Treasurer’s Update

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Great Commission Fund (GCF) Update for September 30, 2011

Great Commission Fund (GCF) income was $2.5 million or 91.3% of budget in September. First quarter revenues (July–September) total $8.0 million or 96.8% of our $8.3 million budget, a decline from 99.6% of budget through August but an increase of $135,119 or 1.7% over the first quarter of fiscal 2010-2011. As a reminder, the fiscal 2011-2012 budget assumes 2 percent revenue growth.

Ministry expenses were held to 96.3% of budget for the month with first quarter spending increasing to 95.7% of budget. First quarter change in net assets is ($1,166,000), which is favorable to budget by $150,000. We began the fiscal year July 1, 2011 with $306,000 of non-appropriated net assets which helps cushion against this planned decline in net assets through three months. The change in net assets through three months shows improvement of $166,000 or 12.5% compared to September 30, 2010.

October revenues are trending at approximately 87% of budget, which would bring YTD revenues through October to 94.2% of budget if these trends continue.

Read the September 30 financial update»

Great Commission Fund Expense Reduction Plan

Our plan to close the projected $1.3 million gap between revenues and expenses is to use $522,000 of ministry reserves, $375,000 from the upcoming Great Commission Sunday offering, trust God for $310,000 in additional major donor gifts, and reduce expenses by $63,000. If revenues continue to trend down, further action will be needed.

Be Light Christmas Offering 2011

The 2011 Be Light Christmas Offering gives Alliance people the opportunity to express their passion for reaching lost people by giving an extra gift to the Great Commission Fund. This year’s offering will enable and empower Alliance workers to be light in several new fields within the 10/40 Window and other spiritually desolate parts of the world—some within our own country.

As Church Treasurer, please indicate the amount of this special offering on your church’s monthly remittance. A special field for recording the offering total will be included on the remittance forms for December and January. We appreciate you and your church’s leadership team for encouraging participation as we partner together to carry the greatest gift of all—the Light of the world—to those with little access to the gospel.

The 2011 Christmas Offering materials will arrive in your church the first week of November. It will include bulletin inserts, a pastor’s resource sheet, mini poster, and a video segment calling the Alliance family to extend the light of Christ into our communities and around the world this Christmas.

If you have questions, please contact the Joan Phillips at 719-265-2014 or communications@cmalliance.org, or click here. For accounting questions regarding this offering, contact Peggy Purvis in Donor Accounting at 719-265-2089 or purvisp@cmalliance.org.

Great Commission Sunday Offering

Thank you for your participation in this year’s Great Commission Sunday offering! A total of $960,000 has been received through September to respond to the open doors for the gospel, resulting from recent government upheavals in North Africa. As Dr. David Thompson, C&MA medical worker in Gabon, West Africa, notes, “We now face the greatest opportunity we have seen this century to bring the liberating truth of the gospel to more than 300 million people.”

Gifts of Securities—Stock and Mutual Funds

The Orchard Foundation, the financial stewardship arm of the C&MA, is ready and able to serve you by facilitating gifts of securities (stock, mutual funds, or bonds) on behalf of your church. Orchard will coordinate the gift directly with your donors, liquidate the assets, receipt the gift, and forward the proceeds (less a nominal processing fee) to your church. Gifts of securities are a great way for your donors to avoid capital gain taxes and receive their tax-deductible contribution. Gifts of securities have never been easier to process for you or your donors! For more information contact The Orchard Foundation toll free at 888-689-6300 or by email at steward@theorchard.org.

IRA Charitable Rollover

The IRA Charitable Rollover has been reinstated through December 31, 2011, as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This provision allows individuals aged 70½ and older to donate up to $100,000 from their Individual Retirement Accounts (IRAs) to public charities without having to count the distributions as taxable income. All you need to do is contact your IRA custodian and request that an amount be transferred to The Christian and Missionary Alliance. If you would like more information, please contact Joseph Padilla at 1-888-689-6300 or e-mail him at padillaj@theorchard.org.

Employer-Provided Cell Phone

Many churches provide their pastors with cell phones primarily for business reasons. The value of the business use of a church-provided cell phone is now excludable from an employee’s income as a working condition fringe for the use of an employer-provided cell phone, occurring after December 31, 2009.

Honoraria, Speaking Fees, and Love Offerings

Churches cannot use their tax exempt funds for what is termed private inurement. This means that individuals cannot be given church funds unless there is an exempt ministry purpose for providing them to an individual. These purposes normally relate to payment for services provided by an employee or independent contractor or reimbursement of ministry expenses. One exception is the use of benevolence funds to meet the basic needs of an individual on a limited basis. A love offering taken up by the church and provided to a missionary, guest speaker, or pastor is always compensation in some form. For an employee, it is reportable income on a W-2. For a missionary, it is reportable income on Form 1099.

IRS Form 941 Reporting for Churches

Most churches are required to file IRS Form 941 on a quarterly basis (April 30, July 31, October 31, and January 31). Federal income and FICA taxes should be withheld and remitted for church employees who do not qualify as clergy. FICA withholding rates for non-clergy employees is reduced to 5.65 percent for one year (2011) with the combined FICA employer match remaining at 7.65 percent. Pastors considered clergy by the IRS are subject to self-employment tax and are exempt from federal income tax withholding. Churches that withhold federal income tax along with any self-employment tax as a convenience for their pastors, should report these wages on Line 2 of Form 941 and any federal income tax withholding on Line 3 of Form 941. Churches should not report clergy wages or withholding on Line 5a and Line 5c with non-clergy employees.

