second quarter 2011 president’s f e a t u r e pen atime s ... · second quarter 2011...

SECOND QUARTER 2011

THE

President’sPen

Decisions by leaders and boards ofChrist-centered organizations are

made constantly. For leaders, decisionsare made nearly every day. Boardsmake decisions every time they meet.Many of these decisions are seem-

ingly small or routine—sometimes madeoffhandedly and without much thought.Other decisions are of organization- altering magnitude. Especially withthese more significant issues, spiritualdiscernment is fundamentally important.As leaders and boards, we are con-

fronted with new perspectives, emerg-ing trends, and economic and regulatorydevelopments. It is a daunting task tomake biblical decisions against a mosaicof options!We focus on the Bible, prayer, faith,

and wise counsel—all important ele-ments in biblical decision making—buttoo often we do not consider spiritualdiscernment in the process.In I Kings 3:5-9 (ESV) we learn that

while Solomon was at Gibeon to offersacrifices to the Lord, God appeared tohim and said simply “Ask what I shallgive you.” We are commonly taught that

by Dan Busby,President

continued on page 2 �

Senator Charles Grassleyhas asked ECFA to workwith representatives fromthe religious and broader

nonprofit community toaddress certain nonprofit taxpolicy issues and to help facili-tate a response as to whetherthese issues can be addressedwithout legislation. To facilitate this task, ECFA has

formed a national advisory commis-sion, the Commission on Account a-bility and Policy for ReligiousOrganizations. The ECFA board hasnamed Michael Batts chair of the newCommission. Michael is the founderand managing shareholder of anOrlando-based CPA firm, Batts Morri-son Wales & Lee. ECFA President Dan Busby

recently interviewed CommissionChair Michael Batts.

Batts: Both ECFA and I are hon-ored and humbled by Senator Grass-ley’s request to lead the independenteffort to obtain input from the religiousand nonprofit community on theseissues. The conversation that willensue in the coming months will focuson the issues and questions raised bythe Senator’s staff and effective waysto address them. It’s our hope, as wellas the Senator’s, that solutions will befound without the need for burden-some legislation that creates excessiveentanglement between the church andthe government.

This is an independent effort.The Commission is completelyindependent of the Senator andhis staff, independent withrespect to the IRS, and will beindependently addressing theseissues. Busby: The Senator’s staff

identified a litany of issues. One thatcertainly will get considerable atten-tion is whether churches should filethe same highly detailed annual infor-mation return that other nonprofitsmust file, the Form 990.

Batts: The organizations that werethe subject of the Senator’s inquiry

over the past three years, the sixmedia-oriented ministries, were clas-sified as churches and therefore notfiling Form 990s. So the underlyingpremise in the staff report is that thegovernment is limited in its ability to monitor the activities of suchorganizations and possibly to enforcethe law. This premise needs to be examined

because the IRS does receive signifi-cant information from churchesthrough various forms that are filedand the IRS is not precluded fromexamining a church. There are simply


Interview with the New Commission Chair

F E A T U R E

A TimeforDiscernment Michael E. Batts

It’s our hope that solutionswill be found without the need for burdensome legislation.

E C F A F O C U S O N A C C O U N T A B I L I T Y / S E C O N D Q U A R T E R 2 0 1 1

Solomon asked the Lord for wisdombut he requested more than wisdom;he asked for discernment. He becameboth wise and discerning. This teachesus that God honors discernment andthose who seek after it.1

Discernment is evidence of God atwork and is deeply rooted in both theOld and New Testaments. The earlychurch used the language of discern-ment. Paul and Barnabas were sent to Antioch with a letter that said, “For it seemed good to the Holy Spiritand to us to lay upon you no greaterburden than these essentials” (Acts15:28-29 NASB). This is the languageof discernment.2

