The Business of Ministry: Battle for the Bottom Line

The nation’s lingering recession multiplies long-term financial challenges for evangelical ministries and denominations.

Recession was obviously on the minds of ministry executives gathered for a Christian Management Institute held in California in February. When World Vision International vice-president James Canning asked his audience whether their organizations were experiencing turbulent times, about half of the 100-plus raised their hands. “If you are not in a difficult time now,” Canning told the middle-managers, “you will probably experience one in the next few years.”

Ministry managers hesitate to blame only the recession for their current troubles. Indeed, the slow economy has hurt some evangelical organizations and denominations, while others appear unaffected. But the weak economy has intensified other factors that are crucial to their financial health, such as increased competition, changing attitudes among donors, and the lingering effects of televangelism scandals. Managers at the institute, sponsored by the Christian Management Association and the Evangelical Council for Financial Accountability, said they had come seeking specific, practical advice in three critical areas: streamlining internal operations, attracting and keeping donors, and maintaining program commitments.

Whatever the impact of the recession, most groups agree that a decade or more of galloping expansion is over. “We haven’t crashed and burned,” says one ministry spokesman, “but we’ve had to slow down the train.”

Slow Growth

Adjusting to a new speed has not come without cost to many ministries. For example, Prison Fellowship (PF) ended 1990 with a 3 percent increase in funds. But the ministry had counted on a 20 percent increase based on gains in previous years. In the same period, the cost of providing employee health benefits went up by 40 percent.

In response, PF laid off 60 employees (20 percent of its work force) between January 1991 and February 1992. At the same time, “our major programs grew at a 40 to 50 percent clip,” according to senior vice-president James Jewell. “The layoffs are partly a reaction to the amount of money we have to work with,” Jewell says. “Partly, it’s an attempt to restructure so we can operate more effectively in the years ahead.”

World Vision U.S. president Robert Seiple is also concerned about the slowing growth. “As it relates to income, we are within a couple percentage points of where we were last year at this time,” he says. “Unfortunately, we were targeted to grow several percentage points.” Seiple says World Vision “will pull out all the stops to avoid layoffs,” but the organization may have to delay programs and capital expenditures.

As internal operations at parachurch ministries adjust to slower growth, hiring appears to be very sluggish. Many ministries are discovering creative solutions, such as below-budget spending and better use of new technology and outside contractors.

At Crista Ministries in Seattle, some former full-time jobs are being done on a half-time basis. In the office of benefits and personnel, Crista retains a staff numbering half the people needed at many other groups their size. Human resources director Roy Parnell explains, “We use computer resources to work smarter. We could not be doing what we do without the Lord providing a very sophisticated software system.”

Need For Innovation

The rising cost of health benefits weighs heavily on the minds of ministry executives and church leaders. Ray Musser, who analyzes and recommends benefit programs for churches and nonprofit organizations, senses extreme frustration about health-care costs. Some groups have been forced to make tough decisions to raise deductibles, search for new carriers, stop covering dependents, or move toward being self-insured.

Insurance companies are skittish about income from contributions, Musser says, “so some of them place ministers in the same rate category as bartenders.”

That, too, has called for some creative solutions. Musser cites one Baptist church in Pomona, California, that administers its health-care plan through the church-run day school to get the best rates, because the school has tuition income.

But innovation is often hard to find in Christian organizations, at least in their business administration. Overall, nonprofit firms are sorely in need of professional management practices, according to some experts. “The majority still believe that good intentions and a pure heart are all that are needed,” wrote management expert Peter Drucker last December in the Wall Street Journal. “They do not yet see themselves as accountable for performance and results.”

For example, some churches and ministries dismiss the need to maintain a cash reserve. In Christian Management Report, David Pollock wrote, “They believe nonprofit means just that—no operating cash surplus. The fact of the matter is, generating cash surpluses may be the only way certain organizations can survive and expand.”

Getting To Know You

To deal with the slowdown, ministry managers are looking at both short-term and long-term trends. Participants at the management institute packed a talk by author Russ Chandler on demographic changes likely to occur in the coming decade. Their interest was driven by one concern: their need for donors.

For nonprofit groups and churches, growth is tied to contributions from supporters or members. Symptoms of recession—unemployment, job anxiety, uncertainty—obviously take their toll on donations. But according to development consultant Thomas McCabe, president of Killion McCabe & Associates, other factors affect donations today. Donors are less likely to stick with an organization they support. They are increasingly skeptical, and perhaps most critically, they lack theological moorings to guide their giving.

Some ministries find fully 40 percent of their donors stop giving after one year. In addition, McCabe says, they are much more selective. “The increasing reality today is that you have to present genuine results of ministry as the focal point of fund appeals, as opposed to presenting a legitimate need.”

Stephen Burger, executive director of the International Union of Gospel Missions (IUGM), says city rescue missions nationwide continue to attract donations, even where the recession has hit hardest, in cities such as Allentown, Pennsylvania; Flint, Michigan; and Youngstown, Ohio. “My sense is that whether we do well or don’t do well has to do with our ability to share our story,” Burger says.

At the same time, rescue missions have seen a 20 percent average increase in the number of clients. Missions need to add staff and diversify services, Burger says. “The jury is still out over whether our donor base will stick with it.… We can’t take them for granted.”

People who give to religious causes are much more likely to remain faithful to their local churches. And some groups, including the Church of the Nazarene and the Free Methodist Church of North America, report steady growth consistent with previous years.

