As of this time last year, we were projecting a budget shortfall of $485,950 for 2022, due to the ongoing impact of COVID-19 and the need to continue to reconfigure and restructure ministries as we build our new Conference. This larger work continues, and I will address it further momentarily. However, the actual pre-audit results for 2022 show a surplus of $134,000.
2022 Financial Results
This surplus mirrors Proportional Giving to Our Church’s Wider Mission, which exceeded budgeted expectations by nearly $136,000. Based on recent years, we had anticipated a 5% reduction in giving. Instead, contributions from our churches were at 99% of 2021 levels, or 104% of budget.
Further good news can be seen in participation levels: between 2020 and 2022, sixty churches which had paused their giving were able to resume contributions to OCWM through proportional gifts. Your Board members praise God for this re-engagement, and for the generosity of all of our churches which makes possible our many shared ministries.
Also contributing to the surplus was $300,000 of savings in staffing costs. A little under half of this was a result of staff consolidation and structural changes; the rest was due to staff vacancies.
Another major contributor was Pilgrim Day Camp on the Framingham campus, which saw unprecedented enrollments as more parents returned to in-person work. PDC exceeded budget expectations by $200,000. Our day camp ministry is well-known and well-loved in Framingham and surrounding communities. It is possible that demand will ease again as more child care centers re-enter the market, but the summer of 2023 is already booked to capacity.
Other factors contributing to the positive 2022 outcome, as well as areas in which we fell significantly short of budget, are listed in the “Key Variances” document included with the financial statements accompanying this report.
Your Board of Directors has voted to transfer up to $100,000 of the 2022 surplus to the Operating Budget Stabilization Fund, for use in future years. The exact amount will be determined once an audit is complete.
2023 Budget Projections
The 2023 budget assumes that 2023 Proportional Giving to Our Church’s Wider Mission will be at 97% of 2022 levels. This is consistent with pre-COVID trends going back many years. The budget projects a significant increase to Friends of the Conference individual gifts, approximately doubling from their 2021 levels. (2022 FOC gifts were minimal because the position of Director of Philanthropy was vacant for most of 2022.)
Total return proceeds are projected to rise slightly due to an increase in endowment funds. Outdoor Ministries and general program income are expected to increase, as we continue to recover from pandemic-related slowdowns.
On the expense side, we have increased salaries and wages by 5%, which seemed essential given cost-of-living increases of over 8%. Outdoor ministries expense and general program expense are also projected to increase over 2022, corresponding to higher levels of activity. Total program support and institutional costs are projected at 7% less than 2022 actual levels.
The result is a budget showing a projected deficit of $485,600. Of this amount, $347,000 is directly attributable to the lingering effects of COVID on our retreat centers in Sharon and Framingham. This is the amount by which the projected net expenses for 2023 exceeds net 2019 (pre-pandemic) costs for these two sites. (Our other retreat center, Irons Homestead, had relatively low utilization prior to the pandemic, so the impact of COVID has been smaller there.)
The Board values our retreat center ministries and wants to give them every chance to recover from the pandemic. However, it does not seem faithful or wise to meet this challenge by cutting hundreds of thousands of dollars from other staffing and ministry lines.
Fortunately there is a short-term alternative. The 2023 budget passed by the Board assumes the use of $100,000 from the Operating Budget Stabilization Fund, representing excess income from 2022, and $247,000 in Employee Retention Credits. Although we are still waiting to receive most of these credits, they represent less than ¼ of the amount to which our auditors believe SNEUCC is entitled, so it seems reasonably safe to count on this amount.
Retreat Center business is on the rise this year, and our hope is that we can recover pre-pandemic levels of activity and revenues. That said, all of the retreat centers had financial challenges even before the pandemic, including large shortfalls in available funds for capital upkeep. Whether it is sustainable or optimal for the Southern New England Conference to operate all three centers has yet to be determined.
The deficit remaining after the planned transfers above is $138,600. This represents less than two percent of the budget. Our consistent experience in the historic Conferences has been that budgeted deficits of this magnitude generally disappear by year-end due to cost savings. Your Finance Committee and Board are comfortable with this projected deficit.
Planning for 2024 and beyond
The senior management team continues to work toward a sustainable staff and compensation structure. Staff transitions during 2022 enabled consolidation and cost reductions of about $145,000. Additional changes are planned, with anticipated cost savings in the neighborhood of $250,000, to be initiated by the start of 2024.
In addition, the following efforts reported a year ago are ongoing:
Our Stewardship and Fundraising Committee continues to work to enthusiastically communicate our Vision, warmly invite support of our shared ministries, and make it as easy as possible for congregations and individuals to support the work of the wider church. To this end, at the committee’s recommendation, the Board of Directors has engaged Harvest Development Consulting Group to conduct a comprehensive review of our fundraising practices and potential, and help us to develop effective strategies for the future. Our new Director of Philanthropy, Rev. David Figliuzzi, is taking the lead on this project.
The Property Committee continues its review of all properties owned by the three historic conferences, to determine the extent to which each is a financially viable contributor to our Vision and ministries. This committee will make recommendations to the historic Boards, which own the properties, as well as the SNEUCC Board, which manages them.
These recommendations are likely to include re-purposing and/or selling some properties. Some, such as large offices, are clearly no longer needed. For others, there are more difficult tradeoffs to consider. These must be faced, because financial support of all existing properties would require us to radically curtail other ministries.
If properties are sold, the Finance Committee’s recommendation will be to add the proceeds to endowments, generating support of Conference ministries in perpetuity.
MA Bible Society
As of January 2023, after discernment and due diligence on both sides, the Massachusetts Bible Society has become a subsidiary of the Southern New England Conference. The Conference has agreed to carry forward the mission of the Bible Society "to promote biblical literacy, understanding and dialogue that is grounded in scholarship, socially relevant, and respectful of the many voices within the Bible and all those who turn to the Bible in faith" – a purpose that your Board determined was entirely in alignment with the Vision of the Conference.
Conference staff are carrying out the Bible Society mission, supported by a new endowment of $1.3 million for this purpose. Roughly half of the income on the endowment is helping to support the staff who are doing the work, with the other half available for direct costs of programming.
The new partnership was enthusiastically embraced by the outgoing leadership of the MA Bible Society as well as the SNEUCC Board. The hope is to conduct a full merger of the organizations once an appropriate legal mechanism can be identified.
Undergirding all this financial management, of course, is the hope that the powerful love and justice of Jesus may be made visible and tangible in the lives of people in and beyond our communities. Your Board members are grateful for the ministries each of you is carrying out every day. We are grateful also for your financial support of our shared ministries, as we seek to do together what none of us could do alone. It is good to be on this journey together.
May we will remain grounded in the Vision God has placed before us, in full confidence that the Holy One is seeking to do a new thing through the Southern New England Conference. Thanks be to God!