail merges? Get suggestions on names for a new campaign? Alison Hollo, Senior Administrator for the Office of the Episcopate, invites parish administrators to forward her their names and email addresses to be added to an ECCT listserve for parish admins. 

As a member of Bishops' Executive Secretaries Together (B+E+S+T), Alison has participated in their listserve and wants to make the same opportunity available for parish admins in ECCT. 
Parish properties: Go solar!

Photo credit: Creative Commons, United Nations
By Dave Desmarais, ECCT's Property Manager

Have you already added insulation, converted heating systems, installed LED lighting, and taken other steps to reduce energy costs? Ready to explore solar? Here's an opportunity (limited to 20 churches):

If your parish is:

a) genuinely interested investigating the potential for solar energy, and

b) owns under-utilized sunny acreage near its buildings or

c) has recently (within the last five years) re-roofed parish buildings, and

d) is not limited by historic district designations ...

then you should contact Dave Desmarais at  203-639-3501, ext. 101  to find out if your parish might benefit from a solar panel project. An energy contractor he's met with has volunteered to assess the solar potential for up to 20 ECCT parishes that meet the criteria above.
Reminders of upcoming deadlines  
  • September 1, 2017: Audits of 2016 parish business records due
Links
 
2017 Treasurers' Newsletter can be found here. 
2016 Treasurers' Newsletter can be found here. 

Manual of Business Methods in Church Affairs linked on this page (English and Spanish)
The next issue of the Parish Admin & Finance eNewsletter will be published mid-June. 

EPISCOPAL CHURCH IN CONNECTICUT
PARTICIPATING IN GOD'S MISSION


290 Pratt Street ı Box 52 ı Meriden, CT 06450 ı 203-639-3501