Financial Review
Dear District Members,
Our District’s 2023 Financial Review is completed. You can find it here, on our website.
I apologize that we did not have this ready for our District Council meeting at the end of April. Nevertheless, I am pleased with the report. I wanted to explain and/or highlight some things here:
We have made some changes to our bylaws regarding District Affiliated Churches, and this Review is the first year that these changes are fully realized on the reports. Furthermore this CPA firm classified certain items differently than previous CPA firms. Both of these issues prevent us from presenting a workable year-by-year comparison. And so this report is only for 2023.
The Bylaw changes allowed us to remove District Affiliated Church operations from the report, and so this report does not include any DAC income or expense.
The Bylaw changes do not allow us to remove DAC property assets and mortgages from the report, so these are included. Additionally, the list of property assets and depreciation schedule was updated, resulting in a more accurate asset report.
Our CPA defined and classified missions-giving-through-the-district-office differently than previous CPAs: Missions efforts that are district related (DAC’s, Teen Challenge, Chi Alpha, and other District Missions) are included in the income report (They weren’t included in previous years.) The total of these items is about $2.8M. Donations identified for General Council missions remain excluded from the report. (They are considered pass-through.)
Our CPA uses the term “Investments” on the balance sheet and elsewhere. The vast majority of these “investments” are endowment funds, designated as such by the donor, and the funds are deposited in fixed-rate interest-earning accounts, not in the stock market.
Our CPA provided a new report of Functional Expenses—which compares expenses for missions, program ministries, and administrative costs. You’ll notice that 37% of our overall costs are for District Ministries, and only 30% of our overall costs are for administration.
In the final analysis, while the review shows that our operations are sound, it also shows a substantial shift in our finances: substantial growth in our designated endowments and fixed assets, and substantial increases in our expenditures for ministries, but our regular revenue is insufficient to sustain these costs. This is why we have formed an exploratory committee to propose some district revenue options and to host some regional discussions on the matter. The committee hopes to hammer out a workable proposal for our consideration at the 2025 District Council. Our mission is important, and we must be good stewards of that mission.
Sincerely,
Dr. Jay Herndon
Secretary-Treasurer