Romans 12:2 (ESV) directly refersto discernment, “Be transformed bythe renewing of your mind, that bytesting you may discern what is thewill of God, what is good and accept-able and perfect.”We do not get to listen to God’s voice

thundering on the top of Mount Horeb.Instead, we must rely on the more subtle dynamics of the Holy Spirit wit-nessing with the human spirit aboutthings that are true. Discernment presents unique chal-

lenges in contemporary Western cul-ture, because it requires us to movebeyond our reliance on cognition andintellectual hard work to a place ofdeep listening and response to theSpirit of God within us and among us.3

Discernment involves thinking in aspecifically Christian way about eachissue. At the same time, our heartshave to be engaged in devotion toChrist. Then, and only then, will wefind ourselves in tune with the mindof God and be able to make good judg-ments and appraisals, because to thebeliever is promised the presence ofthe Holy Spirit.4

Discerning God’s will is a spiritualdynamic beyond human wisdom.Always a key principle for leaders ofChrist-centered churches and nonprofits, with national and world eventsoccurring at a frenetic pace and thesecond coming of Christ closer than it has ever been, the importance ofspiritual discernment is vital.

A Time for Discernmentfrom page 1

limitations on the manner in which theIRS must go about it.ECFA’s historical and current posi-

tion is in opposition to requiringchurches to file Form 990. That posi-tion is based on the potential for exces-sive entanglement between thegovernment and the church. Courtshave affirmed the legal principle thatexcessive entanglement is prohibited.

Busby: Another issue is whetherthe income tax exclusion for housingallowances paid to clergy should belimited in some manner.

Batts: The Freedom from ReligionFoundation case challenges the consti-tutionality of the clergy housing allow -ance exclusion. This case may go to theU.S. Supreme Court in a few yearsunless it is dismissed (see page 7). Then, in a recent case (Driscoll,

see page 7), the Tax court decidedin a split decision that the housingallow ance for a minister is not lim-ited to a single residence. In otherwords, a minister can receive a tax-free housing allowance for multiplehomes. The question is whether theruling allowing an exclusion formultiple homes opens the door forabuse and whether there should be

some kind of limitation on the housingallowance exclusion. At the same time, the Senator’s staff

also raised a concern about the needto protect the constitutionality of thehousing allowance.

Busby: Senator Grassley’s staffasked whether the current prohibitionagainst political campaign interventionby churches and other 501(c)(3) chari-ties should be repealed or modified.The staff even refers to the Lyndon

Johnson Amendment of 1954 as an“atomic fly swatter.”

Batts: The law, as it exists, essen-tially prohibits all 501(c)(3) organiza-tions, including churches, fromengaging in any type of campaign inter-vention activities. The IRS has takenpositions publicly and in its educationalmaterials that churches may not makestatements in worship services thatoppose or endorse candidates for officeand yet in every election cycle we seecampaign-related activities occurring inchurches. The IRS is well aware of what is

occurring in churches and yet it is reti-cent to engage in any significantenforcement action against churches.This issue raises First Amendmentquestions in terms of churches beingable to freely exercise both their reli-gious faith and their freedom of speech.

Busby: The next issue is whether the

Senator Grassley Taps ECFAfrom page 1

Published quarterly by ECFA (Evangelical Council for Financial Accountability)

Dan Busby, President and Managing Editor

440 West Jubal Early Drive, Suite 130, Winchester, VA 22601Telephone: 540-535-0103 • 800-323-9473

Fax: 540-535-0533 • Email: [email protected]

ECFA.org


ECFA’s historical and current position is in opposition

to requiring churches to fileForm 990.

We hear countless voices in a givenday—some belong to co-workers, themedia, or friends. Other voices existwithin us (memories, emotions, ordesires), and these can be the hardestto filter. For the believer, hearing theLord is most important, so discernmentbecomes critical in distinguishing Hisvoice from the others.5

As leaders and board members, weare expected to pursue discernment; theBible repeatedly cries out for this.

