Financial Implications of Mission in a Supported Territory
- Details
- Written March 2017
Administration is defined as:
the ongoing and dynamic application of thought and action to the structure, function and philosophy of an organisation
In the financing of a territory's mission there is a need for economic philosophy, policy and practice. Economic policy and practice must be derived from philosophy. The principal architect of this philosophy is often the territorial commander building on that which existed before appointment. In The Salvation Army we tend to emphasise structure and function. Let me suggest that philosophy and even theology are equally, if not more, important.
1. PHILOSOPHY
Territorial economic philosophy will be largely derived from one's personal philosophy about money. What I share is therefore essentially my own, but has evolved from experience as a hospital administrator, been refined by years as medical adviser and more recently by the opportunities of territorial leadership both in India Central and Southern Africa. This has been shaped by interaction with numerous colleagues over the years and by occasional reference to documents such as the Manual of Accountancy, O & R and publications on governance and management.
I share with you some statements and reflections that may read as something of a manifesto. They are personal statements, although I suspect they are fairly widely shared.
1.1 THEOLOGY
1.1.1 I believe money is a gift from God.
I keep before me a picture of a little old lady coming to the holiness table with a self-denial envelope. She gave it to God and he makes it available to us. I find it helpful to give thanks to God for what he has given us in the prayer before a finance council. The financial resources have come from him, and they must be used for his work. They do not belong to me. My colleagues and I are merely stewards of what God has given.
It must be used for the purpose for which it was raised. To use it otherwise (even if such use is legitimate) is misappropriation. It must not be hoarded, although it is legitimate to effect some savings.
1.1.2 I am committed in faith to the promise that God will provide according to our needs in Christ Jesus.
We could, I am sure, all testify to the way God has provided. When the income is not as much as I had hoped I must not fret or worry. I must believe that this is what God knows we need and we must operate within those limits. We must live within the harvest, and at that stage tailor to suit the cloth and economise.
But in spite of living by faith I still plan, budget and monitor finances.
1.1.3 I am aware of the dangers of money and more particularly the love of money.
Scripture warns us about this frequently.
At a personal level I must beware of the danger of riches and resist any temptation that I benefit from territorial finances.
At a territorial level I must beware that we do not allow money or the worry about money to consume us. We must retain our focus on God and his mission. Nor must we 'gain the whole world and lose our soul'. The temptations of corruption come not only to junior officers. Misuse and misappropriation of money can become a vicious cycle. We need to be aware of it and be prepared to try and break it somehow.
I must beware that the territory does not get obsessed with money and financial concerns. It is a sure way to make a territory 'unspiritual' and even to help drive the spiritual among us away from us. Spiritual values must come first. We must seek first the kingdom of God. The TC must do that.
Economic upliftment is a product of salvation it but must not become the main issue. Newbigin has pointed out that one of the greatest secularising influences in the world has been the church!
1.1.4 I believe in the biblical teaching on tithing. I must practice this myself, of course!
I accept that the principle may be applied within the Army as a means of balancing the finances of the various components of a territory. THQ – divisional - corps relationships. I believe this must be built into the operation of every territory (including those regarded as supported).
1.1.5 I believe that believers must be challenged to give before we ask non-believers.
This helps uphold Christian principles and gives a sense of ownership to Salvationists and Christians. This is possibly the most important principle on which to build the Army's mission. From good Salvationist giving will proceed successful financing of our mission.
1.1.6 I believe in the principle of self-denial.
Self-denial is not just something to hold us together internationally. It is a principle that calls us to simplicity of living so that we do not draw excessively from funds for the maintenance of ourselves.
1.1.7 I believe in the joy of giving.
It is true that as we share with others, God prospers his work, and leaves us contented.
We may have to learn to live with less as a result, but are usually happier and contented.
1.2 TRUSTEESHIP RESPONSIBILITY AND ACCOUNTABILITY
1.2.1 I accept my responsibility as principal custodian of the finances of the territory, but do not regard this as exclusive.
This responsibility is clarified as
-'Whatever its legal status, the Army's moral standing is that of trustee of the gifts, grants and contributions received '
MOAP&P2-2
-'Wise and successful management of the finances of the Army in the territory'
O & R TC/CS 59/1/1
-'On behalf of the General'
O & R TC/CS 60/5/2
-'To the extent laid down in the MOA ,
0& R TC/CS 60/1/2
-'Within the limits of your territorial budget and the provision of this memorandum, you will bear full responsibility for me financial affairs of your territory'
MOA 15.1.4
The support of the duly appointed officers is vital. The quality of and relationship with Financial Secretary is of the utmost importance as is the composition of the finance council and its expenditure boards.
