Ken Sloane, a stewardship expert at Discipleship Ministries, outlines ten policies for institutional trust and financial integrity that reduce confusion and conflict while at the same time encourage generosity to support your mission and responsible use of congregational resources.
Some people equate the word “policy” with “bureaucracy,” and that’s not hard to understand — both have to do with decision-making. As we discuss policies for churches, we focus on what decisions can be made ahead of time that will guide the church in times of crisis or difficulty and that might keep the church out of a difficult situation. Here are just a few examples: What do we expect from church staff, and what can they expect from us? How do we avoid a gift that the church doesn’t need without the donor taking it personally? How do we guide leaders in the appropriate use of donor gifts so that expenditures are not questioned after the fact? How do we manage endowments and bequests so that they support the church’s growth in its mission, and not a congregation becoming lazy in stewardship and generosity?
The inspiration for this article comes with my gratitude from author and stewardship strategist Bonnie Ives Marden, and her excellent book Church Finances for Missional Leaders (Wesley Foundry Books, Nashville, 2019) and is used with her permission. The first seven policies and descriptions are part of Bonnie’s list. I’ve added three more at the end that I think are also worthy of your church’s consideration. I’ve also provided links for each that will give you examples or ideas.
Life will be so much easier for your church if you have policies in place before you need them instead of being confronted with a problem or a decision and trying to create a policy that gets you out of a tough spot. Let me also add that your policies may not be perfect the first time around, so do your best and then tweak them based on the wisdom gained in the navigation. Finally, remember that your policies often have a shelf life. We all know how fast technology can change, and your policies will need review and possible updating on a regular basis.
1. Building use policy
When a group uses the church property, a building use policy clarifies expectations about access to the property and the use of facilities. It should address such subjects as food preparation, sound systems, worship space activities and supplies, setup and cleanup expectations, safety, and insurance verification. Information on fees, keys, and emergency contacts are also important policy elements. Any property use needs to align with the church’s missional purpose. Groups using the property need to provide a binder documenting appropriate insurance coverage. Uses that are not missional could trigger taxes for unrelated business income. Property use may generate significant income, and careful attention to nonprofit regulations and legal considerations will reduce potential risks. See sample building use policy from Reveille UMC in Richmond, VA.
2. Endowment policy
The language contained in your endowment policy should include a description of committee membership, the purpose of the endowment, an investment policy, and guidelines for amending the policy. Also known as a charter, the policy defines the goals, framework, and identified priorities for an endowment in your mission. Because of the legal responsibilities and financial accountability for managing invested assets and endowments, the policy contains language similar to language used in bylaws. Legal counsel is recommended to ensure that this policy complies with state laws impacting investments, endowments, and charitable giving by nonprofit organizations. See information from the Missouri Methodist Foundation on endowment policies.
3. Finance policy
These policies provide instructions for creating the budget, opening bank accounts, managing transactions, record-keeping, and other aspects of financial management; your finance policies orient leaders to mission procedures and expectations. While roles and responsibilities for financial management may be defined by denominational guidelines, these policies provide supplemental guidance for local operations. See sample financial controls policy from the Florida Annual Conference of the UMC.
4. Gift acceptance policy
This policy offers donors and committees guidance about the types of gifts accepted and how different types of gifts are stewarded, including how to refuse certain gifts. Especially appreciated by major donors, the policy provides helpful guidance about whether valuable items or property could be donated to your mission. This policy helps your mission avoid gifts it can’t use. See sample gift acceptance policy from UMC Discipleship Ministries.
5. Memorial fund policy
Memorial funds receive gifts honoring a person’s life. The memorial fund policy describes the purpose and stewardship of gifts, appropriate uses, and local traditions. Input from family members may be invited; however, the church retains the right to adopt or reject suggestions. Since families and members cannot create new designated funds, their input does not supersede the church’s authority to make the final decision. Affirm the life and values of the people honored by having a plan and avoid accumulating memorial funds without a clear plan or process. See sample memorial fund policy from UMC Discipleship Ministries.