1 The Discipline of Spiritual Discernment, TimChallies, Crossway, 20072 “Discerning God’s Will Together: A SpiritualPractice for the Church,” by Danny E. Morrisand Charles M. Olsen3 Strengthening the Soul of Your Leadership,Ruth Haley Barton, InterVarsity Press, 20084 The Lost Art of Discernment, R. C. Sproul5 “Developing Spiritual Discernment,” article byCharles F. Stanley

2

law should impose an excise tax or penaltyon nonprofit organizations that engage inexcess benefit transactions.

Batts: The current law alreadyimposes penalties on individuals who areleaders of nonprofit organizations andengage in excess benefit transactions withthe organization. An excess benefit trans-action is essentially a transaction whereinthe organization transfers something ofvalue to the insider, to a leader of theorganization, and doesn’t receive some-thing of at least equal value in exchange. Under the current law, there are excise

taxes (penalties) that apply to these indi-viduals—the leaders who receive excessbenefits under these arrangements. Theunderlying premise appears to be thatthose penalties that apply to the indi-viduals are not adequate, and that theorganization should also be penalized.

Busby: Another issue is whether thecurrent IRS audit protection for churchleaders should be repealed.

Batts: A relatively recent court deci-sion held that the IRS’s current approachto examining churches does not conformto the law. The IRS is addressing that issueand certainly will reach some resolution.Currently, the law limits the IRS’s abil-

ity to examine a church and the law alsodirects the manner in which a churchexamination may be conducted. As thelaw is currently drafted, there is also alimited protection with respect to exam-ining the individual leaders of the church. So this issue relates to whether or not

there should be a paring back of that pro-tection when an individual is suspected ofengaging in an excess benefit transaction.

Busby: The next issue is whether therebuttable presumption of reasonable-ness for transactions between nonprofitorganizations and their leaders should beeliminated.

Batts: In the rebuttable presumptionprovisions in the law, a nonprofit organ-ization may follow certain procedures inestablishing compensation for its leadersor in approving related-party transactions.If the leaders follow the procedures thatare set forth in detail in the regulations,



desirable treasure and olive oilin the dwelling of the wise, buta foolish person devours all he has.” The tough part of thisverse to swallow is that lastphrase—it is very hard for a well-intentioned executive

dir ector or board member to admitthat maxing out on service provision(and in so doing “eating up the seedcorn”) is, well…still foolish.5 We cansee the validity of buying car insur-ance for an event that we hope andtrust will never happen, yet at thesame time walk in ignorance regardingself-insuring against liquidity risk.The parable of the wise virgins

(Matthew 25:1-13, NET) speaks of

foolish wedding guests who “…did nottake extra6 olive oil with them. But thewise ones took flasks of olive oil withtheir lamps. When the bridegroom wasdelayed a long time… the foolish onessaid to the wise, ‘Give us some of youroil, because our lamps are going out.’‘No,’ they replied. ‘There won’t beenough for you and for us…” The wed-ding guests were caught off guardwithout adequate resources held inpreparation. But there’s more: Theyran out of reserves because they didnot think they needed as large a levelof reserves to carry them through thewaiting period. In our organizations’financial context, this would be tanta-mount to holding too little in cashreserves because we underestimatethe period over which these reservesmust bridge revenue shortfalls orexpense spikes.

Hoarding. Perhaps your organiza-tion resists holding an adequate levelin cash because of a valid concernregarding hoarding resources (seeJames 5:3b, which has more general

“Oh, if we had only knownhow deep this recessionwould be, how long its

after-affects could linger, andhow pronounced its effects ongivers might be, we would haveheld more in cash reserves.”Doubtless you have heard someone ata church or charity utter words likethese, and maybe they’ve even twirledaround in your mind. What if you were the executive

director or board chair for the BostonSalvation Army and watched yourUnited Way allocation drop from $1million in 1990 to $171 thousand in2011?1 And what happened to thecash-versus-debt balance at the almost200 churches who have defaulted ondebt over the past two years?2

No question about it: in today’seconomy it is as if “cash is king.” Justas a rapidly expanding economymasked inefficiency and overspendingin some ministries—according to thespouse of a mission agency CEO—the downturn has placed a premiumon proper cash management and oncarefully-devised financial policies.

