By Melanie Ave
LCMS leaders point out that the national Synod continues to make marked improvements in its financial position, with recent statements showing a $6 million increase in total unrestricted net assets since 2010.
LCMS President Rev. Dr. Matthew C. Harrison said he feels “very good” about the current state of the Synod’s finances, which put the church in good shape to carry out its emphasis of Witness, Mercy, Life Together.
“If our financial house is not in tip-top shape, it reduces our flexibility to act when we need to act,” Harrison said. “The donors and the constituents of the Synod need to know that when they send their dollars here, those dollars are being treated with exceptional care and being used with the greatest possible efficiency for the sake of the Gospel.”
Harrison also pointed to the reduced deficit in “undesignated” net assets, one component of unrestricted net assets. The negative balance dropped from $15.5 million at the end of fiscal year 2010 to $6.6 million as of January, according to a recent report given to the LCMS Board of Directors by Jerald C. Wulf, LCMS chief financial officer. The last time “undesignated” assets showed a positive balance was in 1999, when the total was $1.8 million.
Wulf said he would like “undesignated” net assets to reach a zero or positive balance.
Harrison attributed the overall financial improvements to a focused effort to reduce expenses and track revenues so the Synod is spending only what it receives.
Wulf and Harrison indicated that the following have contributed to the improved fiscal picture:
• conservative revenue estimates and more accurate expense budgeting.
• reduction of some 66 staff positions at the LCMS International Center in St. Louis and the elimination and consolidation of some departments and areas of service, largely due to the restructuring mandate from the 2010 Synod convention.
• the addition of $9.2 million in income from the sale of property in Hong Kong.
• timely expenditure of sizable bequests.
“By God’s grace, we are in the black for this fiscal year,” Harrison said.
About 70 percent of the Synod’s current $64.5 million budget is restricted funding, meaning it can only be used for specific purposes or spent after a certain amount of time. The remaining 30 percent is unrestricted funding, which pays for most of the mission and ministry stemming from the LCMS International Center.
Restricted assets, many of them endowments, dipped between 2010 and January 2013, dropping from $64 million to $59 million. But total net assets — a combination of restricted and unrestricted funds — increased from $67 million to $68 million during the same time frame.
Unrestricted resources cover everything from the International Center’s electricity bills to the costs of recruitment, placement and care of missionaries.
In addition to “undesignated” funds, unrestricted net assets also include funds designated by the LCMS Board of Directors and the Synod’s net investment in land, buildings and equipment.
Most unrestricted dollars come to the Synod from LCMS districts, which receive the money from congregations. Wulf said contributions to the Synod from the districts has recently been declining by about $1 million annually.
In fiscal year 1989, for example, the unrestricted financial support coming to Synod from the congregations, through the districts, was more than $30 million. In comparison, in fiscal year 2011, the amount was down to less than $16 million. Between fiscal years 2010 and 2011, the decline was about $1.4 million; however, between fiscal years 2011 and 2012, the decline was only about $600,000.
“Unrestricted funds cost us the least to administer,” Wulf said. “They’re the easiest to administer and they provide us the most flexibility to respond to mission and ministry opportunities, some of which arise rather quickly.”
Harrison said while he is pleased with the rosier financial outlook, funding concerns still remain.
“We still face the long-term continued decline of dollars from the pew to the plate, from the district to the Synod,” he said.
Looking to the future, with an even healthier financial picture, Harrison said he would like the Synod to concentrate on endowing the seminaries to help keep the cost of seminary education low; focus on global seminary education as huge shifts in world Lutheranism occur, such as the recent split of the Ethiopian Evangelical Church Mekane Yesus from fellowship with the Evangelical Lutheran Church in America and the Church of Sweden because of the two churches’ acceptance of same-sex marriage; and assist districts as they plant new churches and renew aging congregations.
Harrison said it is important for the Synod to keep its finances transparent.
Each year, The Lutheran Witness publishes a state of the Synod report, and both the Witness and Reporter carry an annual financial summary by the chief financial officer.
“You can’t really expect the people of the Synod to solve the problem if they don’t know what it is,” Harrison said. “I would be proud for any member of the Missouri Synod to come to this building and open up the books and show them how we work.”
Melanie Ave is senior writer and social media coordinator with LCMS Communications.