But now, in an era of layoffs and budget-cutting, the question is being presented of whether or not that’s fair. Is the trend toward more designated giving — giving money that can only be used to fund specific programs, with no money taken out to cover the costs of running those programs — is hurting other programs that are funded by Presbyterians who do not specify the purpose of their donations.
So the General Assembly Council, meeting Sept. 24-28 at the Montreat Conference Center, is considering a proposal to begin collecting administrative fees of up to 5 percent on restricted funds given to the church — an idea that’s already come under criticism from some parts of the church, but which is being pushed because of hard financial realities.
The denomination could be facing a shortfall of as much as $4 million in revenues in the unrestricted budget for the two-year period of 2005 and 2006, said Joey Bailey, the denomination’s chief financial officer. That shortfall, if it’s not addressed, likely would trigger another significant round of layoffs and budget cutting. The PC(USA) has already cut $8.47 million from the mission budget and eliminated 85 positions in the 2003 and 2004 budget years.
If the proposal to collect administrative fees from restricted funds were approved, it could free $1.4 million in unrestricted funds a year — funding for programs in the unrestricted budget that, if that change isn’t made, are in danger of being cut.
John Detterick, the council’s executive director, said in an interview that he’s heard criticism of the idea from those who support or benefit from programs funded with restricted dollars — including, informally, one seminary president and Presbyterian Frontier Fellowship, which supports evangelism around the world. Some people say “Folks don’t trust the GAC and they don’t want their money to go to the GAC” without attaching some strings as to how it can be spent, Detterick said. And they might not be willing to keep giving money if they don’t keep control over how it’s being spent.
Susan Andrews, moderator of the 2003 General Assembly, said she’s heard some of the criticism of the idea. One thing she’s concerned about, Andrews said, is that “the area of pure mission giving is relatively unpolluted with political ramifications,” and “there’s something about a pure offering to help people in need that is unpoliticized.”
Andrews said she wonders if that will change if the administrative fee is imposed — and whether the political infighting will spill over into those areas as well. “I’m not saying I’m against it,” Andrews told the committee. But “I’m very troubled by that.”
Detterick acknowledged that “for some people in the church, this is a critically important issue,” and imposing the fee could affect donations.
In the interview, he said that if the 5 percent administrative fee were approved, it might be phased in over the course of several years, not all at once. And “it’s OK for me if they don’t want to do this,” he said of the 5 percent proposal. “But the reality is if we don’t do this, we’ll need to make larger cuts” in programs funded by unrestricted dollars.
And Detterick told the council’s executive committee that “we do have somewhat of a justice issue,” with some programs bearing all the administrative costs for others.
The shift towards more restricted giving has become marked in recent years — so much so that the denomination promotes, on its Web site, “Extra Commitment Opportunities” or specific pots of money to which Presbyterians can contribute if they support a specific cause. Presbyterians can designate money to support a particular missionary’s work or to respond to the AIDS crisis or to be spent in a specific part of the world.
Some Presbyterians restrict their donations because they’re unhappy with decisions the denomination has made in the past about how money has spent — they don’t trust the denomination to make the right choices. Others aren’t angry, but they have a passion for a particular type of work or just want a voice in how the money that they give is spent. “This seems to be a trend in our society,” that people want some control over where their gifts go, said Bruce Hendrickson, chair of the council’s Mission Support Services Committee.
But the financial picture for the denomination isn’t what it used to be.
In the past, 70 percent of the PC(USA)’s budget was unrestricted — meaning the money was given with no strings attached — and 30 percent was designated for particular programs. That made it relatively easy to find the funds to pay for indirect administrative costs within the unrestricted budget.
Now, that percentage has flipped. Today, 70 percent of the denomination’s budget is restricted — and only about $36 million of the $128 million budget comes in unrestricted money. And none of the indirect administrative costs, such as paying for insurance or legal costs or accounting, can be recovered from those designated funds. As a result, budget officials said last winter, of all the unrestricted funds given, about one-third went for indirect administrative costs in 2001.
As a result, Detterick and the staff leadership team are proposing that an administrative fee of up to 5 percent be collected from restricted donations beginning with the 2005 budget. At the council’s meeting last January, Detterick made a similar request — that time suggesting that a 9.5 percent fee be collected — but after considerable discussion the council voted to postpone action on that, pending more study.
At that time, several council members raised concerns — among them, that charging an administrative fee could hurt the Fund for Theological Education and that it could chill donations to the Mission Initiative: Joining Hearts and Hands, the campaign to raise $40 million from large donors over the next five years for international mission work and new church development and redevelopment. Bill Saul of California is co-chair of the Mission Initiative steering committee for the new Mission Initiative, said at that time that subtracting indirect administrative fees from the money raised “would be devastating to the Mission Initiative.”
And Presbyterian Frontier Fellowship, which helps to raise money to evangelize “unnreached people groups” around the globe, has come out strongly against imposing the administrative fee.
After the January meeting Keith Wulff of the denomination’s Research Services office conducted focus groups in six cities, spoke to several presbytery executives and with representatives of Frontier Fellowship, the Medical Benevolence Foundation and the Outreach Foundation. He determined “there would be little impact if 5 percent of designated gifts went to administrative costs.” Assessing a 5 percent administrative fee ‘would be acceptable to donors,” a report to the council states.
The report also states that overall administrative costs for the PC(USA) came to $13.6 million out of a $129.1 million budget in 2002, or 10.6 percent. That compares with 13.1 percent for the Episcopal Church Foundation, 22.9 percent for the American Cancer Society and 28 percent for the American Red Cross, the report states.
Bruce Hendrickson, chair of the council’s Mission Support Services Committee, urged the executive committee members to think about the issue with open minds, and a recognition that sometimes things have to change.
“It’s not sweet music,” Hendrickson said. But “this is a sign of the times and we’ve got to face up to it” — to consider doing things differently from how they’ve traditionally been done.