The term “investments” can be a scary thing for churches. With the crash and continued volatility of the stock market still fresh on your budget’s bottom line, investing may seem impossible or imprudent.
And let’s be honest—if there is no budget, that is the first line-item to tackle in the finance category. (Check out the Leadership Links in the April 2 issue of the Religious Herald.)
But what if not investing is hurting the church more than doing so?
“Many churches don’t realize they are going broke safely,” said Kenny Elkins, wealth manager and shareholder at Equity Concepts, LLC, a private, Christian-based wealth management company based in Richmond, Va.
Most church money is tied up in cash accounts such as money markets and certificates of deposit. They are safe, federally insured and easily accessible. They are also earning yields at a record low right now, while inflation continues to rise. In 2011, inflation was 3.16 percent, while the average 12-month certificate only earned .90 percent APY. “Inflation is the silent killer,” Elkins explained.
That’s not to say you should pull all church funds out of the local credit unions and banks. It’s important to have a stash of emergency cash, and money that can be easily accessed for emergency repairs or other operating expenses. But when all the everyday and short-term expenditures are covered and there is still a substantial amount of money sitting in a cash account, it might be a good time to consider investing.
“There is a misconception that when churches think of investing, they think of the stock market,” Elkins said. “The reality is there is a wide array of investment opportunities not correlated to the stock market, and it is important to find a mix of assets that the congregation is comfortable with.”
Non-traditional investing doesn’t have to come in the form of outside management companies either. One church in Titusville, Fla., decided to try a “reverse offering.” Indian River City United Methodist Church gave each congregation member $50 and told them to use their talents to multiply the investment. (Sound familiar? Matthew 25 is the same story.) The congregation members got busy with bake sales, making flip flops and jewelry, and organizing events such as cookouts and spa days. In just 10 weeks, they more than doubled their initial investment into a 131 percent return.
If you do decide to enlist in the help of a wealth management company, there are many layers of investments that vary in risk, from conservative to moderate to aggressive. Non-stock market investments, which are also dubbed “alternative assets,” can range from real estate to precious metals, to senior secured notes and energy infrastructure. Just as with investing in the stock market, it is important that whatever the investment option is, it lines up with the morals and values outlined by your church.
With the average church including fewer than 200 members, the question remains whether or not smaller churches can participate in the investment arena. While excess cash is important, it’s always a good idea to seek advice on where you’re putting your resources.
“It is biblical to have wise counsel at any stage, whether you are just starting a church, in the middle or have a very robust financial situation,” Elkins said. “There is never a bad time.” (Check out Proverbs 12:15 and 11:14)
Larger churches that have more money to invest do have an advantage, only because there are more opportunities for diversification. Not keeping all your eggs in one basket, as mentioned in Ecclesiastes 11:2, is one of the keys to financial success.
“Large churches really need to think about managing money like a college endowment fund,” Elkins explained. Harvard University, the largest endowment fund in the United States, raises money from donors and grows it for the good of the institution. The more money they have, the more deeply and widely they can diversify.
Whatever the situation, investing doesn’t have to be the evil word that it perhaps has been hailed as in the past—as long as it is understood, not underestimated. Find a trustworthy wealth management representative that can help guide you in the right direction.
“His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’ ” (Matthew 25:21).
Sources:
- Inflation: http://www.inflationdata.com/inflation/inflation_rate/historicalinflation.aspx
- CD rates: http://bankvibe.com/best-cd-rates-in-2011-top-10/
- Crown Financial Ministries “Investing” Chapter
Alison Fallecker works for Entrust Financial Credit Union.