December 4, 2019 Tony Morgan

Strategic Financial Planning with Jill Mutimer – Episode 122 | The Unstuck Church Podcast

Fund even the biggest dreams and visions from God

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When churches plan their finances strategically, they can fund even the biggest visions and dreams from God.

Unfortunately, poor financial planning can lead to money dictating ministry instead of driving it.

This week on the podcast we continue our four part series on financial challenges that churches face today. Jill Mutimer from the Strategic Consulting Group joins me to talk about how churches can become more strategic in their financial planning.

Specifically you will learn:

  • How to stop derailing the overall long-term vision of the ministry.
  • Strategies for creating a clear roadmap of what to do today, tomorrow and in the future.
  • Practical advice on how to share funding plans with banks.
  • Tips to determine the best type of lending institutions to work with.
  • Common mistakes churches are making in their financial planning.
Lenders don't want you to have to grow just to pay them back. They want you to be able to pay them on how you've already performed in the past. Click to Tweet Another church is not your ministry or vision. Structure your funding plan on what you should do rather than just doing what other people have done. Click To Tweet

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Transcript 

Sean: 00:02 Welcome to the Unstuck Church Podcast where each week we’re exploring what it means to be an unstuck church. If we’re not careful, poor financial planning can lead to money dictating ministry instead of driving it, but when churches plan their finances strategically, they can fund even the biggest visions. This week on the podcast we continue our four part series on financial challenges that churches face today. Tony is joined by Jill Mutimer from Strategic Consulting Group for a conversation on how churches can create a longterm strategic plan for their finances. Make sure before you listen to subscribe to get the show notes in your inbox. Each week you’re going to get one email with our leader conversation guide, all of the resources we mentioned and access to the archive of all of our past podcast resources. You can sign up by going to the UnstuckGroup.com/podcast. Now let’s join today’s conversation with Tony and Jill.

Tony: 01:01 Well, on this money series, we are going to be looking at several different topics and one of the topics that we’re discussing is related to stewardship and other specific generosity strategies and day to day management of church finances. But Jill, your organization offers something completely unique for churches when it comes to funding ministry. So could you give us a little bit of an overview of what your team does?

Jill: 01:23 Yeah, I’ll be happy to Tony and I’ll tell you, at Strategic Consulting Group we would really focus on the financial or financing aspects of ministry. You know, just really trying to help them attain their vision. And we do that with three processes. The first is strategic financial planning and really, you know, due to the familiarity of these words or concepts, the fact that they are used all the time, a lot of ministries think they’re doing it already or they perceived that there’s a lot of people out there that do this kind of thing. But I can tell you that our clients after they go through the process with us will tell us they weren’t doing it before and they don’t really know of anybody else who does it.

Tony: 02:06 Yeah, that’s great. It’s hard to believe it’s been more than 20 years since I used to be in local government, Jill, back in those days, every city manager knew of a financial planner that they had involved in looking at what the city was trying to accomplish, planning for the future, and then helping with the financing needs. When I shifted over into church ministry, even with large churches, I was so surprised that there weren’t churches taking advantage of the types of solutions that you are offering and I have a feeling for a lot of the podcast listeners, this is going to be a completely new concept for them because we’re not talking about somebody that would help you with day to day financial management. It’s not somebody that’s going to help you raise money through a campaign or a generosity initiative. It’s not the person helping you think about your offering strategy necessarily.

Tony: 03:03 This is really taking a longterm view of what God is trying to do through your church and then making sure you have a financial plan in place to accomplish that. So with that foundation, let’s dive in. I mean that’s one of the glaring gaps. I guess Jill is the fact that not many churches are taking advantage of this financial planning aspect. But as you work with churches from this financial planning side of things, what do you see in most churches that you help? Are there any key gaps and what steps can leaders take to address them?

Jill: 03:36 Well, yeah, a lot of ministries need this and they’re so focused on the other components of the planning process that they tend to forget the financial piece and that’s why they end up getting derailed. But I would say if I were to pick one thing that’s just the most glaring gap, it would be that ministries really try to focus on pulling off the next big thing at any given time. And it is typically the thing that is causing them the most pain at that moment. So they don’t really take a longterm view of their vision. Again, they just spent this on that next big thing. And unfortunately this leads to truly tactical behavior and decision making and it really oftentimes can get the next big thing, which is fine, but it ultimately derails the overall vision of the ministry because if you can’t achieve the higher priority things down the line, then it really wasn’t the right decision.