Book Buyers Turn Cautious, Publishers Feel The Pinch

While nonprofit groups have kept a wary eye on donors for the past year, Christian publishers and retailers have focused nervously on their sales figures. And what they have seen has prompted a round of shakeups in the industry.

During the first three months of 1991, the Persian Gulf War actually gave a boost to the Christian retail business. According to William Anderson, president of Christian Booksellers Association, Desert Storm drew massive numbers of people into stores in search of pocket New Testaments, prophecy books, flags, maps of the Middle East, and jewelry (such as crosses and other small items to send to Desert Storm troops). The war combined with the traditionally strong Christmas and spring sales seasons to create “a tremendous sense of momentum” at the Christian Booksellers’ annual convention last July, where stores “bought heavily,” Anderson says.

But immediately after the convention, consumer spending dropped precipitously. Stores returned their overstock and quit ordering. “Add to it a more discerning consumer,” Anderson says, “and there was a big fourth-quarter scare. But there was no nosedive. It was a cumulative effect from the previous 18 months.”

Still, shock waves from the sudden downshift are being felt at Christian publishing houses nationwide. Executives are reluctant to talk about specific numbers. And even though most report that sales are behind projections, they find reasons to be optimistic,

Mark Taylor, president of Tyndale House, says his company experienced the fourth-quarter scare described by Anderson. But he predicts his fiscal year will end April 30 with “a comfortable level of profitability.” Even so, sales are substantially lower than they were last year, Taylor said, so a hiring freeze is in place.

Publishers, like nonprofit ministry leaders, say the recession is not exclusively to blame for their worries. But it has prompted some major changes, including layoffs and sellouts.

In recent months, Wolgemuth & Hyatt Publishers of Nashville has ceased operations. Campus Crusade for Christ is negotiating the sale of its for-profit publishing branch, Here’s Life Publishers, to Thomas Nelson. In addition, Gleneida Publishing Group, which includes the Fleming H. Revell Company and Chosen Books, is looking for a buyer.

Two of the largest Christian publishers have recently cut back their work forces. The Zondervan Corporation cut 3 percent of its work force (a total of 57 positions) as part of a belt-tightening move by its parent company, HarperCollins. According to Zondervan vice-president Tom Mockabee, sales are running just slightly ahead of last year, instead of showing an expected 11 or 12 percent increase.

Word, Inc., in Dallas eliminated 17 positions (about 3 percent of its 500 workers worldwide) as part of a year-end restructuring.

Ironically, some of the best-selling titles recently have been those that dispense advice for dealing with hard times. The book that helped carry Moody Press to a good 1991 was Larry Burkett’s The Coming Economic Earthquake, says Dennis Shere, acting vice-president for media. “It came out at just the right time.”

By Ken Sidey, with Thomas Giles.

Yet caution is evident at many denominational headquarters. The recession appears to be taking less of a toll on evangelical denominations than on their mainline counterparts. Evangelical churches continue to add members and generally are organized with smaller denominational bureaucracies. Nonetheless, church leaders as well as ministry leaders are increasingly preoccupied with planning ahead.

For example, efforts are under way at the Wesleyan Church to cut costs at the top. At its general conference this June, the church will consider resolutions to eliminate one of four chief executive officer positions, says treasurer Daniel Busby. It will also consider holding a general conference less frequently.

At the Conservative Baptist Foreign Mission Society, “We are definitely being very careful with expenses,” says treasurer Mark Weckesser. At year end, the Conservative Baptists listed churches that gave $10,000 or more to the denomination. Weckesser says, “We noted a significant number that had given over $10,000 in 1990 but didn’t make it in 1991.”

Other denominational officials note a tendency for churches to keep more money at home and to demand better accountability for funds sent to headquarters. Says financial coordinator Harry Van der Meer of the Christian Reformed Church in North America, “Our deacons are looking for more information as to where the money is going [at the national level].”

Maintaining Ministry

Hard times are also forcing ministries to re-examine who they are and what they stand for. According to some seasoned observers, the process is a healthy one, and often long overdue.

“In ministries, we tend to do what we want and then find a rationalization for doing it,” says the finance officer of one large Christian organization. “We are geared toward preserving our program, not doing it better.… When’s the last time a ministry went out of business? We perpetuate ministry because we are unwilling to stand up and say it’s no longer working. We fail to assess it as we do other things.”

Some ministries have looked toward mergers as a solution. International Bible Society and Living Bibles International recently announced they were joining forces in the work of Bible translation and distribution. And two Christian colleges in Indiana, Summit Christian College in Fort Wayne and Taylor University in Upland, recently merged.

Other ministries are looking toward greater cooperation with one another to avoid duplicating efforts. Last year MAP International of Canada started a project in Albania, then ran into trouble funding it. They approached World Vision, which gave MAP $40,000 to help with the cost of shipping medical supplies to Albania.

“I see the big question of the nineties being, ‘How can Christian organizations work together to be more effective for the kingdom?’ ” says MAP’s chief financial officer Gordon Thompson.

Plenty of other financial questions remain for evangelical ministries and denominations. And answers are not likely to become easier to find. The longer the recession persists, the more pressure will build for basic changes in U.S. economic and social systems, says World Vision’s Canning. With that in mind, he paraphrases Drucker: “The most important task in managing a nonprofit is to anticipate crisis: to see the storm coming and get ahead of it.”

By Beth Spring, with Thomas Giles.

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