Cultivation of a sense of responsibility within this coalition (TC/CS/FS/TFC) to apply finances to the mission of territory is essential. Responsibility can be delegated, but we must not be guilty of negligent delegation.
The TC's powers are exercised in the possible application of veto (0 & R TC/CS 84/62/10). If this is applied with care and justified in terms of territorial mission, the veto can become a means of reinforcing the mission and not the TC's power.
‘The financial secretary is …… under the authority of the TC and CS ….. (but) also, in a special sense, the guardian of the Army's funds and financial interests involving recognition of a responsibility to the General '
MOl to Territorial Financial Secretaries (1995) 1.5
The financial secretary therefore shares in some special way with the General, the TC and the CS, responsibility for finances.
1.2.2 I accept that accountability must be broadly applied.
Flowing from the issue of responsibility is that of accountability. I view that accountability in broad terms to the General who appointed me; to donors who support us; to the soldiery who share in the mission. There must be full transparency at all levels.
1.2.3 I believe that better stewardship of what we have is often more important than seeking more income.
Better management of resources is often more important than more fundraising.
And utilising reserves available before asking for more is an important principle. The TC needs to know what these reserves are and request their use when appropriate.
1.2.4 I believe in the principle of self-support.
For a congregation this is one of the best ways of ensuring sustainability and a real sense of ownership. This is true also for a territory.
Accompanying the principle of self-support are those of governance and propagation of the gospel - self governance and self-propagation.
I am willing to subsidise new work for a fixed period, but expect it to become viable and financially stable. This can be successfully used as an encouragement to existing corps to become financially self-supporting. A commitment can be made that savings effected will be invested in new openings.
Permanent dependency was one of William Booth's great fears. I think he would be horrified to see that many of the supported territories remain thus.
1.2.5 I believe in setting down financial policies and strategies.
Attachment 1 is the Vision and Values Statement of the Southern Africa Territory which highlights some of these values and philosophical principles. They form guidelines for the territorial executive council and the finance council, and have been extensively promoted throughout the territory.
There are various components of planning which must be undertaken. Without these it is difficult to visualise how a territory's vision and mission will be accomplished.
Vision -the reason why we exist (unchanging)
Mission -our current sense of purpose goals and values (5- 10 years)
Strategies -our priorities and direction over the next period (3 -5 years )
Financial Policies & Plans - how we will raise and utilise financial resources
Business Plan - plan that will enable us to implement the strategies in order to achieve defined objectives
The Complete Guide to Business and Strategic Planning by Alan Lawrie is a helpful tool. –
1.3 FUNDRAISING
1.3.1 I am willing to promote and publicise the work of the Army. This will encourage people to engage in informed giving. This often results without our asking.
I will protect the privacy of the people we service. Furthermore I will not engage in work just in order to improve the image of the Army. But this must not compromise our Christian and church position. Nor must we promote in publicity what we will not implement. Nor must our promotional work determine the kind of social programmes we follow. The mission must lead. Resources and publicity must not dictate.
1.3.2 I am not afraid to ask for money for the sake of God's work.
I never find door-to-door collecting a chore. Some do. The recently poor often find this more difficult.
In approaching the public and the corporate sector we find that sometimes the best results come from enthusiastic supporters (both staff and advisory board members) who are not Salvationists.
1.3.3 I recognise the need for focused fundraising.
Generalised giving is more difficult to cultivate and there is a need to develop and build on focused giving. People seem to be more willing to give to specific projects, centres, or schemes.
1.3.4 I am willing to engage in commercial ventures (eg recycling) and low risk investments.
This can be done for the sake of generating revenue for specific aspects of Salvation Army operations, but I am acutely aware of the accompanying dangers and that these may detract us from our prime purpose. We must remain mission focused!
It may sound contradictory for a supported territory to have reserves. These need to be judiciously managed. An investment advisory committee and investment manager can be of great benefit. For a supported territory endowments suitably invested to fund specific operations, can be beneficial.
2. PRACTICE -
Now we must turn to some practical matters: Audits, accounts, budgets and projects. Let me offer a few remarks on each.
2.1 AUDIT
The purpose of an audit must be clearly outlined. That for the IHQ audit is well stated (attachment 2). The Salvation Army is also subject to external audit. Once again it is wise to understand the purpose of such audit and to whom the report is principally addressed. Having said that I have found it helpful to regard the report as addressed to me! For both IHQ and external audits it is helpful to engage in dialogue with the auditors. I prefer this to be in the presence of the finance council or even the executive council.
Auditors may need to be reminded that resources are applied to the accomplishment of the Army's purpose and task. The TC may be the person who needs to do that.