Jill: 04:33 So really we feel like the best approach is to be able to quantify the entire vision and ensure that the ministry is putting their resources behind all of the aspects of the vision so that all of the priorities are accomplished rather than just the one thing that is causing the most pain. An example of this, let’s say, you know, a ministry wants to move forward with a worship expansion at one campus, but they don’t understand that by doing that, it might prevent them from launching additional campuses in the future, which if you ask them overall would be a higher priority in the vision and help them attain their vision longterm, quicker by doing the multiple campuses. But they just don’t understand by doing this, you’re not going to be able to do the other parts when you want to. And really in ministries in particular, just need to understand what they have to do today, tomorrow and next year to achieve their vision.

Jill: 05:28 And that’s why we think this strategic planning process and ending up with a roadmap to follow is the only way to help you get there. Really it ties in to your every day though because you need to understand how this is going to impact ministry programs on a day to day basis because you’ve been behaving in a certain way that’s led you to be successful and you need to understand if by doing the things that you’re planning to do in your vision, it’s going to cause you to have to change that balance of capital and ministries and you need to make your decision up front with that information at hand. And you need to understand that there’s going to be sacrifices because at that point you can make good strategic decisions rather than tactical decisions. But all in all, even if a ministry doesn’t use strategic consulting group, just by listening to this podcast, they will try to take a more strategic approach to the financial piece of the puzzle and marry that to the vision and the infrastructure.

Tony: 06:26 That’s good. Jill, this is probably not going to be a surprise to you, but many churches have leaders with opposing views when it comes to debt. Some of them want the church to be completely debt free. They never ever want to have any debt. I, kind of like to say they’ve been Dave Ramseyed. I don’t know if you’ve run into those churches or not. And then others recognize they have to do something to accommodate growth. And, there’s an openness to financing, which I think is a positive thing. Many of us don’t pay cash for our homes. And I think it’s appropriate that churches consider using financing for their church homes as well, especially if it helps us engage in a greater kingdom impact. But do you have any recommendations for pastors who are navigating this divide in their leadership? Maybe it’s their church boards or financial committee when it comes to this debt issue?

Jill: 07:23 Yeah, we deal with it all the time. Just last week we were presenting the results of a strategic financial plan and one of the gentleman who was in the room, he is very debt averse and we’ve talked a lot about it. But we find that oftentimes these opinions on debt and more so by emotion and fear, which are really both subjective and we just feel financial decisions, particularly borrowing should not be based on emotion or subjectivity because we feel like there’s enough data out there that you can make these decisions objectively. And ultimately, if debt will allow the ministry to achieve their vision or expedite their vision without unnecessary risks to the ministry, then it’s not a bad thing to consider because again, if it doesn’t materially increase risks, it’s just not that negative of a thing. Now, there’s nothing wrong with wanting to be debt free, but the risks of not borrowing and doing things, just pnly if cash was available, is that the ministry may miss the opportunity to leverage the blessings that have been bestowed upon them.

Jill: 08:29 And sometimes if you wait too long, that window closes. And we think that if you can quantify the borrowing need and how it’s going to be out there, you can gain comfort in the fact that it’s going to be a tool to help you gain and achieve your vision rather than some weighted ball around your neck for a long period of time. At the end of the day, like I said, in our strategic financial planning process, we try to really provide objective feedback instead of subjective feelings around which the ministry can make the decision. From our speaking, it’s really not good or bad. Like I said, it’s just a tool that you can use to accomplish the vision. And, if ultimately you can have this set up standing for time and still maintain your ministry spending and then answer this question, you know, if we lay everything out and show you in black and white that it’s not creating undue risk, are you going to be able to sleep at night?

