….So you’re knowing where it’s going.”

The old saying is good advice for those who consider establishing foundations that will carry on their legacy after they pass away.

Remember Leona Helmsley, the hotel baroness who is famous for saying “only the little people pay taxes”?  She’s  joined the good company of captains of industry like Henry Ford and John D. Rockefeller who established foundations that no longer reflect their values.  Helmsley left the bulk of her $5  Billion estate to her foundation with instructions to the trustees to spend the funds primarily for “purposes related to the provision of care for dogs.”

As the Wall Street Journal reported today, the trustees of her estate and the New York Attorney General sought a ruling on whether they were bound by the mission statement.  Manhattan Surrogate Judge Troy Webber gave the trustees sole discretion in spending the money.  Of the $136 million distributed in April, less than 1% went to animal rights and welfare.

In contrast, the John M Olin foundation was set up to guard against trustee tinkering:

John M. Olin Foundation was a grant-making foundation established in 1953 by John M. Olin, president of the Olin Industries chemical and munitions manufacturing businesses. Unlike most non-profit foundations, the John M. Olin Foundation was charged to spend all of its assets within a generation of Olin’s death, for fear of mission drift over time. It made its last grant in the summer of 2005 and officially disbanded on November 29 of that year after having disbursed over $370 million in funding, primarily to conservative think tanks, media outlets, and law programs at influential universities. The Foundation is most notable for its early support and funding of the law and economics movement.  (Thanks to John Kinsel and Wikipedia)

Stonecroft Ministry’s decision to stop assistance to Village Missions was a difficult decision for them. Their decision to reduce their support from $40,000 each month to zero has created an enormous shortfall for us. Their notice, requires us to earnestly seek God’s wisdom for ways to increase income and reduce costs.

We had already cut programs to the bone to balance our 2009 budget, including eliminating staff conferences for the first time in our history. The last thing we want to do is stop serving a community that desperately needs our help.

Please pray for these communities and help us in any way you can to close this serious financial gap. And please pray for Stonecroft as they seek to minister to women around the world.

Become a partner with Village Missions by clicking here.

There’s  a new book out that I highly recommend to CFOs, Directors, and Board members.  Ron Mattocks has written “Zone of Insolvency, How Nonprofits Avoid Hidden Liabilities and Build Financial Strength.” The” Zone of Insolvency” is a term used by bankruptcy courts to describe a period of corporate financial distress, sandwiched between solvency and total insolvency.  Ron does a great job applying this concept to nonprofits.

There are three financial tests to determine if you’re in the zone:

1. Balance sheet test — whether the value of the assets exceeds the liabilities; Insolvency is generally defined as the condition of having more liabilities than assets.
2. Cash flow test — whether the organization has sufficient cash flow to meet its fixed financial obligations as they become due; and Cash flow insolvency is the condition where debts cannot be paid as they become due.
3. Unreasonably small capital test—whether the organization has sufficient capital to obtain or support financing for future operations.

According to Mattocks, approximately one third of all nonprofits, more than 450,000 organizations, operate perpetually in financial distress, the “Zone of Insolvency,” and approximately 7% are totally insolvent.

The book caught my eye because it addresses some issues that are relevant to Village Missions these days.

In mid-February Stonecroft Ministries leaders met with Village Missions to tell them of the decision to stop all financial support of Village Missions.  Even though Stonecroft gradually had been decreasing their support of Village Missions for several years, this reduction of $40,000 per month, with such short notice, was a shock.

For more than 60 years, through the generous offerings of women involved in Stonecroft’s outreach clubs, support was provided for Village Missionaries serving rural communities that could not support a pastor. This has been a tremendous blessing to people who otherwise might not have a Gospel preaching church in their small town.

Today, facing demanding economic times, Stonecroft’s leaders felt they had no choice but to focus only on their vision -  the spiritual needs of women – even if it meant completely ending its support of Village Missions and rural communities.

Thankfully Village Missions is still far from entering the  Zone.

But we have to work hard to replace that income.  We have lived with budget deficits for several years, and we’re looking at another deficit year coming up.

Village Missions will stay on course, keeping country churches alive and vital. We are trusting God to enable us into the future.The needs are great across rural North America. We believe missionary statesman Hudson Taylor had it right when he said, “God’s work done in God’s way will never lack God’s supply.”

To learn how to be a partner in Keeping Country Churches Alive, click here.