When the report is received it is important to study this and to note the recommendations or instructions. It is essential that these be followed through. As chief executive of the territory I regard it as the responsibility of the TC to ensure that arrangements are made for the recommendations to be addressed by the appropriate person and followed.
A study of IHQ and external audit reports will give a TC understanding of many aspects of the financial position.
2.2 ACCOUNTS
It is essential for a TC to have a working knowledge of territorial accounts. We must be able to read an income and expenditure statement and a balance sheet.
But more important than merely reading these, the TC must encourage summary and analysis of the statements. Comparisons with previous years, with the current budget or even with comparable situations will prove helpful in financial management. Very often trends are more important than the present position. And sometimes a few simple sentences about income and expenditure by the chairman will help the finance council understand the position. Attachment 3 is a sample of financial analysis.
2.3 BUDGET
In supported territories we hear a lot about these, and rightly so. The problem is that very often the budget is simply used as a means of ensuring continuing support by IHQ, and it does not become the tool of financial management that it should be.
A responsible TC will try to cultivate the understanding of department heads, finance staff and the finance council in recognising their responsibility in formulating and approving the budget as a management tool. Departmental budgets must be formulated in order to reflect the vision, mission, strategies and plans of that department. These must contribute to and reflect the territorial mission. It is probably in budget formulation that finance and mission are most closely co-ordinated.
I find myself confused over the issue of the purpose of budgets and of authority for approving these.
O & R for Officers (1997) 69. 5a. 6 states:
'The finance connected with each section of Army is regulated by me of an annual budget ….. When prepared by the authorised offices it is submitted for approval to the responsible authority - for example that of a supported territory to IHQ’
The same regulations state:
'The duties of a finance council or board Include preparing the budget ,
The implication is that a TC and members of the TFC in a supported territory are authorised officers but not the responsible authority.
I appreciate the statement of O&R TC/CS 60.6.2.
'The sending of financial aid ….. should be done in a structured way to ensure that this supports the strategy and policies adopted officially by the receiving territory'.
When IHQ grants are required it is right that the TFC-approved budget is forwarded to IHQ with the accompanying request for a grant. Even if there are delays beyond the start of a financial year in receiving responses to such requests, the approved budget or a modification of it must be adopted for operational purposes. Responsibility rests with the TC and the TFC and whatever the O & R may state it would be wise for these persons to regard themselves as the authority responsible for financial operations.
One of the major difficulties for a territory is the uncertainty that surrounds income. We cannot be sure of the IHQ grant, of the public appeal, and even of government grants. Therefore financial management by regular budget comparison becomes imperative. The expenditure side of the budget must be balanced by income! The two need to be monitored. A TC must, if necessary I insist on regular budget comparisons. (This means adequate financial staff).
2.4 PROJECTS
A significant means of funding in recent years has been that of project funding by donor organisations. These could be national or international, and cultivated by a public relations department and a projects office.
A territorial commander with a good overview of territorial financing can invite or suggest ways in which aspects of territorial programmes can be financed by project funding. There are obviously dangers in embarking on this mechanism of funding as sooner or later the donor is likely to withdraw support, thus compromising the very programme which has become dependent on that funding.
Clearly thought needs to be given to developing mechanisms of financial stability with careful forward planning.
Care must be taken that project funding is applied only to the purposes of the project. Projects are not a means of income for the general maintenance fund. Project funding can effect savings, but it is not an account into which we can dip as we please!
2.5 TERRITORIAL INCOME
The Salvation Army's definition of a supported territory is one that receives grants from IHQ. COAL has already proposed that territories be categorised differently (attachment 4 ). Whether or not IHQ accepts the proposal a TC can use this in presenting a target to a TFC that regards itself as a responsible authority: Aim to be less dependent on IHQ financing!
Attachment 5 illustrates the general maintenance funding of four territories -three dependent on IHQ grants, the other not.
I suggest these could be the history or the future history of any one territory .Not only do percentages change: total income is likely to increase also as growth occurs.
3. SUMMARY -
The paper provides a TC's perspective on the financial implications of mission in a supported territory. From a series of statements of principle, emerges the importance of developing financial policies and plans within a framework of vision, mission and strategies.
The importance of cultivating a sense of responsibility, authority and accountability locally is emphasised. Varying degrees of dependence on IHQ financing are highlighted, illustrating how local fundraising can reduce dependency on IHQ grants.
SUGGESTED QUESTIONS
1. Does the territory have a vision and mission statement? Has there been any attempt to formulate a business plan?
2. Does the territorial finance council regard itself as a responsible authority?
3. Have the territory's financial statements been summarised and analysed?
4. Is the territory's mission driven by its vision or by finance?
5. What components of territorial income should be strengthened? And in what order?
Paul du Plessis
March 1998
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