6. Pastor’s discretionary fund policy
This designated fund is often available to pastors for special needs or pastoral care emergencies. Models for funding, managing, and distributing discretionary funds vary. Pastors should never be sole signatures on a discretionary fund account because this practice puts both the church and the pastor in a position of unnecessary risk and temptation. It is the church’s responsibility to protect both its assets and leadership. Periodically review the fund management system to ensure that all parties understand the procedures and that the pastor is protected from tax or misappropriation risk. See sample discretionary fund policy from the Greater New Jersey Conference of the UMC.
7. Safer sanctuary and limited access policies
Faith communities set expectations about protecting children, youth, and other vulnerable people by adopting a Safer Sanctuary policy with guidelines for supervision, adult-child ratios, and transportation. Annual review and revisions as well as ongoing education are necessary after adopting such a policy. In situations in which previous violations of trust, convictions of illegal actions, or status as an offender of some sort exist, customized agreements or covenants set expectations for the level of access or activity as well as appropriate boundaries put in place for the safety of all people. Enforcement of such covenants entails ongoing supervision and vigilance. This type of policy is included because it is a best practice to reduce the financial and legal consequences of violations of trust or misconduct. See Safer Sanctuaries resources from UMC Discipleship Ministries.
8. Church personnel policy
You may think that only very large churches need to develop a personnel policy or employee manual. Any church that employs staff, full or part-time, has certain expectations of the work patterns of those employees and how they interact with volunteers, church leaders, and the congregation in general. All employees have some rights and protections granted by law, as well as expectations about how they will be treated by those who supervise them and their coworkers. A personnel policy does not necessarily involve creating a one-hundred-plus-page employee manual, but it is an important tool in preventing situations that might lead to the loss of a good employee or legal action against the church. Searching for the policies established by other churches may be a good way to begin developing a personnel policy for your church. See sample church personnel policy from the Michigan Conference of the UMC.
9. Accountable reimbursement and/or credit card policy
With all the attention given to the housing/parsonage allowance, it is easy to not pay a lot of attention to the advantages for clergy of an accountable reimbursement line in the church budget. Unlike the housing/parsonage allowance, which is a reduction of clergy compensation, the accountable reimbursement draws from funds in the church budget for legitimate expenses that clergy incur in the performance of their work. The policy should spell out as specifically as possible what items can be charged to this line, how the expenses are authorized by a different party, and what the schedule is for reimbursement. Clergy are still advised to keep a log of the expenses’ purpose, their travel, and miles driven. However, remember that there are a variety of tax laws that dictate what are considered church expenses and what are more appropriately shown as income to the pastor. These distinctions should also get attention in situations where clergy or other staff use a credit card in the church’s name. See the links below for help establishing these policies. See information on accountable reimbursement policies and on credit card policies from the North Georgia Conference of the UMC.
10. Church communication policy
Who speaks for your church? More specifically, is there a plan for where and from whom people can find accurate information about what is happening that involves your church membership? This information can range from questions about closing the church due to bad weather to a crisis that might involve the arrest of a staff person or a volunteer. The plan might include who can speak to the press, who starts a phone or text chain, or who reviews the church newsletter to be sure that the language is clear, accurate, and not offensive. United Methodist Communications has excellent resources on developing a communications plan. There is also a Local Church Services team whose purpose is to work with and support your church.
This article originally appeared on the Discipleship Ministries website. Used by permission. Points 1‒7 are excerpted by the author from Bonnie Ives Marden’s book, Church Finances for Missional Leaders: Best Practices for Missional Leaders (Wesley Foundry Books, 2019), available at Cokesbury and Amazon.
Related Resources
- Assuring Financial Integrity, an online course from the Lewis Center’s Keeping Our Sacred Trust ethics training series
- Protect, Sustain, Grow: Best Practices For Handling Your Church’s Money, a Lewis Center video tool kit resource
- 9 Questions to Assess Your Church’s Financial Health by Lovett H. Weems Jr.
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