Churches Adopt Business Management Methods
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“There’s a need to step up to a higher level of professionalism and accountability within churches,” said former accountant, lawyer and seminary graduate Bryan Gunn, minister of administration at Shades Mountain Baptist Church in Birmingham, Alabama, where the pastor, Danny Wood, is a former BellSouth executive, Religion News Service reports. Adopting good management techniques helps to protect congregations from the turmoil that results from instances of financial fraud, church business managers say.
Churches today accept electronic bank transfers and stock as donations and issue budgets and financial statements. At Church of the Highlands in Birmingham, Chris Hodges, pastor, says he uses his business degree more than his seminary degree, according to Religion News Service. Hodges preaches to 4,000 people with the help of video feeds. “When you really treat it like a business, it reaches more people.”
Michael Moore, pastor of the 6,000 member Faith Chapel Christian Center in Wylam, Alabama, says that his church is also a business, Religions New Services says. “You have to measure your spending, but it’s God’s business.” Moore’s church is currently spending $15 million to construct a bowling alley, athletic center, teen disco and adult nightclub. “The purpose of money is to meet the needs of the people. We believe the heart of our ministry is meeting spiritual needs. We have other needs, to relate to people to have fun. You can have fun and love God too.”
Some ministers prefer to play down the business side of their churches. “You don’t treat church members like you would customers in a business," says Morrell Dodd, Hunter Street Baptist administrator. “The business side of what we do – obviously there is one – we prefer that to be in the background.”
“We work very carefully to make sure we are in compliance with good management techniques,” said Gary Fenton, pastor of Birmingham’s Dawson Memorial Baptist Church, Religion New Service reports. “People have the right to expect the money and time they give to the church will be used in a way that glorifies God and helps humanity.”
When financial fraud occurs in churches, the perpetrator is often a trusted member of the community. A former financial secretary at Southside Baptist Church in Princeton, Kentucky, was indicted by a grand jury for embezzling $396,000 over a six-year period. In Texas, the General Baptist Convention has asked for new guidelines for church planning after a report alleged that $1.3 million had been mismanaged by three ministers over a seven-year period. Megachurches usually have staff to track expenditures, says Jeremy White, a certified public accountant in Paducah, Kentucky, according to ChurchCentral.com, and the potential for fraud is greater in medium and small-size congregations.
Often the fraud is perpetrated by the person who oversees collections or money management, a long-term employee or trusted church official. “Trust is an issue, but there aren’t adequate controls," White says, according to ChurchCentral.com. White’s firm has found instances where the church treasurer is allowed to take the collection home and record it on a computer before making a deposit. Another area where there is a risk of fraud is when one person has served as treasurer for too many years, and White advocates rotating financial officers.
Churches should make an effort to present good financial reports on a regular basis, White says, although there is no need to adopt a specific format. “But at least have some kind of reporting. Transparent disclosure is very important,” he told ChurchCentral.com.
Most losses from fraud are never prosecuted, White says, because churches are embarrassed and fearful that disclosure will affect contributions. Businesses routinely cover up embezzlement to protect their image. But not following through when fraud is discovered leaves other churches open to the same type of problem when the offender finds another job, he says.
The Internal Revenue Service (IRS) has listed recent publications on its Web site at www.irs.gov/eo  that provide guidance on technical issues affecting churches. These include three notices addressing vehicle donations. The IRS will continue with the Form 990 redesign project in 2007 and will focus on implementation of changes to exempt reporting mandated by the recently enacted Pension Protection Act, in a message to the public and the press in the introduction to the FY 2007 Implementing Guidelines.