2010 Year-End Giving and the New Healthcare Law

SUMMARY

In January 2011 we asked members of ECCU’s Ministry Advisory Panel (MAP)** about their 2011 budget plans for six different expense categories before and after knowing their 2010 year-end giving results. After knowing their 2010 year-end giving results, most ministries made no adjustments. When asked about the new healthcare law, only 46.5% of responding ministries were aware of the small business tax credit provision for non-profits.

** The MAP is composed of ECCU member and non-member ministry staff and leaders representing evangelical Christian churches, businesses, schools, and other ministries. This report was produced by ECCU’s research department.

2010 YEAR-END GIVING

This section of the survey was designed to understand how 2010 year-end giving results affected ministries’ 2011 budgets. The first set of questions compares 2011 budget plans for six different expense categories before and after knowing the 2010 year-end giving results. Similar patterns were found in all six categories.

Question: Before knowing your ministry’s 2010 year-end giving results, what were your plans for the following 2011 budget line items?

  • The greatest number of budget increases were in the areas of ministries (38%), salaries (28%), and projects/programs (28%).
  • The greatest number of budget reductions were in the areas of benefits (13%), full-time personnel (11%), and projects/programs (11%).

 

The following chart shows in greater detail the breakdown of ministries that planned to make no changes (“Keep the Same”) in relation to the number of expense categories:

  • 18% of respondent ministries planned to make no changes to any of the six expense categories.

 

Question: As a direct result of your ministry’s 2010 year-end giving results, have you made (or plan to make) any changes to the following 2011 budget line items?

  • 26.8% were planning to increase salaries in their 2011 budgets. However, this number dropped to 12.7% after knowing their 2010 year-end giving results.

 

  • Of the 26.8% ministries that originally planned to increase salaries, 30% decided to increase them even more after knowing their year-end giving results.
  • 10% of ministries that originally planned to increase their projects/programs budget opted to reduce their budget based on year-end giving results.

 

The next set of questions compares 2010 year-end giving to ministries’ budget expectations and 2009 year-end giving results.

Question: How did 2010 year-end giving (December) compare to your budget expectations?

  • 34.3% of ministries’ 2010 year-end giving was 5% or more below their budget expectations.
  • 25.7% of ministries reported that their 2010 year-end giving was 5% or more above expectations.

 

Question: How did calendar-year 2010 giving compare to calendar-year 2009?

  • The number of ministries that experienced a year-to-year decline is exactly the same as the number of ministries that experienced a year-to-year increase (28.5% in each category). The majority reported that giving remained the same (+/- 4%).

 

When comparing calendar-year 2010 giving to budget expectations, panelists who are ECCU members seemed to fare slightly better than non-ECCU member panelists. The following chart depicts the positive correlation between ECCU membership and higher revenue.

Recommendation:
Although the economy appears to be on the mend based on Gross Domestic Product (GDP) growth, continuing troubles with the housing market and international events are slowing the recovery. Therefore, ministries should increase expenses only where essential. If your ministry is one of the few experiencing prosperity, now is the time to shore up your cash reserves.

THE NEW HEALTHCARE LAW

A second objective for the January survey was to understand ministries’ awareness of the new healthcare law and how ministries have adjusted their budgets in response to it. The questions presented to the panel focused on three areas of this law that are of special concern to ministries.

For your reference, the following table shows how ECCU categorizes ministry types and sizes for purposes of analyzing survey responses.

 

Question: Before this survey, were you aware that the new healthcare law requires dependent coverage up to 26 years of age?

  • 90% of all ministries were aware that the new healthcare law requires dependent coverage up to 26 years of age, and the level of awareness correlated positively with ministry size (the larger the ministry, the more likely it was aware of the changes).

Dependent Coverage Awareness

Dependent Coverage Awareness by Ministry Size

 

Question: Before this survey, were you aware that the new healthcare law includes a non-discrimination component mandating equal coverage for all covered employees?

  • 80% were aware that the new healthcare law includes a non-discrimination component mandating equal coverage for all covered employees. Awareness on this topic was also positively correlated to ministry size.

Non-Discrimination Component Awareness

Non-Discrimination Component Awareness by Ministry Size

 

Question: Before this survey, were you aware of the small business tax credit provision for non-profits?

  • Only 50% were aware of the small business tax credit provision for non-profits.

Tax-Credit Provision Awareness

 

Question: How does the small business tax credit provision for non-profits affect your 2011 budget?

  • 62.9% of ministries believe that the tax-credit provision will have no effect on their ministry or that they don’t qualify for the tax credit, or both.

 

  • Of the 50% who are aware of the small business tax credit provision for non-profits, 42.3% stated that it will not affect their 2011 budget.

 

Questions: What percentage of your 2010 total budget did healthcare costs represent? And, what percentage of your 2011 total budget do healthcare costs represent?

  • Ministries budgeted 0.35% more for healthcare in 2011 than in 2010.

 

  • Micro ministries spent at least 2%–3% more of their budget on healthcare.

 

  • Other than colleges, the percentage of the 2011 budget going to healthcare expenses will increase from the 2010 budget across all ministry types.


 

Question: As a result of the new healthcare regulations, did you have to do any of the following? (Options in the survey were: Keep plan as grandfathered [no changes], change insurers, change to a less expensive plan, increase co-pay, cancel coverage, and other)

  • The majority of ministries (53%) do not plan to make any changes to their healthcare plan as a direct result of the new healthcare law.
  • 21% of ministries will be passing the increased costs of healthcare down to employees.


Recommendations:
Most ministry leaders seemed quite knowledgeable about requirements resulting from the new healthcare law. It’s important to stay abreast of the latest developments around this issue since so much of it has yet to take effect and considerable ambiguity still exists as to what the law’s requirements will ultimately look like. One way to stay informed is by subscribing to ECCU’s blog, which addresses this and a host of other issues that impact your management of ministry finances.

 

If you found this survey report helpful, please pass it along to other members of your ministry team and peers using the Share with a Friend tool below.

 

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