| FINANCE |
Temple Beth El
has a long history of "hand-to-mouth" financing, with periodic
bouts of serious financial difficulties, In recent years the lack of
controls allowed an ongoing budget deficit to be camouflaged by the
large seasonal cash flows early in each fiscal year. This allowed the
operating deficit to be passed on from year to year and to grow. This
problem was compounded by the lack of clear financial reports and the
ease of funding out this deficit by borrowing money from the bank during
the parish house construction or from the Capital Campaign of 1993.
Historically, the budget was created by
the Treasurer, reviewed by members of the Executive Committee and then
presented for approval by the Board of Trustees. In some years, the
true operating expenses of the Temple were not compared to, and adjusted
to remain within, the budget which was approved by the Board.
The Temple is emerging from a year long
restructuring of its financial affairs. The financial condition, operating
procedures and programming plans have also been re-evaluated.
The Budget and Finance Committee created a revised budget in November 1995 to more realistically reflect the actual expenses, and implemented the following:
monitored on a monthly basis actual revenues and expenses vs. budget
instituted open communication with Board and Executive Committee
implemented a more restrictive approval process for expenditures
established a reserve for Capital Campaign 1993 to reflect money received but used in operation of the Temple (funds raised to support building of Parish House, sewer system and balance for endowment)
hired a new accounting firm that is local and received authorization for certified audit, due in late 1996
suggested formation of a fund raising committee organized with specific goals
recommended a special dues assessment of $250 in December 1995 to close the operating deficit
created an independent Financial Review Committee to evaluate the progress made by the Temple Board of Trustees
committed to presenting a budget that was realistic and balanced
undertook a thorough review of receivables and set a committee to work aggressively at collecting them
reviewed the current membership of the Temple to present an accurate accounting of the members and their individual obligations.
requested a revised budget from
the Board of Education and a detailed plan for collecting tuition in
the new fiscal year.
Temple Beth El finished the fiscal year
on June 30, 1996 with a small surplus. The surplus was applied to the
reserve for Capital Campaign 1993, reducing this amount to $45,000.
Some mortgage debt to Cornerstone Bank was also repaid, reducing the
obligation taken to build the Parish House.
In the beginning of this fiscal year, an
aggressive program to retrain the congregation regarding their financial
obligations was implemented. This included written communication,
personal letters, personal calls, registration desks and times for financial
arrangements.
Two new programs begun this year are a
High Holy Days Appeal and a Temple Beth El Endowment Fund. The High
Holy Days Appeal is a broad appeal to the entire membership for operating
funds, conducted around and within the themes of the New Year, especially
tzedakah. The Temple Beth El Endowment Fund is being pursued as a long
term appeal to build a significant endowment whose earnings will contribute
to Temple operating funds and capital needs. The funds are being solicited
through meetings with individual members.
With the organization
and process changes made within the past two years, the foundation has
been laid for a much sounder fiscal operation. These changes, however,
are new and must be refined and become the normal operating procedures
for the Temple. The need for change, therefore, is to simply maintain
and build upon what was put in place in the 1995-1996 fiscal year.
Because of the annual nature of the financial
planning process, there is no funding for major capital projects. They
must be handled on an ad hoc basis through debt financing and capital
campaigns as needs arise.
There is no cohesive long range financial
planning process in place whose objective is to provide for the perpetual
funding of the programming needs of Temple Beth El and to have enough
resources to fund the long range capital needs of the congregation.
The financial
stability of the Temple is dependent on several key factors: membership
dues and fees, fund raising and use of facilities to generate additional
income, endowment funding, and capital funding. Cohesive planning across
all of these areas is necessary to generate the income which funds the
many Temple programs.
Operationally, the financial needs of Temple
Beth El are overseen by two groups. The Budget and Finance Committee
operates under the Treasurer and is responsible for budgets, accounts
receivable, accounts payable, and accounting transactions and reports.
The Vice President of Finance oversees the endowment fund, capital budget,
capital funding and investment management functions. The Financial
Review Committee, should one be appointed by the President, and the
outside auditing firm retained by the Temple serve as advisors and consultants
to both of the financial areas described.
Operating Budgets
The operating budget of the Temple must
be reflective of the true costs of running the Temple for its fiscal
year. It should be cash flow based and reflect the actual cash received
and expenses incurred.
The budget should be prepared by the Budget
and Finance Committee, with input from all branches of the Temple.