It’s been a long while since I’ve posted.  several months ago I decided that I needed to spend time focused on the core task of my job: helping run the Mission by the numbers.   Since then, we’ve learned that more folks are going to the web to find information about us.  So, I’m back to finish what I started and help tell our story.

Village Missions scored a “B-” (16 out of 20) in our evaluation by BBB’s Wise Giving Alliance.  The results of that evaluation are posted on the Alliance’s site here.   Does that mean that Village Missions is a “B-” ministry?   No way!!!  Actually, I’d like to discuss the standards that were not met, and here is the second standard that we did not meet:

Standard 4 : Compensated Board Members – Not more than one or 10% (whichever is greater) directly or indirectly compensated person(s) serving as voting member(s) of the board. Compensated members shall not serve as the board’s chair or treasurer. VM does not meet this Standard because two (2) members out of the 10 member board of directors (20%) are paid staff.

The Board of Village Missions values participation and feedback from all constituencies affected by their policy making activities. One member of the board represents the “rank and file” missionary employee. A second board member represents the District Representatives, a middle-level manager position that directly supervises the rank and file missionary. These two board members provide invaluable feedback to board members who make decisions that affect the everyday lives of the missionaries they serve. They are excused from discussions and votes that relate to compensation and other matters in which that they may have a conflict of interest.

I was reminded of the importance of this participation recently when the chair of the budget committee forwarded some suggestions to the administration for our comment.  He was seeking our input because, as he said “[the committee does] not understand the impact the implementation of the ideas will have on the mission and especially on the missionary families.”

What’s really wonderful is that our budget chair and his committee have the humility to recognize their limitations and are quick to seek input from those who will be affected by their decisions.  Think of all the difficulties in our world that could have been avoided in recent days if those in positions of leadership exercised the same kind of humility.

The Board of Village Missions did recently take some action that satisfies Wise Giving Alliance standard #4.  They recently appointed two new independent board members.

We appreciate the efforts of the Wise Giving Alliance.  Their efforts are good for all charities.

Certified Financial Planner Jeffrey Voudrie provides some excellent advice to seniors on his website  http://www.guardingyourwealth.net .

Some of the most popular products being pitched to seniors today are reverse mortgages. Everywhere you turn there are free seminars, free reports and free DVDs, all touting the amazing benefits these loans offer. Are reverse mortgages the answer to seniors prayers, or are they too good to be true?  Go to Jeff’s article>>>

For those who want to include charity in thier financial planning, the tax law provides some very cost effective charitable options for you to:

- Stay in your home
- Secure a reliable stream of lifetime income
- Get a substantial tax deduction
- Bypass Capital Gains Tax
- Benefit the causes you care about

If you would like to explore the options give us a call at 800-617-9905 x 112, or email us. Village Missions provides charitable tax planning information as an educational service to friends, and there is absolutely no cost or obligation.
 

Last night I was checking my 4th grade son’s math homework.  As I was going over the wrong answers and the missed problems, I was showing him what separates an “A+” student from a “B-” student.  In his case, it’s all about paying attention to detail. 

Oh, the irony! Village Missions scored a “B-” (16 out of 20) in our evaluation by BBB’s Wise Giving Alliance.  The results of that evaluation are posted on the Alliance’s site here.   Does that mean that Village Missions is a “B-” ministry?  Does that mean we’re not paying attention to detail?  No way!!!  Actually, I’d like to discuss the standards that were not met in excruciating detail.

Here’s the first standard we did not meet:

Standard 3. A minimum of three evenly spaced meetings per year of the full governing body with a majority in attendance, with face-to-face participation. A conference call of the full board can substitute for one of the three meetings of the governing body.

Response:  The board of Village Missions has two, not three face-to-face meetings per year. We believe this is adequate for several reasons.  

1. Village Missions is a national organization with members from all regions of the country.  Schedule coordination and travel logistics make more meetings costly and difficult.
2. Village Missions is a policy-driven organization that vests authority in an Executive Director. The board’s function is to develop policy and supervise and evaluate the Executive Director. 
3. The board does schedule conference calls as the need arises – they are not regularly scheduled. Here is a record of board meeting dates during the last two fiscal years that the Alliance reviewed: 

   Date	Method	Ratio of Members in Attendance
   10/7/2005	Conference Call	10/10
   11/11/2005	In person	10/10
   2/7/2006	Conference Call	7/10
   5/5/2006	In person	10/10
   11/9/2006	In person	9/10
   5/11/2007	In person	8/10

    As you can see, in the year ended 6/30/06 the board met four times.  In the year ended 6/30/07, the board only met 2 times.

