“Therefore, brothers, be all the more diligent to make your calling and election sure, for if you practice these qualities you will never fall.” (2 Peter 1:10)
There are 327,000 religious organizations in the United States, each with a parish council or board of trustees. Almost every one of these governing bodies will have a volunteer member who is serving as the treasurer. In most parishes, key volunteers also fill staff-like positions in office procedures.
Many volunteer-staffed parishes have an informal air about them. For this reason it is easy for finances to be treated in a casual way. But when money matters are treated casually, it can become too easy for money to get lost, or for some people to question how money has been spent, or even for individuals to take advantage of the informality and help themselves to cash or other assets.
The power of money and all that it represents to vulnerable human beings is emphatically represented in scripture by the behavior of Judas – “He was a thief, and having charge of the moneybag he used to help himself to what was put into it.” (John 12:6) This is not to say that parish treasurers should be suspected or closely watched because they might be tempted to adopt the behavior of Judas, but rather that professional procedures must be in place to ensure integrity in all aspects of finance in the parish.
Parishes raise and use substantial funds. And each parish has at least one volunteer leader counting the cash (it’s recommended that at least one other person be present for this task), writing checks, safeguarding financial integrity and managing funds. The recommendations below are offered to assist voluntary treasurers to conduct their work in the most professional manner possible.
1) Handle the money with high standards and set a tone of integrity.
Oversight of cash, checks, and deposits is vital. If it isn’t always possible for the treasurer to be present when money is changing hands, be visible enough that others know that he or she is engaged. Be especially scrupulous about keeping personal funds (the treasurer’s and others) completely separate from parish funds.
Given the limited personnel resources in some parishes, it may not be possible to divide up financial duties as part of an internal control system, particularly since it isn’t always possible to exert the same degree of control over volunteers as paid staff. However, a few essential rules should be followed:
The Treasurer should receive and reconcile the bank statements, OR write checks, but not both;
Incoming checks should receive immediate restrictive endorsement (preferably a bank stamp, or handwritten “For deposit only, ABC Bank, Account # 123445”) and be deposited within a week, with no cash back;
Outgoing checks must be supported by an approved invoice, receipt, or a voucher prepared by the volunteer if a receipt or invoice isn’t available. If a fellow volunteer asks for a reimbursement but doesn’t have a receipt, the treasurer should respond “I wouldn’t be doing my job as treasurer if I didn’t insist on receipts from everyone”;
Checks should require two signatures and never be signed in advance. Alternatively, the parish council might set a policy that permits one signature for small checks below a certain amount, say $50, in order to help discourage checks from being signed in advance.
2) Identify and manage risk
Take the lead in safeguarding the parish’s assets, data, and personal information. Risks associated with volunteer screening, vehicle use, and special events are often of particular concern to treasurers. The Nonprofit Insurance Alliance Group and the Nonprofit Risk Management Center provide free introductory articles on ways to manage these and other risks.
3) Confirm contributions
A prompt thank you letter that includes what donors need for tax purposes is an effective way to keep contributors up to date on the great work the parish office is doing. The IRS says it’s okay to send this information by email. When different financial duties are assigned to a variety of people, the chances increase that any misappropriated donations will be detected more readily.
Here’s a sample of the essential information to include in the thank you letter:
“Date
“Name and address of the parish
“Donor name and address
“We wish to thank you for your (year) contribution of cash in the amount of $(amount). We did not provide any goods or services in exchange for this contribution. (Name of parish) is a religious organization exempt under Section 501(c)(3) of the Internal Revenue Code and contributions are deductible to the extent allowed by law.”
Remember to separately list any single contribution of $250 or more. If the donation is other than cash, describe the property but do not indicate a value.
If the donor is provided with goods or services as part of the contribution, then delete the second sentence in the above example and substitute the following:
“We provided you with (description of item) with a fair market value of $50. Your tax deduction is limited to the amount of cash and value of any property contributed, reduced by the value of any goods or services received in return. Accordingly, the amount eligible for a federal income tax deduction is $450.”
There are exceptions for items of minimal value such as pens and mugs. See the discussion regarding “quid pro quo” donations in IRS Publication 1771.
4) Track volunteer time
In many parishes volunteer effort represents the majority of resource inflow. Tracking volunteers can help protect volunteers and a parish from certain forms of liability and provide helpful data for planning future programs and events. And if the parish intends to seek grants or major gifts it is helpful to reflect the value of the time commitment of volunteers in the budget and grant or gift proposals. Otherwise, the parish council and general parishioners may not know if there are the people in place to get the job done well.
5) Plan and evaluate with a budget
Expressed in financial terms, a budget is a map that shows what the parish plans to do and how it plans to get there. It’s a key tool for getting everyone to agree on what the parish will and won’t do in the coming year. And in small or “casual” parishes where internal controls are often lacking, the budget is the canary in the coal mine. An unexplained variance between a budgeted and actual line item of revenue or expense, for example, may be the first red flag signaling a more serious problem.
Preparing an effective budget starts with asking leaders to estimate what they’ll need and to provide specific proposals for financing it. Reviewing last year’s budget is a key part of the process. Cost and revenue estimates need to be reasonable and attainable. Avoid the temptation to “wing” estimates or to be overly optimistic about contribution increases. At the same time, resist the watchdog mentality at the gate of the treasury, opposing all new funding proposals with knee-jerk resistance.
6) Prepare timely financial reports
Timely and reliable financial information is the underpinning of good stewardship and sound financial decision making. Without this information there’s no way to track budget performance.
For parishes with minimal cash flow or whose finances largely depend upon one event, paper-based record keeping may be acceptable. A template treasurer’s report with blanks for handwritten amounts can be just as effective as a computer-based system if the figures can be easily traced to supporting documents and are presented clearly. For such parishes, a simple monthly reconciliation of bank account activity classifying receipts and disbursements and reconciling beginning to ending cash balances may be enough to form the basis for a summarized monthly financial report to the parish council.
As the parish grows, a switch to commercial accounting software such as QuickBooks may be the best next step. It is vital at this juncture that a proper chart of accounts is established and necessary training is provided from someone with nonprofit accounting experience.
7) Recruit the next treasurer
Like other volunteers, the treasurer will not serve indefinitely. Unfortunately, some parish treasurers entrench themselves and resist transfer of control. Throughout their term of service, effective treasurers encourage and equip fellow volunteers to participate in financial management duties. When it’s time for the treasurer to pass the baton, these parishes will enjoy the least disruption.
Indeed, all parish council members share equal responsibility for the financial health of the church. Officer titles vary, but those typically described as president, vice president, and secretary form a core parish council leadership group alongside the treasurer. The secretary should be diligent in taking complete and concise minutes that reflect filing of the treasurer’s report and all parish council decisions – especially financial ones.
As a key front-line volunteer, the parish treasurer plays a critical role in sustaining the church, maintaining essential parishioner confidence and supporting overall mission effectiveness.