Storehouse. Al Jandl and VanCrouch introduced me to the Store-house Principle.3 They suggest Godspecially blessed storehouses estab-lished by His people. They contendthis principle applies equally to organ-izations and individuals. “The LORDwill command the blessing on you inyour storehouses and in all to whichyou set your hand, and He will blessyou in the land which the LORD yourGod is giving you (Deuteronomy 28:8[NKJV]).” For those short of funds,start small but start now to buildreserves (a storehouse) and ask Godto bless and grow that storehouse.

Oil. Setting aside adequate oil forunforeseen future needs appears intwo prominent places in Scripture.Proverbs 21:204 (NET) says “There is

by John Zietlow

Cash reserves prove their worth in the new millennium

3

In today’s economy it is as if ‘cash is king.’




application than the immediate con-text). We’re not talking about trying toget to the place where our organizationdoes not require faith to accomplish itsmission. That said, regardless of howmuch or how little is held in cashreserves, we will always be exercisingfaith regarding the mission outreachand the fruit that God promises to it.

Evidence from business. Faith-based organizations don’t mimic busi-ness, but studying business behaviorhelps us see why we might want tohold more cash than we previouslythought prudent. A prominent aca-demic study (Bates, Kahle, and Stulz,[BKS]) documents a tremendousincrease in cash holdings by busi-nesses from 1980 through 2006--atrend continuing to the present day.7

BKS investigated the reasons for theincrease. They found that companiesare investing less in cash substitutessuch as accounts receivable and

inventories (which would convertover time into cash) and so holdingmore cash. Second, and to our point of

recession-induced need, the variabilityof cash inflows and outflows hasincreased dramatically. In finance ter-minology, this represents an increasein risk, and cash holdings act as ahedge against that risk. You mighthear yourself saying, “Things don’tseem to be as dependable as they usedto be.” Nonprofits are seeing theirservice outreach multiply while rev-enues are not keeping pace. Cashenables them to bridge that gap. Third, organizations build cash

when capital expenditures are low andreduce cash when making large capitalexpenditures. A follow-up study bythree researchers finds that in the“Great Recession” those organizationshaving the smallest levels of cashreserves going into the recession cut

Building the Oil Supplyfrom page 3

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back the most on their capital invest-ments—no surprise there.8 We expectministries to “prefund” major capitalexpenditures so we should applaudbuild-up of cash on the balance sheetin anticipation of those expenditures. Finally, businesses with higher

research and development expenditureshold more cash (presumably to be ableto fund these as well as to fund opera-tions if there is a small or delayed pay-back to these expenditures). Forministries, the second factor—increasedfluctuations in operating cash flow(study your Statement of Cash Flowsover the past five years)—is the key ele-ment shared in common with busi-nesses. Higher risk implies we should beholding higher levels of cash reserves.

Benchmarking cash reserves.Weare fortunate to have some compara-tive data to guide us in setting our tar-get reserves level. The Urban Institute(UI) defines “operating reserves” as“cash and other liquid assets that canbe tapped when income falls short ofexpenses.” Furthermore, to be includedin reserves, amounts your organizationholds in cash and other current assetshave to be unrestricted, meaning thatthe cash or other assets have no prohi-bition on being sold, no purpose limita-tion, or were the result of revenues andsupport in excess of expenses.The UI calculates operating reserve

ratios using a formula devised byexperts serving on the Nonprofit Oper-ating Reserves Initiative Workgroup.9

The part of net assets that comes from“nonborrowed” real estate and otherfixed assets is excluded in that theorganization cannot readily convert it tocash to pay expenses. The UI has tabu-lated data on many nonprofits in theWashington D.C. area and found that:• 57% of the organizations have lessthan three months’ worth of operatingexpenses covered by operating reserves.• 19% of the organizations actuallyhad negative operating reserves, mostcommonly because of high levels ofunpaid bills (accounts payable); largeamounts reported under “mortgagesand other notes payable”; or moneyowed to benefactors and officers ofthe organization.10

Anecdotal evidence suggestschurches and other ministries are in abetter position with respect to operat-ing expenses but for many organiza-tions this position has deterioratedover the 2008-2011 period. More datais needed.