The budget should be reviewed by the Executive Committee and discussed
and voted on by the Board of Trustees during the April and May meetings.
The budget should be reviewed against actual
experience and projections of income and expenses on a monthly basis.
Adjustments should be made as necessary to reflect changes in projected
income, changes in Temple programming plans, and changes in probable
expenses for the year. A rebalancing of expenses to stay within budget
should be done at each review, especially so if any changes in budget
result from reduced income projections or increased expense projections.
Contributions earmarked for specific purposes
should be segregated from the Temple's general accounts for budget and
expense accounting purposes.
Membership Dues and Fees
Provide for a structure of tiered dues
and fees that offers lower membership costs for some groups (e.g., young
families, senior citizens and single parents). Additional funds would
be solicited from those in all tiers who have above average incomes
for their group as a part of normal fund raising efforts.
Encourage and recognize congregants who
pay a premium above their dues obligations.
Foster open communication of the Temple's
willingness to accept all members and structure reasonable financial
arrangements based on ability to pay.
Fund Raising
Reliance on fund raising should be constrained
to be a reasonable percentage of the annual operating budget, based
on prior year's experience and conservative expectations of the congregation's
willingness to participate. The current ratio of about 80 percent of
the projected income coming from dues and fees seems a reasonable target
at this time.
Maintain a High Holy Days Appeal as a standard
annual fund raising campaign, to be evolved and grown over time. Consider
its impact on, and coordination with, other High Holy Days fund raising
through solicitations for Honors and for the Book of Remembrance. The
goal of High Holy Days fund raising should be to maximize the total
funds raised.
A Purim event with silent auction and/or
other "side room" fund raising should be maintained as a significant
fund raiser for the spring season.
Other programs should be instituted on
a periodic basis. These could include such activities as raffles, bazaars,
dinner dances, art auctions and others. These should be undertaken
as the needs demand and when the opportunity of success is reasonable
in terms of timing and having the volunteer resources to implement the
programs.
Programs that are capable of self-funding,
either in part or in whole, should be structured to solicit such funding.
Candidates for such programs include travel and trips, outreach and
inreach programs, educational programs, and special services such as
baby-sitting.
A system of charging small fees to cover
or offset the expense of those programs and activities which benefit
a small group of participants should be instituted. By offsetting the
expense of such programs and activities, additional budget money will
be available for funding programs and activities benefiting the widest
portion of the congregation.
Facilities and Catering
Use of Temple Beth El facilities as a means
to generate income should be encouraged, where operational and expense
considerations permit it. Of particular significance is the use of
catering facilities by both members and non-members. This area should
be one in which an Executive Director spends a significant effort, since
a larger number of small events will generate considerable income if
managed properly.
If contract terms can be found that are
acceptable to Temple Beth El, an-
Endowment Funding
The Temple Beth El Endowment Fund should
be aggressively pursued as a normal part of annual fund raising activities.
Investment of endowment funds should be handled professionally. Initially,
the Jewish Community Endowment Fund is recommended as the fund manager.
The operation of the Temple Beth El Endowment
Fund should be formalized, with documentation of policies, periodic
reviews of all operations, and disbursement processes.
Temple Beth El should be a strong supporter
of the Jewish Community Endowment Fund program. Its members should
be encouraged to participate, and to designate at least a portion of
that participation to Temple program funding.
As both endowment funds grow, their income
should be used to support basic funding needs for education, buildings
and grounds, professional staff and operating budget items.
Capital Funding
The policy of the Temple should be to maintain
the smallest amount of debt possible, consistent with the needs of the
Temple. The Temple is not in a position to carry large amounts of leverage
and receives no benefit from interest deduction. Interest expense only
compromises the Board of Trustees and causes operating committees of
the Temple to subordinate programming targeted at current and future
members.
The annual budget should include an ongoing
level of expense related to upgrading capital equipment. This could
include smaller capital items for the buildings and grounds, and should
specifically include funding for continual refurbishing of the religious
school and catering facilities.
A 5 year capital budget related to specific items of need should be maintained to better prepare for large capital items. This should include larger capital items for the buildings and grounds, religious school, parish houses and catering facilities. The Building Committee should prepare and maintain this budget; and should be positioned to communicate select items from this list to allow the Fund Raising Committee and Endowment Committee to "market" these items as key needs for external funding.