Jill: 09:31 And if the answer is yes, it’s really not a negative thing to use on an interim basis. But I will say that our plans, we have a goal for many of our ministries including any of the high growth ministries to ultimately position them so that one day they won’t have to rely on financing to fund the vision. And again, most of these required some financing before they can get to the point where their cashflow can fully sustain their growth. But we do have a few clients, you know, we’ve been doing this now for 20 years and we’ve been working with some of these high-growth ministries for quite a few years now and we do have some that have now obtained the ability to fund their vision from their cashflow and not have to rely on financing. But I will say that they would probably tell you they’ve made some significant sacrifices to get to this point. But they would also probably tell you if they had internally funded their vision, they would not have grown to where they are now.

Tony: 10:30 Yeah, it’s good to remember that. That’s for sure. And I love the fact that you’re trying to eliminate as much as pressure, and reduce as much as possible any risk to the church and really, if there’s going to be debt, make sure it’s manageable and it doesn’t impact ongoing ministry of the church. Jill, I see a lot of churches that have experienced phenomenal growth in attendance and financially, but they’ve been unable or in some cases unwilling to save any money and because of the growth they need to build, they need to expand, but their lack of savings frightens banks as it as it should. What would you say to the church leader who’s in that situation? I mean, what are some steps that they can take to position themselves to have a positive conversation with their bank?

Jill: 11:21 Well, I think there’s a lot here and so we’ll address it a piece at a time if you will. The first thing is, you know, the type of behavior that you’re describing where you need to do something but you’re not in a financial position to do something is what really has resulted from taking a tactical approach to the financial piece of the puzzle. I mean we’ve seen it all. Here’s a couple of examples. A ministry has this perception that a bank wants them to do a capital campaign to go get a loan. So they go to their congregation on Sunday, and say, write down how much you’re going to give to this capital campaign so that we can go get this loan or worse yet, write down things that equal $5 million so we can go get this loan.

Jill: 12:12 And that’s just very bad because it ends up where the ministry, even if they get the lump sum, the ministry will have to end up getting a lot of spinning to pay this because they haven’t even evaluated if it makes sense to move forward. Also, you know, ask the banker, any banker what they need you to do to move forward. And you asked ten different bankers, you’re going to get 10 different answers. So it’s much more important from our perspective to build a plan that makes sense for the ministry and helps ministry achieve vision because we know that the sound funding plan will take care of all these tactical issues, like financing, like satisfying lenders, that kind of thing. It’s just the worst when the ministry allows these outside factors including lenders to drop their vision. And so first we say, let your vision drive your funding.

Jill: 13:08 And when you engage in the strategic process of planning, that is exactly what’s going to happen because you make sure that your funding plan can achieve your vision and then you behave accordingly. The second thing is a lot of lenders use metrics to analyze repayments. Capacity. A lot of people are familiar with metrics like X times your revenues are X percent of your operating budget. We at SCG particularly don’t feel that these are very relevant. But you know, they are out there. I will say that over time we placed in our history about a billion and a half in churches, with a hundred percent success rate and in most cases, our loans that had been driven by the ministry funding plan and have minimized risks for all parties end up be higher than they would have been if you had driven it off of one of these metrics that a lender uses.

Jill: 14:03 In other words, if you lay out your funding plan and it makes sense and there’s minimal risk for the ministry, you can share, there’s now minimal risks for the lender, you know, you can oftentimes just borrow as much as you need for your vision and without regard for those metrics that they use. The most positive conversation that churches can have with a lender, which is one of the things you ask is to understand their perspective. If you understand how the lender perceives risk in a situation and you can address it, then you can make them be your partner forever. You just have to understand where they’re coming from, what they perceive the risk to be and how you can mitigate or eliminate. One mistake a lot of churches make is they go talk to a lender and say, Hey, you know, we’re going to repay you based on the growth that we’re going to realize after we build this building.

Jill: 15:03 This is sort of the build it and they will come problem. So I’m just telling you they know this thinking can have tremendous risks. That’s what frightens them. And so, unfortunately when ministries talk about all this wonderful ministry and all the faith that they have in the things that are going to happen, lenders hear, risks, risks, risks, and they want to say, okay, we don’t want you to have to grow just to pay us back. We want you to be able to pay us on how you’ve already performed in the past. Just understand what their perception is. Try to identify what risks they’re going to see and try to mitigate them up front. And one final thing I’ll say is that one big mistake a lot of ministries make is they go talk to the bank too early before they know exactly how much a project is going to cost, or for example, how much you’re going to have in pledges.