Digging out. There are severalroutes toward rebuilding oil and store-house provisions:• Designate a person to oversee

liquidity. This would normally be thetreasurer.11 Have this individual startwith assessing the needed cash reserveposition and then educating the boardand development team on this positionand how critical it is to build to andthen maintain the position. The desig-nated person then provides ongoing

reports including present and antici-pated cash positions along with rec-ommended actions should thepositions be below target.• Forecast cash changes and your

resulting cash position. Think of cashplanning and cash reserves as a fort orplace of hiding (“A shrewd person seesdanger and hides himself, but the naivekeep right on going and suffer for it”12

Proverbs 22:3 NET).• Preserve cash by astute manage-

ment of cash inflows (acceleratethese), cash positions (consolidatethese so your cash is not spread out allover the place) and cash outflows(reduce these to the extent possible).Some donors will prepay pledges ifthey know this is important to yourchurch or nonprofit.• When completing asset sales,

place the proceeds in cash reserves.With the recent multiyear downturn indonations, this sort of strategy may bea lifesaver, sparing deep personnelcutbacks or field operation closures.

Conclusion. Financial health is aprerequisite for mission achievement.As you and your organization begin tobuild or rebuild your oil supply andstock or restock your storehouse, take

Nonprofits are seeing theirservice outreach multiply

while revenues are notkeeping pace.

Think of cash planningand cash reserves as a fort

or place of hiding.



On March 2, 2011, the ChristianAlliance for Orphans, a McLean,VA-based nonprofit involved in

orphan care, advocacy, and adoptionbecame ECFA’s 1,500th member.“Word is spreading that member-

ship in ECFA is of tremendous value toChrist-centered organizations—churchand nonprofit alike,” said Dan Busby,ECFA president. “The 1,500-membermilestone demonstrates that evangeli-cal organizations are taking a proactiveapproach to positioning themselves asaccountable and transparent.”“Ministry without accountability is

like a roller coaster without seat-belts,” said JeddMedefind, president ofChristian Alliance forOrphans. “ECFA bringsa confidence, safety,and wisdom to Chris-tian organizations and

helps them hold fast to integrity amidthe pressures and unexpected curvesthat ministry always brings.”Medefind describes ECFA’s work

as “indispensable” and will further

Building the Oil Supplyfrom page 4

5

confidence that God is your Source andHe will supply all of your needs accord-ing to His riches in Christ.

