Financial management systems are critical for demonstrating adherence to nonprofit legal requirements, the Book of Discipline ¶ 258.4. Finance, and accountability to the VA Annual Conference Committee on Finance and Administration, the Board of Higher Education and Campus Ministry, to all supporting organizations and donors. In this regard, this page will highlight six elements of an effective financial management systems, with links to appropriate documents.
BHECM Salary Based Grants: The annual allocation of salary based grants to all campus ministries (Wesley Foundation, Hybrid, and Ecumenical) will be conditional, based on the receipt of the annual reports and meeting or exceeding standard expectations as evaluated by the BHECM/VA Conference Staff and the District Superintendent. (Chapter 6 Extract (2018))
BHECM Funding Policies: The funding policies and procedures of have been developed with the following objectives in mind: fairness to each campus ministry unit, clarity and rationality in the way campus ministry monies are allocated, efficiency in the utilization of such funds, adequate funding for property maintenance, and local board responsibility in local fund raising and economy of operation. These policies are outlined in the handbook. (Chapter 8)
The annual budget document is the blueprint for both spending and income. It is your guide for making short and long term strategic decisions and guiding month-to-month operations. Checking the annual budget against year-to-date income and expenses may show where adjustments in activities and in expectations need to be made to finish the year without a deficit. The budget is a critical tool for boards to fulfill their financial oversight duties. To be effective, budgets need to be realistic, consistent with your strategic planning objectives, flexible and measurable. Preparing the annual budget should be a team effort involving the campus minister, the administrative staff, and the local board. There are two major types of budgeting that should be considered – line-item and program. The line-item budget is a list of various categories and the amount the campus ministry expects to spend for each category. As a minimum there must be a line-item budget. However, a program budget is preferred. The program budget contains various line-items, but the difference is that each major program is provided with a line-item budget.
Consider using the “10 Steps Annual Budget Checklist” prepared by Propelnonprofits.org. Th budgeting process should begin at least three months before the end of the current fiscal year to ensure approval by the board before the start of the new fiscal year. The budget needs to reflect your programs, mission, strategic plan as well as expected income. (10_step_annual_budgeting_checklist_2017)
Internal Controls: Campus ministries should have procedures and activities in place that safeguard their assets and ensure their efficient use. The General Council on Finance and Administration publishes a checklist that includes controls that could apply to campus ministries. (Internal Control Checklist Extract)
Record Keeping Requirements: Churches are required by the IRS to maintain accounting records that substantiate activity. Generally this includes official documents, minutes, property records, general ledgers, receipts and disbursements journals, payroll records, banking records, and invoices. Most experts agree that accounting records and contribution data should be maintained a minimum of seven years, while property records, licenses, permits, minutes, and annual reports and financial statements should be retained permanently.
Annual Financial Review: An audit/financial review is an independent evaluation of the financial reports and records of the internal controls of the campus ministry by a qualified person or persons for the purpose of reasonably verifying the reliability of financial reporting, determining whether assets are being safeguarded, and determining compliance with the law, local policies and procedures, and the Book of Discipline. Campus ministries will use the following guidelines and form.
- Annual Financial Review Guidelines
- Steps in Conducting the BHECM Financial Review
- Annual Financial Review Report Form
IRS Compliance Guide: In this publication, the IRS addresses activities that could jeopardize a public charity’s tax-exempt status. It identifies general compliance requirements on record keeping, reporting, and disclosure for exempt organizations (EOs) described in section 501(c)(3) of the Code that are classified as public charities.