Adventist Church Controlling Costs
During Global Financial Challenge
Hiring Freeze Continues, Most Capital Projects On Hold
BY MARK A. KELLNER, News Editor, Adventist Review
eaders of the General Conference of Seventh-day Adventists are keeping an eye on expenditures as the church begins to feel the effects of the economic downturn. On Feb. 12, 2009, the GC’s Administrative Committee, or ADCOM, voted to continue several restraints on spending, though no employee layoffs were announced. An almost complete hiring freeze continues at the world headquarters, with only the most essential positions being filled when they become open.
According to Robert E. Lemon, GC Treasurer, the General Conference has $294 million in cash and investments. This includes working capital of 40 percent of one year’s operating expenses, restricted and allocated funds committed for specific projects, endowment funds and the extraordinary tithe received in 2006 and 2007, the majority of which has been allocated to various initiatives. Most of the funds are in fixed income investments but a portion is in equities. The unrealized and realized losses for 2007 totaled $16.4 million and the interest and dividends amounted to $6.6 million giving a net negative return on $294 million in investments of $9.8 million or approximately 3 percent.
CONTROLLING COSTS: Pastor Robert E. Lemon, right, General Conference Treasurer, answers a question during a Feb. 12 meeting of employees at the world headquarters in Silver Spring, Maryland. GC President Pastor Jan Paulsen, at left, chaired the meeting. [Photo: Matthew Herzel/AR]
Lemon reported that in 2008, US $71,450,420 was remitted as North American Division (NAD) tithe to the General Conference. That’s down four-tenths of one percent (.4) from 2007, but if you exclude the “extraordinary” tithe received by several conferences in 2007 it represents an increase of eight-tenths of one percent. Most of that increase came during the first three quarters of 2008.
Lemon noted that in looking at tithe receipts for the last quarter of 2008 – compared with the same period for 2007 – NAD Tithe to the GC is down 2.55 percent.
Mission offerings from the NAD last year totaled $23,774,840, and that’s down 1.68 percent year-to-year over 2007. Again, the last quarter of 2008 showed the greatest decrease: 5.77 percent.
Tithe and mission offerings from other divisions saw substantial growth last year: $20.8 million in tithe versus $17.7 million for 2007, and $44.7 million in mission offerings, up from $38.1 million the year before.
During the past year there have been tremendous fluctuations in exchange rates, Lemon noted. During most of 2008, he said, this has worked in the GC’s favor: Of the $9.7 million increase in tithe and mission offerings from outside the NAD, $4.6 million came from changes in the exchange rate used to convert from the local currency into a weaker US dollar. But as the US dollar has strengthened in the last few months, it has dramatically decreased the funds coming to the GC.
“The strengthening of the US dollar is very positive for the church,” Lemon said. “We welcome it, as it gives more appropriations to the divisions and institutions outside the US. But it also reduces the dollars received by the GC.”
He added, “Not all reports are in, but we estimate a 5 percent decrease in (global) tithes and offerings for the last three months of 2008.”
Lemon reported the GC’s headquarters operating budget is under the cap. It was $35.3 million in 2008, and it will be $35.6 million in 2009. He said the annualized savings on the currently unfilled budgets would be over $1.6 million.
If a 5 percent decrease in tithe and offerings continues, Lemon said the effects would be considerable. To the World budget, it would represent a loss of $8 million per year; to the GC Operating Cap (the maximum authorized to be spent at the GC World Headquarters), the decrease would be $2 million annually.
Lemon told church leaders and employees the GC is conserving financial resources in the following ways:
- There are 19 unfilled budgets as of February 12, and the net savings is $1.6 million per year.
- As determined in November 2008, there will be no general increase in pay in 2009; it is hoped that pay increases can be restored when the economy turns around.
- There will be no increase in the employee’s contribution to the Health Care Plan for 2009.
- The GC is continuing the hiring freeze and there will be another major review in two months.
- GC travel budgets have decreased by 20 percent and will save over $600,000.
- All GC staff are being asked to review planned meetings and conferences to see what economies can be realized.
- The GC has put plans for a new document management system on hold.
- Major capital items will be delayed until further review, excepting the Hope Channel/ATN studio construction, which is proceeding since there are signed contracts in place and breaking these would be very costly.
- World budget appropriations will continue at 2008 levels and not increase for 2009. A special 3 percent increase will be reviewed at the time of Spring Meeting; if granted, it would be a one-time special appropriation for 2009 to give divisions and institutions help in making adjustments to the current economic realities.
Lemon expressed appreciation to the General Conference staff for their understanding in these difficult times and thanked the members, many of whom are personally affected by the economic downturn, for their continued faithfulness to the Lord.
“And as I contemplate these matters,” Lemon said, “I remember the words of the Lord’s Servant, who reminds us: ‘We can see only a little way before us; "but all things are naked and opened unto the eyes of Him with whom we have to do." He never becomes confused. He sits above the confusion and distractions of the earth, and all things are opened to His divine survey; and from His great and calm eternity He can order that which His providence sees is best.
“’If we were left to ourselves to plan, we should make mistakes. Our prejudices, our weaknesses, our self-deceptions, and our ignorances would be manifest in many ways. But the work is the Lord's, the cause is His; He never leaves His workmen without divine directions . . . .’” (My Life Today, page 10)