Tips for 2010: How the Recession Could Affect Your Ministry

(Originally published as an article within ECCU’s former e-publication, Ministry Banking Today.)

We’re nearly halfway through 2010 and, by some reports, things are looking up. But what is reality for the financial services industry? And what can your ministry expect in the months to come, when working with your bank, as a result of the recession?

During the Church Leaders Summit at the Christian Leadership Alliance conference last month, Mark Johnson, ECCU executive vice president, provided these updates.

Liquidity remains tight. While some financial institutions feel the impact of the recession lessening, most are still extremely cautious. To ensure greater liquidity, they are hanging on to cash and limiting lending. In addition, credit standards are now stricter, which means borrowers need to have stronger financial statements to qualify for a loan.

Continue to monitor your financial institution. If your bank or credit union is not transparent about its financial condition, ask the tough questions. Key indicators of their health are: Profitability, capital, and asset quality. You can also do a self-check by accessing your financial institution’s information at for banks or for credit unions.

Protect your donors. Fraud is an increasingly serious problem for ministries. Practice fraud protection by truncating credit card account numbers on receipts, shredding or destroying data with Social Security numbers and personal information, and abiding by current regulations and requirements. For more ideas on protecting your donors’ information, read the article Are You Putting Your Members at Risk?

Learn from your peers. As ECCU interacts with over 2,000 ministries across the nation, we see a pattern of issues arising from those that are struggling financially through the recession. Here are the top struggles among these ministries:

Management issues

  • Failure to identify the problem
  • Failure to take action to solve the problem
  • Failure to seek expertise in navigating through the problem
  • Failure to manage stress within the leadership team(s)

Building project issues

  • Expecting the current capital campaign to deliver similar results as past campaigns
  • Relying on the concept, “If we build it, they will come”
  • Committed donors reducing their unrestricted (general fund) giving to give to the building project
  • Not fully understanding or planning for additional costs that could come with the expansion, such as street improvements

Transparency issues

  • Sometimes, communication to board, staff, and donors has not been as forthright as it could be
  • Fearing that communication about financial challenges will drive stakeholders away

Liquidity, the #1 issue for most ministries

  • Inadequate planning (which was confirmed by a correlation study conducted on ministries in trouble)
  • Insufficient level of cash reserves

To help mitigate some of these issues in your ministry, begin by understanding these four financial priorities: Ensure financial integrity, maintain adequate liquidity, maximize cash flow, and leverage assets.

Learn how to evaluate your liquidity needs and calculate a cash reserve target by meeting with an Evangelical Christian Credit Union (ECCU) ministry development officer. There is no cost for this consultation, which utilizes a cash reserve calculator and other analytical tools designed specifically for ministries. To schedule your free cash reserves consultation, call 800.288.4846.


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