UUSM - About Us - Management Policies - Use of Church's Financial Resources
Use of Church's Financial Resources
Approved by the Board of Directors 2-8-05
The financial resources of the Church are identified and described in the section
“Structure of the Church’s Financial Resources,” below. Policies
with regard to the maintenance and management of these resources, in addition
to those inherent in the attachment, are as follows:
1. Budget for all classes of expenditure that recur with enough consistency
to be meaningfully budgeted, shall be included in the annual Operating Budget.
This includes, in particular, routine facility improvement and equipment acquisition
expenditures, arbitrarily defined as such items or projects costing $5,000 or
less.
2. Major extraordinary expenditures, of either a capital or non-capital nature
but not warranting invasion of the Emergency Reserve, shall be included in the
Operating Budget accounting whether or not anticipated in the development of
that budget.
3. Expenditures that appropriately fall under one of the Operating Budget line
items shall be charged to that line item, whether or not a budget deficit in
that line item, or in the budget as a whole, will result. Operating Budget deficits
are covered out of the Unrestricted Reserve.
4. The Church shall maintain an Emergency Reserve, to be used for major emergencies
only, in an amount not less than one quarter of the annual operating expense
budget. Additions to the Emergency Reserve to maintain it at the specified level
shall be made as necessary out of the Unrestricted Reserve. Expenditures from
the Emergency Reserve may be made only with approval of 75% of the Board or
of those present at a Church business meeting.
5. Donations, by bequest or otherwise, shall be used in strict accordance with
any instructions by the donor. If the Board should determine that the donor’s
instructions are not consistent with the principles or interests of the Church,
the donation shall be declined.
6. All donations other than to the Operating Budget or a Dedicated Fund, shall
be taken into the applicable Reserve or Endowment, if one exists. Otherwise
a new account that does not entail restrictions greater than those specified
by the donor shall be created. In particular, unless the donor specifies otherwise,
funds received by bequest or by major living gift shall be taken into the Unrestricted
Reserve.
7. Unbudgeted expenditures or reallocations of Church funds not in excess of
$50,000 may be made by the Board of Directors. Unbudgeted expenditures or reallocations
in excess of $50,000 shall be presented to the congregation for decision, unless
time limitation or other acute constraint precludes calling a congregational
meeting.
Unitarian Universalist Community Church of Santa Monica
STRUCTURE OF THE CHURCH’S FINANCIAL RESOURCES
(Approved by the Finance Committee, March 28, 2004)
The financial resources of the Church fall into five broad classes: Operating
Budget, Dedicated Funds, Reserves, Endowment Funds, and Agency Funds. It is
the purpose of this document to identify the pieces of these five classes and
to explain how each functions.
Operating Budget (currently $430,000 per year)
An Operating Budget is approved each year by the membership at its Annual Meeting.
In addition to what are usually recognized as operating expenses, this budget
includes all routine facility improvement and furniture and equipment acquisition
expenditures (arbitrarily defined as such items or projects costing $5,000 or
less). The budget also includes all sources of income except (1) bequests, (2)
living gifts specifically directed elsewhere, and (3) earnings on the Endowments
and Agency Funds. The budget is closed at the end of each fiscal year, with
the net surplus (or deficit) transferred to (or covered from) the Unrestricted
Reserve (see below).
Dedicated Funds (currently $27,000)
Dedicated Funds are established to hold monies contributed by donors or allocated
from the Operating Budget for specified purposes, to be usable currently and
to remain available beyond the fiscal-year-end close of the Operating Budget.
Reserves
Reserves are established to hold funds donated or set aside for future needs.
The Reserves are invested, but with the principal as well as the earnings thereon
being available for use as specified, and under the conditions defined, when
the Reserve is established. Four Reserves currently exist:
Emergency Reserve (currently $204,000)
A Reserve to be maintained at a level to be determined from time to time by
the Board, to be used for general needs in the event, but only in the event,
of a major emergency such as a catastrophic fire or earthquake.
Minister’s Equity Sharing Reserve (currently $198,000)
A Reserve to be used to provide equity sharing in a new Minister’s residence
in the event that Judith should choose to depart at some time in the future
($135,000 was provided for equity-sharing for Judith 10 years ago, and capital
appreciation and periodic inflation-equivalent allocations have been retained
in the Reserve).
Capital Reserve (currently $0)
A Reserve to hold funds donated (by bequest or otherwise) with request by the
donor that they be used only for facility improvement, expansion or other capital
purposes, but without request that they be treated as Endowments (see below).
Approved capital expenditure needs beyond those covered by the Operating Budget
are funded first from the Capital Reserve then, if that is insufficient, the
remainder from the Unrestricted Reserve (see below).
Unrestricted Reserve (currently $121,000)
A Reserve to hold funds donated (by bequest or otherwise) without restriction
as to their use, plus any other funds accumulated by the Church outside of its
current Operating Budget and not otherwise allocated.
Endowment Funds
Endowment Funds are established to hold monies donated (by bequest or otherwise)
with the requirement that the principal be invested and only the earnings be
used for either specified or unspecified purposes (in some cases the donor may
permit limited access to the principal under stated conditions). Two Endowment
Funds currently exist and a third is under consideration:
Pipes Lectureship Endowment Fund (currently $37,000)
An Endowment created by solicited gifts to fund the annual Ernest Pipes Memorial
Lectures.
Wright Pulpit Endowment Fund ($16,000)
An Endowment created by bequest to fund the bringing of outside speakers from
time to time into the Sunday morning pulpit. This particular Endowment permits
the Board, once every five years, to reassess and potentially change the usage
of the endowment earnings.
General Endowment Fund (currently $0)
An Endowment Fund to be established to receive donations (by bequest or otherwise)
from donors who wish to help assure the long-term financial strength of the
Church through principal-uninvadeable investments, but without specification
of, or restrictions on, the use of the investment earnings. For donors who wish
to endow specific objectives, separate Endowment Funds (similar to the Pipes
and the Wright) are established.
Agency Funds
Agency Funds are defined as funds that really don’t “belong”
to the Church but rather are held and accounted for by the Church, serving essentially
simply as a bank, for the convenience of the “owners”.
Standing Agency Funds (currently $4,000)
Examples of Agency Funds are the Women’s Alliance Fund and the Adventure
Group (TAG) Fund.
New Building Project Fund (prior to 1248 18th St. purchase, $1,204,000)
Although the new building project clearly is owned by the Church, it is being
treated accounting-wise as an entirely separate financial entity, and therefore
its fund balance is treated by the Church as an Agency Fund.
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