John Zietlow, D.B.A., CTP, is Professor ofFinance at Malone University (Canton,OH) and Associate Faculty at IndianaUniversity-Purdue University at Indi-anapolis (IUPUI). He co-authored FinancialManagement for Nonprofit Organizations(Wiley, 2007) and Cash & Investment Man-agement for Nonprofit Organizations (Wiley,2007). Email: [email protected]. Website:www.johnzietlow.com.1 Megan Woolhouse, “Salvation Army Cuts Ties withUnited Way,” The Boston Globe, August 28, 2010. 2 Shelly Banjo, “Churches Find End Is Near,” TheWall Street Journal, January 25, 2011. 3 Al Jandl and Van Crouch, The Storehouse Prin-ciple: A Revolutionary God Idea for CreatingExtraordinary Financial Stability (BrokenArrow, OK: CrossStaff Publishers LLC), 2004.4 Scripture and/or notes quoted by permission.Quotations designated (NET) are from the NETBible® copyright ©1996-2006 by Biblical StudiesPress, L.L.C. 5 Nonprofit scholar Liz Keating calls this the “cur-rent services trap.” See Kate Barr’s insightful com-ments on why this is a dysfunctional mindset athttp://www.nonprofitsassistancefund.org/blog/2007/11/08/how-to-get-out-of-the-current-services-trap/.6 The NET translation has this note for verse 3:“The word ‘extra’ is not in the Greek text but isimplied. The point is that the five foolish virgins hadonly the oil in their lamps, but took along no extrasupply from which to replenish them. This is clearfrom v. 8, where the lamps of the foolish virgins aregoing out because they are running out of oil.”Scripture and/or notes quoted by permission. 7 Thomas W. Bates, Kathleen M. Kahle, and ReneM. Stulz, “Why Do U.S. Firms Hold So Much MoreCash than They Used To?” The Journal of Finance,44 (October), 2009, pp. 1985-2021.8 Ran Duchin, Oguzhan Ozbas, and Berk A. Sensoy,“Costly External Finance, Corporate Investment,and the Subprime Mortgage Credit Crisis,” Journalof Financial Economics, 97 (September 2010), pp.418-435.9 The formula is based on the 2006 IRS Form 990. Seerelated information at http://nccs.urban.org/. 10 Amy Blackwood and Thomas H. Pollak, “Wash-ington-Area Nonprofit Operating Reserves.” 11 Marie Hollein, “The Treasurer as Chief LiquidityOfficer,” Journal of Corporate Treasury Manage-ment 4(1), 2010, pp. 28-34.12 The note to this verse in the NET Bible isinstructive: “The shrewd person knows where thedangers and pitfalls are in life and so can avoidthem; the naive person is unwary, untrained, andgullible, unable to survive the dangers of the worldand blundering into them.” Scripture and/or notesquoted by permission.

empower the ministry he leads to holdhigh, God-honoring standards for fis-cal integrity and good governance.“This partnership elevates both thecharacter and quality of the entirerealm of Christian adoption andorphan care ministry,” Medefind said.The Christian Alliance for Orphans

unites more than 80 respected Chris-tian organiza tions and a national net-work of churches. Working together,their joint initiatives inspire, equip,and connect Christians to “defend thefatherless” (Isaiah 1:17).The Alliance seeks to stimulate and

help grow Christian communitiescommitted to adoption, foster care,and global orphan care in the localchurch. Their united efforts includethe national Summit, the Orphan Sun-day campaign, monthly webinars, andan array of other initiatives.

Editor’s note: Orphan ministry is oneof the fastest growing segments ofECFA membership. ECFA is verypleased to serve organizations whohave stepped up to address thistremendous ministry need.


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then the compensation or transactionis presumed to be reasonable. It essen-tially shifts the burden of proof to theIRS. It seems that the underlying concern

relates to the compensation levelsthemselves and whether indeed theyare reasonable or not. One of the verychallenging issues that is likely to cometo a head in this process is the fact thatthere are a number of religious groupsthroughout the country who sincerelyespouse a religious doctrine that,among other things, holds that theirleaders should be blessed materially.So, their question may very well be“What business does the governmenthave attempting to tell a church whatto pay its pastor?”

Busby: Finally, the Senator’s staffraised an issue as to whether legisla-tion is needed to remove uncertaintyabout the taxability of “love offerings”paid by church attendees to ministersthrough a church.

Batts: The underlying issue hereseems to revolve around a practicewhere the congregation is asked tomake gifts to the minister (or otherchurch leader) in a scenario where thechurch solicits those gifts in the settingof a worship service or church-relatedfunction and facilitates the collectionof the gifts. The attendees typicallywrite their checks payable to the min-ister or they simply give cash. Thenthese gifts are collected and handedover to the minister without anyattempt to account for them on thebooks or records of the church or toprocess them in the church. There are some who look at those

transactions and say that the sub-stance of that arrangement is a non-taxable gift. There are others whowould say it is as if these individualsgave to the church and the churchturned around and paid a taxablesalary to the minister.