4. A minimum of two meetings is the standard set by the Evangelical Council for Financial Accountability, which is Village Missions preferred accrediting agency.
5. The board has working committees that carry out their responsibilities outside the regularly scheduled board meetings.  I think the important point here is that the board meeting is not the place where work gets done – it is the place where the work is reported and evaluated – that is how effective governance is supposed to work.

That’s standard 3 – I will cover the other standards in future posts.  Right now, I have to go take a look at some math homework!

A few months ago I began the process of responding to the inquiries of the Better Business Bureau’s Wise Giving Alliance.  I blogged about it in a post titled ”How Charity Watchdogs Can be a Pain.“  The ministry I represent, Village Missions, has had some correspondence with the Alliance over the past several months, and the evaluation is now complete. You can see it here.

Even though Village Missions did not ace the test, I think the process was quite valuable.  I found the Alliance staff to be accessible, informative and helpful.  The standards are objective – either you meet them or you don’t.  I like this because so much that passes for charity evaluation on the Internet is loaded with editorial subjectivity.

The Alliance standards give donors a good sense of how boards govern, how nonprofits spend their money, how truthful they are in their representations, and how willing they are disclose basic information to the public.  They are a great set of standards to measure ourselves by.  And this is not a one-time evaluation.  Village Missions will use these standards as best practices to benchmark against.  I want to see them used as part of a TQM-style continuous improvement process.

Village Missions did not meet 4 out of the 20 standards established by the Alliance.  These do not necessarily represent deficiencies in transparency, governance, effectiveness or anything else.  Some could be opportunities for improvement.  We do not meet one standard because it does not serve the best interests of the Mission.  

I will discuss these standards  in detail in following posts.  If interested donors follow along, read about Village Missions on the various watchdog websites, do their own research and ask questions,  I think they’ll like what they see.

Bob Barr, a former congressman and U.S. Attorney, offers a helpful perspective on Senator Grassley’s effort to investigate six televangelists:

http://www.ajc.com/opinion/content/opinion/stories/2007/11/13/barred_1114.html?cxntlid=inform

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof… First Amendment to the US Constitution

Let me say first of all, I cannot watch a prosperity theology preacher on TV without spiking my blood pressure.  And their off-screen antics go beyond the pale of anything a reasonable person should tolerate.  These false prophets are distorting the Good News of Jesus Christ and causing a lot of collateral damage to His church.  Anything the US Government can legally do to them is far too gentle.  I would rather apply the Old Testament penalty for false prophets. (Here, hold my coat.)

Having said that, the actions of the Senator Charles Grassley (R) of Iowa to investigate six televangelist ministries may have far more significant collateral damage to the church than anything Creflo, Eddie, Benny, Joyce, Paula and Kenneth can do. 

It takes years to build a reputation, and only a brief visit with a rabid reporter to destroy one.  That is why the ministry I represent, Village Missions, zealously pursues accountability and transparency.   We voluntarily submit to ECFA standards.  We file a Form 990, even though as a church organization we’re not required to do so – you can see it here.  We raise money only for genuine ministry needs.  We take the stewardship of our donor’s trust very seriously. 

The problem with Grassley’s actions though, is that there is legislation in place already to deal with the excessive abuses of church leaders.  The Internal Revenue Service can initiate audits of churches, provided that they follow IRC Section 7611.

Chip Watkins, a lawyer in Washington D.C. has posted an excellent comment on this: 

“The Senate Finance Committee has no business initiating these investigations. By doing so, the Committee evades tax law requirements that protect churches from unnecessary and multiple intrusions by the government. The IRS is the proper agency to undertake an audit (examination) of whether these churches continue to qualify for exemption under Sec. 501(c)(3) of the Internal Revenue Code. But before doing so, the IRS must satsify Sec. 7611 of the Code, which permits the IRS to open a 90-day “church tax inquiry only after a high-ranking IRS official (which should be the Commissioner of Exempt Organizations) certifies that he reasonably believes that the church may not qualify for exemption, or may be subject to unrelated business income tax. If the IRS’ concerns are not satisfied by the response to the inquiry, it may then open an audit after an initial explanatory meeting with the church and its representatives. The churches should respond accordingly.”

Charles Grassley, who loves to pontificate on nonprofit issues, is going around the law.  No doubt Senate committee hearings will ensue and all the Senators will compete to see who’s pithy sound bites will make the evening news. 

Politicians and televangelists- these guys deserve each other.