Jill: 16:02 A lot of times ministries talk to banks and say, okay, I think it’s going to cost this much and I’m going to raise this much in pledges, and the problem with that is I can promise you those two numbers aren’t exactly right. Instead what’s gonna happen is the lender will see a form, all these perspectives about you and your ministry based on the information you share, but then the reality is going to come to pass and let’s just say instead of costing 5 million to build, it’s going to cost 6 million and instead of raising 3 million in pledges, you raise 2.5 but let’s just say it all still works perfectly financially. If it is still a good deal because you shared that information up front and then the results were not, as you said, the lender starts forming opinions that maybe you don’t have a handle on this project or know what’s going on even though it all still works perfectly fine.

Jill: 16:52 And so I can tell you in our turnkey debt placement process, never to talk to the lender until all these variables are hammered out because it just presents risks. And really, you’ll hear me say this many times no matter what question you ask, we’re all about minimizing risks from the ministry’s perspective.

Tony: 17:10 In a related topic is the local bank always the best bank for the church to be partnering with?

Jill: 17:15 No. I mean it can be, but that’s another thing, you know, working with so many lenders and ministries nationwide, there could be a lender out there that has a strong, strong appetite for your particular deal just because of their risk parameters in their portfolio. And you might not even know that they are even in your market. And with all the technology today, you don’t necessarily have to be banking with the lender down the street because you know, you can put your deposits there and they can concentrate them overnight to another bank and said it’s really about matching that, whatever your optimal loan structure is from your aid to that lender who has the appetite for that type of deal.

Tony: 17:58 Jill, a lot of church leaders like to hear about benchmarks. Deep down they want to know whether or not they’re winning when it comes to the kingdom impact that their churches are trying to have. So, are there any numbers or ratios that you think leaders should be aware of maybe as an example, targets for operating expenses or debt service or staffing or missions? Any thoughts on that?

Jill: 18:23 Well, we get asked that question a lot as you can imagine. And I can tell you why the lenders have ratios that ultimately dictate these types of things. We don’t really believe in a one size fits all solution. I mean, we have ministries that we’ve worked with that have been successful, believe it or not, spending 70% on personnel. We have other ministries that have been successful spending 20% on personnel and they both feel like they’re winning. And you know, in your words, we can tell you the most important thing is that a ministry giving culture and cost structure need to be in alignment. That ministry that has a 70% spend on personnel, I can tell you they probably don’t have a lot of operating cash flow to pay for debt.

Jill: 19:13 And if that’s going to be necessary to pull off their vision, they better be good at doing capital campaigns. On the other hand, a ministry that’s spending 20% in their cost structure on personnel, maybe they don’t want to do a capital campaign. So that’s fine. They can throw off enough cash flow from their operating budget or whatever they may need. But again, we just think these two things need to be in alignment. Another mistake we see ministries make a whole lot is that they want to do what the pastor’s best friend’s ministry or his mentor or whatever other ministry they’re friends with. They think that, you know, they did it this way. That’s going to work for us. But the truth is that’s not your ministry. It’s not your vision. It’s not your congregants. You need to really look inside your ministry and see what makes sense for you and structure your funding plan accordingly rather than doing what other people did.

Tony: 20:09 All right. So like I said at the beginning of the conversation, my sense is there’s churches out there. They’re trying to be good stewards of the resources, financial resources. God’s given them their budgeting. Budgeting is part of this, conversation, but it’s not all of it. They’re doing campaigns, they’re trying to have good accounting, bookkeeping practices in place. But there aren’t, from my perspective, a lot of churches that are engaging in this type of financial planning that we’re talking about today. So can you give us an example? If this has peaked a church’s interest and they want to engage your services, what would you help them accomplish and what would the timing look like for when they should consider getting you involved?

