Official Notice: LCMS financial position

Official Notice

The Lutheran Church—Missouri Synod Inc.

Financial Position of the Synod (FY2013)

By Jerald C. Wulf

In compliance with 2010 Convention Resolution 4-03, the following discussion of the financial position of Synod is presented.

By the grace of God, as of June 30, 2013, even as the share of the Sunday morning offerings that comes to our beloved Synod through our beloved districts continued to decline, the rate of decline was less severe than the average decline over the past 20 or so years.

In Fiscal Year 2013, our Synod’s financial position showed slight improvement.

The June 30, 2013, financial statements for The LCMS, Inc., excluding other consolidated organizations, show that the LCMS has about $75.5 million total net assets (in a business, this would be called owner’s or stockholder’s equity). Of that amount, $29.5 million is “permanently restricted” (this amount must be preserved until the day of our Lord; and only the income from investing this amount can be spent, and then only for the specific purposes allowed by the donors who gave the permanently restricted gifts); another $36.4 million is “temporarily restricted” (this amount includes gifts that may only be spent for specific purposes, in accordance with the donors’ stipulations, or gifts whose use is based on the passage of time). When allowed to be used, either because the purpose restrictions were satisfied or because the proper amount of time has passed, the temporarily restricted net assets are released and applied against related expenses included in the unrestricted net assets account. Because of the donor-imposed restrictions on their use, these resources are the most costly to receive and administer.

Unrestricted net assets, which total over $9 million, are the aggregate of three accounts: net assets invested in capital assets; board designated net assets; and unrestricted, undesignated net assets.

Net assets invested in capital assets (about $12 million) represent the undepreciated value of land, buildings and equipment owned by The LCMS, Inc. Over time, as depreciation expense is recorded, most of this balance will migrate from this account to the unrestricted, undesignated net assets account. As worn-out equipment is replaced, the value of the newly acquired item increases this account balance. These resources are not able to be used to establish new or expand current mission-and-ministry opportunities. Capital assets and improvements exceeded depreciation expense in FY 2013.

Unrestricted net assets — board designated (about $3.8 million) have been identified by the Board of Directors for specific projects or purposes that the Board would like to accomplish, but these resources do not have any restrictions imposed by donors. The Board of Directors, by official action, could change the current purpose, or simply reclassify all or part of this amount as unrestricted, undesignated net assets. The Board of Directors has designated net assets for future use in the categories of mission property, district and congregational services ministries, communications enhancements and innovations, National Youth Gathering contingencies, and seminary catastrophic event.

Unrestricted, undesignated net assets are the resources that are the most flexible, and can be used for any purpose or activity allowed by Board of Directors’ policy. These resources, derived primarily from unrestricted gifts, are the easiest and least costly to administer. They allow us to quickly respond to changing mission-and-ministry opportunities that our Lord places before us and to “fill-in-the-gap” when restricted resources fall short of their goal for project funding. The balance in this account changes monthly, as resources are received and spent. At June 30, 2013, the balance in this account was negative approximately $6 million (ideally, the balance in this account should be $-0- or greater). A year ago, this account balance was negative $9 million. We did not get into this position in one or two years. It will take time to improve. Current financial results indicate that we are headed in the right direction. The key to digging ourselves out of the fiscal hole we are in is receiving more unrestricted revenue and spending less than we receive each year. We are conscientiously working in both these areas.

The Lutheran Church–Missouri Synod, Inc. (The LCMS, Inc.) has not had to borrow money from any external parties (banks, etc.). Accordingly, The LCMS, Inc. has no direct outstanding long-term debt. That is a blessing; however, The LCMS, Inc. is challenged by its promise to provide resources to CUS, Inc., to enable the Concordia University System to pay off a certain conglomeration of assorted debt which is commonly termed “the historic CUS debt.” That term is something of a misnomer, because this debt is an accumulation of certain decades-old capital debts, operating deficits and other obligations not only from our current colleges and universities, but also from our seminaries and from certain other educational institutions that are no longer operating. The details are voluminous and not always easy to track. The blessing is that this debt is being paid down; the principal balance at June 30 was about $16 million. The challenge is that Synod’s unrestricted resources continue to be the sole source of funds available to service this debt. However, the 2013 Synod in convention charged the president and the Board of Directors with the responsibility to implement a plan to eliminate this conglomeration of debt during the next triennium through a “special appeal.” Until then, we continue to pay down about $2 milllion in debt principal, plus interest, each year, from our unrestricted resources.

As members of congregations of the LCMS, we need to ask ourselves:

  • Is our congregation effectively addressing mission-and-ministry needs in its community?
  • Are our circuits and districts effectively addressing mission-and-ministry needs in their areas?
  • Is our Synod effectively addressing mission-and-ministry needs and cultivating partner-church relationships throughout the world?
  • Are we, as God has enabled and blessed us, returning to Him a generous portion of resources which He daily and richly lavishes upon us?

By the grace of God, we continue to faithfully share the Gospel of Jesus Christ with a world that seems to be becoming increasingly hostile toward the God who loves it so much that He sacrificed and raised His only begotten Son, that whoever believes in Him shall have eternal life.

We press on, trusting that our good and gracious God will continue to provide all things that He knows we need to carry out the good works which He prepared in advance for us to do.

The audited financial statements of The Lutheran Church—Missouri Synod and consolidated affiliates will be available on or about Dec. 1 at lcms.org/Fyaudit (click on the “Budget/Audit” tab). Financial statements for The LCMS, Inc., are found in the Supplementary Information section of that report.

Jerald C. Wulf is the Synod’s chief financial officer.

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One Response to Official Notice: LCMS financial position

  1. Stanley Reible October 28, 2013 at 2:08 pm #

    It was good hear of the financial giving growth. We hope that most of it is real giving.

    We hope that most of your LCMS districts and congregations have not fallen into the trap of “marketing of church leadership positions” in return for demanded contributions as has happened in New England.

    I would be pleased to be forwarded to someone in the LCMS legal department about my concerns.

    Thanks,

    Stan Reible

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