(By Leslie Scanlon, The Presbyterian Outlook). A ministerial team of the Presbyterian Mission Agency Board that’s been considering how the Presbyterian Mission Agency (PMA) allocates overhead costs is recommending changes – concluding that the rates themselves are reasonable, but that the agency should generally charge agency departments a single, flat rate and that donors need more information about how such administrative costs are assessed.
Proposed: Setting a flat rate for overhead costs
Moving to a flat rate of 19 percent would raise the costs for some PMA departments (such as World Mission, which currently pays about 11 percent), but likely would free up about $2.4 million in unrestricted funds, “which may be directed to the negatively impacted departments to help smooth the transition,” the report states.
The team also concludes that PMA is not overcharging. “The PMA’s currently budgeted overall overhead allocation rate of 13 percent would be considered low compared to the rather broad range of acceptable allocation rates for large religious and nonprofit organizations,” the report states.
As a comparison, it cites work from The Bridgespan Group, which the report describes as “a well-respected nonprofit consulting firm for nonprofits,” and which found that overhead – or indirect – costs for such groups varied between 21 percent and 89 percent of direct costs.
The board is expected to consider the recommendations during its meeting in Louisville Sept. 21-23. The ministerial team which wrote the report – a team including both PMA board members and representatives from the Presbyterian Church (USA) national staff – is one of a rotating series of short-term ministerial teams the board has created to address specific issues.
This team is not the only group examining the fees and policies associated with what’s been described as overhead costs or shared services or common services – the varying definitions of what’s involved is part of the complexity.
A joint working group of the Way Forward Commission and All Agency Review Committee is hoping to release its report regarding shared services and the PC(USA)’s corporate entity by Sept. 20 – right before the PMA board meeting commences. That work group is also looking at how PMA charges the Office of the General Assembly (OGA) for what’s often referred to as shared services – costs associated with common services such as legal services and human resources.
Most Presbyterians probably aren’t thinking very deeply about these things. It’s significant, however, for a number of reasons. More and more, Presbyterians are giving money designated for particular programs and uses – and not providing unrestricted funding that can be used to support necessary but low-profile work such as building maintenance.
Donor confidence in how the money is being handled is key.