Housing/Parsonage Allowance

Your church board should approve, in writing, a 2012 housing/parsonage allowance for your pastor(s) before payment of compensation in 2012. The excludable amount of housing allowance for pastors who own their own homes may not exceed the fair rental value of the home, including furnishings and appurtenances, such as a garage, plus the cost of utilities. We recommend that this housing allowance be approved as a continuing resolution so it will not expire if the board does not consider it the following year. An example follows:

The following resolution was duly adopted by the governance authority of [church name] at a regularly scheduled meeting held on [date], a quorum being present: It is hereby resolved that a housing (or parsonage) allowance be designated for Rev. [pastor’s name] in the amount of $[amount] for the year 2012 and for all future years unless changed by specific action of the governance authority.

We recommend that this housing allowance be reported in Box 14 on your pastors(s)’ W-2 to provide a permanent record of the amount and to provide support for the resolution adopted by your church.

Small Employer Health Insurance Tax Credit

Beginning in 2010, Eligible Small Employers can receive a tax credit for nonelective contributions to purchase health insurance for employees. This credit is available to exempt organizations including churches. For tax years beginning in 2010–2013, exempt organizations may have up to a 25 percent tax credit.

To qualify as an Eligible Small Employer, a church must satisfy the following three requirements:

1. no more than 25 full-time equivalent employees,
2. average annual wages that do not exceed $50,000 for tax years beginning in 2010 through 2013, and
3. contributes at least 50 percent of the premiums.

For tax-exempt organizations, the maximum credit is 25 percent of the employer’s premium expenses that count toward the credit. The amount of the credit, however, cannot exceed the total of required amount of income tax, FICA, and Medicare withholding, plus the employer’s share of FICA and Medicare tax on employees’ wages for the calendar year in which the employer’s tax year begins.

Churches should use IRS Form 8941 to demonstrate eligibility and calculate the credit. This form is filed with Form 990T, even if the church does not have unrelated business income

Alliance Benefits

In an effort to remain compliant with current health plan laws and regulations, we are in the process of reviewing and contacting churches with any questions that may arise. Our goal is to have complete information on file for auditing purposes. Thank you in advance for your patience if you are one we contact!

Health Benefits

As Church Treasurers, you can greatly assist with your employees’ transitions. Please notify Alliance Benefits of status changes within 30 days, even if the person will be on a severance package. Please send billing changes at least six business days before the end of the month. To learn what forms are needed, see Guide to Filling Out Forms at alliancebenefits.org. For questions, please call Alliance Benefits at 800-700-2651.

Retirement Benefits

Fellowship Fund: The Fellowship Fund contribution for 2012 has been set by Council at 50% of the previous years’ level. In 2012, please determine your church’s contribution amount by multiplying your 2011 operating income by 0.35%. For developing churches, please use the rate of 0.175%.

According to current actuarial studies, the Fellowship Fund is expected to be fully funded by the end of calendar year 2012. We are grateful for your church’s continuing participation until then.

403(b) Retirement Plan: If your employees are not participating in a retirement plan, please consider investing in the C&MA 403(b) retirement plan. The C&MA Plan offers tax advantages for ministers that other plans cannot offer. Please visit alliancebenefits.org to learn more, and call 800-700-2651, option 3, with any questions.

The Alliance Development Fund (ADF)

If your church has a real estate loan from a commercial lender that provides a longer-term payment amortization but includes a balloon payment after five to seven years, you might be planning for ways to extend your loan payment and term. As commercial lenders tighten their credit standards, some churches may face the challenge of finding a new source for their financing when the next balloon payment is due. You can avoid that challenge by utilizing an Alliance Development Fund (ADF) loan with a 15 or 20-year maturity.

ADF has been the loan fund of The Christian and Missionary Alliance for 33 years and during that time, they have made thousands of loans to C&MA churches like yours. ADF does not charge any fees for their loans and, unlike commercial banks, their standard loan product has a maturity term that matches the amortization period.

We want God’s best for your church and that may well include maintaining your relationship with your current lender. However, if you are interested in knowing more about financing alternatives, ADF could be the perfect solution for challenges you face today or anticipate in the next year or two.

Please contact David Graf at ADF 888-878-3060, adf@adf-inc.com, or visit adf-inc.com for more details about available loan programs and current interest rates.

Tax Guide for Churches and Religious Organizations

The IRS offers a quick reference guide of federal tax law and procedures for churches and religious organizations to help them voluntarily comply with tax rules. Download the PDF now from the IRS Web site.

Standard Mileage Rates

The Internal Revenue Service (IRS) standard mileage rate effective July 1, 2011, is 55.5 cents per mile, an increase from 50 cents per mile in 2010. This rate may be used to reimburse employees tax free for mileage driven in their personal automobiles for 2011. This rate also may be used to value personal mileage in church-provided vehicles for inclusion on the employees’ W-2 as taxable income. The standard mileage rate for medical or moving purposes is 23.5 cents per mile for 2011, an increase from 16.5 cents per mile in 2010. The standard mileage rate for providing services for charitable organizations remains at 14 cents a mile.

FDIC Insurance

FDIC insurance coverage on most bank deposit accounts will remain at $250,000 through December 31, 2013. With the potential for additional bank failures, it is wise for our churches to ensure that bank balances do not exceed these levels.

Thank You

Thank you for faithfully serving the Lord and your church! I am thankful for the important role that you serve. If you need any other help, please don’t hesitate to contact me at: baldesk@cmalliance.org. It is a pleasure serving you! May you have a blessed Christmas as we celebrate the birth of our Savior!

Gratefully,

Ken Baldes
Vice President for Operations/Treasurer and COO