In early February, we announced the results of this year’s Fund Drive. We continue to receive a few pledges through June, and pledge increases are always welcome; but it is clear that our pledge income will be 10% short of our goal. That amounts to approximately $150,000.
The basic financial health of First Unitarian is good. We have operated “in the black” for the last 5 years. We have been building financial reserves while addressing deferred maintenance. But we will need to deal directly with this income shortfall.
I want to share our general approach to budgeting this year and also share more analysis of the pledge results than normal.
First, the budget —
Our budget is over $2,000,000 and over 70% of that consists of salary and personnel expense. We are always balancing the need to support our existing programs, explore new initiatives, compensate our dedicated staff, pay our mortgage and “keep the lights on.” The need to reduce spending significantly will make that balancing act even more difficult.
We are required to present a balanced budget to the Finance Committee in about two weeks. You can check the current Moderator’s Letter for details about this process.
To absorb a reduction in spending of the full $150,000 shortfall next year would dramatically reduce our capacity and our program. The budget we will recommend will therefore include the use of several reserve funds, a reduction in addressing deferred maintenance and a commitment of half of our projected operating surplus at fiscal year’s end. Some of these funds will need to be explicitly released by the Board.
This will cushion the impact of the shortfall for one year. It will not, however, cover the entire shortfall.
We will still be required to reduce expenditures by approximately $70,000 in the next year. It will take some time for us to determine exactly what shifts will be required to achieve that reduction. It will certainly involve a reduction in staff, but it will take some time to work through the specifics. Our commitment remains to try to match such changes with retirement and other plans of our dedicated staff.
Please remember: this is a one-year plan. There are reasons to hope that pledge income will rebound, including: signs of health in this year’s pledge drive(see below), the reduction of tension in the congregation and the positive feeling about the ministry we are offering in these difficult times.
If revenue does not rebound, however, further significant cuts will be required in the subsequent year when the reserves will have been used.
Some difficult decisions lie ahead. I wanted to err on the side of providing you with more rather than less information.
And, some additional analysis of our pledge results —
Here are the basic numbers (results as of March 14):
- Comparable number of pledges, 2017 vs 2016 (958 vs 949, + 1%)
- Lower average pledge ($1,458 vs $1,589, -8%)
- Total $ Pledges: 2017 vs 2016: -7%. 2017 vs Goal: $150,000 or ‑10%
What do we know about the causes for the shortfall?
The distribution of pledges describes a fairly healthy pledge base:
- 60% more increased pledges than decreased pledges (250 vs 156)
- More than 10% new pledges (111)
- 42% of pledges held constant
- 2016 pledges not renewed is high but consistent with past years (15-20% of pledge base)
- Some pledging units “returning” after taking 2016 “off” (also a consistent pattern)
- 16% of pledges reduced
The $ shortfall is the result of:
- significant reductions among those reducing their pledge
- replacing some significant pledges (not returning) with lower $ new pledges
- on-going pattern of non-renewing pledges
What do we know about the pledge reductions?
- Bulk of pledge reductions ($104K) are from 72 pledge units.
- About a dozen of these individuals/families have explicitly told us they reduced their pledge because they were upset with decisions/developments at the church.
- For more individuals/families the reduction was the result of changed circumstances that they told us about (retirement, job change, job loss, divorce, etc.)
- We have no firm information for about 40-50 of these pledge units
- Many small reductions (<$100) were probably incidental (forgot pledge from last year, rounded, etc.)
- Some other reductions almost certainly the result of additional contributions to other groups this fall (ACLU, Planned Parenthood…the Trump effect)
What do we know about 2017 pledgers who have not pledged for 2018?
- Some have died, others moved away
- Some have shifted to other churches
- But we know with certainty the reasons for only a minority
The most important information we need is from those who reduced their pledges (who did not tell us why), and from those who did not renew their pledge (again, those who did not tell us why). We certainly will not hear from all of these individuals and families, but we are going to ask. Whatever information we gain will be useful.
Thank you for your attention to this long, but obviously important update.