GAC to consider charging a fee for administering designated gifts
The Layman Online, September 23, 2003
The General Assembly Council, facing continued budget shortfalls, will consider a recommendation that it begin charging an administrative fee of “up to 5 percent” on all donor-restricted giving to the mission budget.
The recommendation has come under fire, with critics saying that it would be “devastating to the Mission Initiative” and “likely to hurt one of the most trusted giving avenues available to the church.”
The proposal by Mission Support Services, a division of the General Assembly Council, would affect gifts to a wide variety of funds such as the Presbyterian Hunger Program, One Great Hour of Sharing, the Mission Initiative, Presbyterian Disaster Assistance and Frontier Mission Extra Commitment Opportunities, among others.
The General Assembly Council will consider the proposal during its meeting Wednesday through Saturday in Montreat, N.C.
Income takes nose dive
The 215th General Assembly, meeting in Denver in May, lowered its mission program budget to $126.9 million by snipping around the edges, tapping reserves and reinterpreting the purpose of some restricted money in order to save as many staff jobs as possible. The budget eliminated only 19 of the 510 jobs under the authority of the General Assembly Council.
Executive Director John Detterick told the General Assembly Council in April that this move was a “tactical budget” – meaning that it resolved only the issue of a projected $3.14 million deficit in 2004.
Having invaded reserves to meet the 2004 budget crisis, the General Assembly Council now finds its back against the wall when facing its needs in 2005. Detterick warned the council in April that the 2004 plan was only a temporary fix and that further cuts would be required for 2005. “Next year,” he said, “we’re going to be in the same position as we’re in this year. We’re going to have to do some major budget changes.”
Restricted income no longer ‘safe’
Mission budget income projections show a steep decline from congregations, both in unrestricted gifts and those that are given for designated purposes. Overall, the 2004 mission budget is nearly $14 million below the $140.4 million spent in 2001.
As confidence in the denominational leadership has decreased, congregations have been shifting their giving from unrestricted to the restricted category, a trend that has tied the hands of denominational bureaucrats. More than 70 percent of contributions to Louisville headquarters now come with strings attached. But even this restricted income stream appears to be shaky. It is down 14 percent, $12.7 million, from 2001, as invested bequests from past-tense Presbyterians generate fewer dollars, and fewer Presbyterians are making contributions.
Warning shots fired
If the cash-starved General Assembly Council now assesses administrative fees on donor-restricted gifts, it could well find itself throwing fuel on the fire. Congregations and major donor individuals may resent having to pay a penalty for channeling their gifts through the denomination when there are plenty of non-denominational alternatives.
In an open letter, released today, the Rev. David Hackett, executive director of Presbyterian Frontier Fellowship, urged the council “to reject this proposal as premature, likely to hurt one of the most trusted giving avenues available to the church.”
If added, he said in an e-mail sent to the media, “this administrative fee would deduct up to $2.50 on a $50 donation, $25 on a $500 gift, $250 on a $5,000 gift, and a sizeable $2,500 on a $50,000 grant – even though it takes the same amount of staff time to handle any size donation check.”
“Currently,” Hackett said, “there are no fees of this sort assessed on restricted gifts, which are the only way donors can direct donations in the current PCUSA financial system to specific ministries without concerns that the funds might be equalized or shifted.”
Mission Initiative Campaign could suffer
This is not the first warning that the council has received on this subject. In January, the chairman of the steering committee for the $40-million Mission Initiative Campaign told the General Assembly Council that he would consider walking off the job if the council adopted two proposals to divert funds.
Bill Saul vehemently protested both proposals, saying that, if they applied to money raised for the Mission Initiative, they would divert funds from new church development and foreign missions in order to pay for more staff.
The 2000 General Assembly ordered that an administrative fee – 9.5 percent – be charged to pay the indirect costs of money raised for restricted purposes, such as the Mission Initiative. Following warnings by Saul and others, the General Assembly Council has not implemented that policy, although it could do so at any time. Currently, only unrestricted funds are used to subsidize indirect costs.
Another proposal, from a member of the council, sought to divert some of the money from the Mission Initiative to hire more staff to promote the development of ethnic minority congregations.
But Saul said both proposals violated the promises that the Mission Steering Committee made to its staff and prospective donors, who have been assured that all of the money raised in the $40-million campaign would go for missions.
Saul told Louisville leaders that if they hit the Mission Initiative with indirect costs, “This would be devastating.” Saul said that when the 214th General Assembly authorized the Mission Initiative Campaign, it made no provision for assessing such fees.
‘An absolute promise’
“We have already gone to major donors and there has been an absolute promise” that contributions will go for approved projects only, he said. The General Assembly appropriated $1 million to hire staff and pay other expenses to begin the Mission Initiative.
Diverting Mission Initiative money to pay for staff and administrative costs “is not who we are,” Saul said. “That’s not what we are told to do. There are specific places it has to go. I hope I don’t have to come to the General Assembly and have to defend that money pot.”
In-house research cited
Hackett was even more critical of the current proposal, saying that, “Within the GAC documents on this proposal are statements that say research has ‘indicated that there would be little impact if 5% of designated gifts went to administrative costs’ and ‘The Research Office has conducted surveys and concluded that an administrative charge of 5% would be acceptable to donors.’ There is no mention of concerns or dissent that came to light during the research.”
The proposal, he said, also states that, “‘The GAC postponed action on this proposal so that research could be done to evaluate the proposal’s impact on giving. Immediately thereafter, Keith Wulff, coordinator of Research Services of the GAC, conducted focus groups in six cities from California to Florida and had telephone conversations with the heads of the Medical Benevolence Foundation, Frontier Fellowship and the Outreach Foundation. Three presbytery executives were interviewed over the phone and one sent written comments.’ Again, there is no mention of the concerns or dissent expressed by those few consulted.”
Research findings disputed
“Through its own channels,” Hackett said, “Presbyterian Frontier Fellowship makes quite a contrary assessment to the GAC and the GAC Executive Director’s office on this proposal. It believes this proposal, if enacted, would likely have a very significant negative impact on frontier mission funds due to the concerns of its donors, thus harming our church’s dynamic mission among unreached people groups. The board has expressed its concerns in writing to the GAC through the GAC executive director John Detterick.”
In conclusion, he said that “we believe this proposal would have a severe impact on the Frontier Mission Program, not to mention how this will impact many other vital ministries within the PCUSA that work hard and well to recruit specific designated donations to their programs or mission emphases.
“This proposal,” Hackett said, “appears to be an accountant’s cold solution to a more complex and sensitive pastoral issue in a strained financial environment. It taxes successful ministries with an unfair assessment in order to fund Louisville’s operations.”