Jill: 20:55 Yeah, I would say, well I’ll give you an example. I would say the sooner the better because if you ask any of our clients, the one thing, one piece of feedback, they have when they’ve completed the strategic financial planning process. For example, they would tell you, Oh, I wish I had done that sooner. And I don’t mean months in advance of a project. I mean years in advance of the project. Time is your friend, time allows you to make adjustments without having to be in a fire drill. I think you asked for an example that just comes to mind. And if you visit our website, strategicconsultant.com you’ll see a list of all of our clients as well as our services.

Jill: 21:48 You know, we have some case studies on there as well, so they’re all on our website. But, I think of a ministry in Kentucky Crossland Community Church it’s, you know, we’ve worked with North Point Ministry, Elevation Church, Summit Church, lots of huge ministries throughout the country. Crossland is not one of those ministries, but they’re a thriving ministry. But when I think of where they were when we started working with them and where they are now, it’s just such a difference at that time. Basically they were a single campus ministry in the back of the shopping center. I couldn’t find them when I got there. I mean, you literally had to drive to the back of this shopping center and go through a door and then, you know, there they were. And this was years ago, they had a vision to take over a theater in the front of the shopping center, take over more space and to be a multi campus ministry.

Jill: 22:40 And, those were their two main priorities. And at the time they were really focused on moving around to the front of the theater, which I’m calling the pending need that they were very focused on. Preparing and helping with strategic thinking, allowed us to really show them the financial barriers, what was going to be necessary, not only to achieve that pending priority, but then the other priorities including becoming a multi-campus ministry. And once they understood this, yeah, the first thing is understanding it, then you have to execute it and I can tell you they did that extremely well. They began to execute. Then we were able to in our turnkey debt placement, procure financing to help them achieve that. And then over time they’re now, you know, a three campus ministry. And so, we’ve been working with them probably since 2012 I think, something like that. But they now have 23,000 square foot of frontage, three campuses, and they really are doing a great job and I think have achieved their vision that they defined for that season of their ministry. In fact, I’m working right now on the next season. Now I’m going to look at the next season of their ministry and see what they have to do to achieve that. So hopefully I’ll be in front of them soon. But I hope I answered your question.

Tony: 23:55 Yeah it does. And by the way, I probably should have said this up front because this conversation may sound a lot like a commercial for what Jill’s team does, but they don’t pay us anything. We don’t pay them anything. The reason why I wanted to prioritize this conversation today is I just see this to be a huge gap that exists in the church today, particularly for those growing, thriving churches that are desiring to have a greater kingdom impact, but they’re missing this critical piece of what it is to be good stewards of the resources God’s given them because they don’t have a longterm financial plan for their ministry. So, Jill, I really appreciate you being a part of the conversation today around this topic. Any final thoughts you want to share?

Jill: 24:43 No, I just appreciate you having us. We really do. And I don’t mean it to sound like a commercial either because I’ll be honest, my goal and our goal in strategic consulting group is just to help ministries achieve their vision and if we can be a part of that, I mean there’s only two of us in our firm. We can’t be a part of every ministry but even if you don’t work with us, you can take a more strategic approach to that financial piece and marry it to the other things that you’re already doing a good job, strategic growth, ease your strategic vision in your infrastructure planning. And ultimately you have to have all three of those pieces to make it work.

Sean: 25:33 Thanks for joining us on this week’s podcast. If you like what you’re hearing on the podcast, we’d love your help in getting the content out. You can do that by subscribing on your favorite podcasting platform, giving us a review and telling your friends about the podcast at the unstuck group. We’re working every day with church leaders to help them build healthy churches by guiding them through specifically designed experiences that focus them on vision, strategy, and action. If that’s a need in your church, we’d love to talk. You can start a conversation by visiting us the unstuckgroup. Next week we finish our financial series with one more brand new episode. Until then, have a great week.

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Tony Morgan

Tony Morgan

Tony is the Chief Strategic Officer and founder of The Unstuck Group. For 14 years, Tony served on the senior leadership teams at West Ridge Church (Dallas, GA), NewSpring Church (Anderson, SC) and Granger Community Church (Granger, IN). He's written several books and articles that have been featured with the Willow Creek Association, Catalyst and Pastors.com.
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