Busby: Michael, this is a greatsummary of the issues. Those whowould like more information on theseissues and the work of the Commis-sion may access it at ECFA.org/Com-mission.


Mr. Michael Batts, Commission chair,is the managing shareholder of BattsMorrison Wales & Lee, an Orlando-based accounting firm exclusively serv-ing nonprofit organizations and theiraffiliates. He is a member of the ECFA

board, ECFA Standards Committee chair, and former board chair. Mike has more than 25 years’experience serving on nonprofit boards and advis-ing nonprofit organizations.

Mr. Lauren Libby is president of TWR,Cary, NC, an ECFA member. Lauren co-founded Educational Communica-tions, Colorado Springs, CO, which comprises 15 radio stations and 28 translators. He formerly served at The

Navigators in various senior executive posts. Laurenis a member of the boards of Northwestern College,NRB and ECFA, and a former ECFA Standards Committee chair.

Dr. Jo Anne Lyon is a general super-intendent of The Wesleyan Church,Indianapolis, IN, and a member of theECFA board. She was previously thefounder and CEO of World Hope Inter-national, Alexandria, VA, a faith-based

relief and development organization alleviating suffering and injustice in 30 countries.

Dr. Mark Rutland is the president ofboth Oral Roberts University (ORU),Tulsa, OK, an ECFA member andGlobal Servants. Mark is the author of13 books and a noted speaker. His 30-minute daily radio program, Herald of

Joy, is heard in multiple markets.

Rev. William Townes, Jr., a CPA, isvice president of convention finance of the executive committee of the South-ern Baptist Convention (SBC), Nash -ville, TN, where he provides oversight ofthe financial operation of the Executive

Committee and the organization of the annual SBCmeeting.

Bishop Kenneth Ulmer, senior pastor-teacher of Faithful Central BibleChurch, Inglewood, CA. Faithful Centralis a congregation of 13,000 that worships at the Great Western Forum.Bishop Ulmer is a nationally recognized

speaker and author.

Dr. Dolphus Weary is president of theRural Education and Leadership(R.E.A.L.) Christian Foundation, Rich-land, MS, an ECFA member. He is anoted author and speaker on racial rec-onciliation issues. Previously, Dolphus

served 26 years with Mendenhall Ministries, amulti-faceted Christian community developmentministry and is a former ECFA board member.

Rev. Luis Cortés, Jr., is the founder ofEsperanza, Philadelphia, one of thelargest Hispanic evangelical networks inthe nation. Esperanza has providedtechnical assistance and training to over450 Hispanic nonprofits with funding

of nearly $10 million. Luis is a national leader of Hispanic concerns and community development.

Rev. Mark Davis is the chief financialofficer of Calvary Chapel—Ft. Laud-erdale, an ECFA member and the eighthlargest church in the U.S., where heenjoys the privilege of carrying out thevision and mission of the church. Mark

serves on the board of 4KIDS of South Florida, theChristian Community Foundation of South Floridaand is a member of the ECFA Standards Committee.

Dr. Stephen Douglass is the presidentof Campus Crusade for Christ, Orlando,Florida, an ECFA member. Campus Crusade exists to help fulfill the GreatCommission by winning, building andsending in the power of the Holy Spirit.

Campus Crusade also helps the body of Christ doevangelism and discipleship.

Mr. Richard Hammar is an attorney,CPA, general counsel for the Assembliesof God, Springfield, MO, and best-sellingauthor specializing in legal and taxissues for churches and clergy. Rich haswritten over 100 books, and is a noted

speaker in the church world. He is a former ECFAboard member.

Dr. Joel Hunter is senior pastor ofNorthland, A Church Distributed, inLongwood, FL, an ECFA member and apioneering congregation of 15,000 thatuses technology to connect people inworship around the globe. Joel is also a

member of the board of the National Association ofEvangelicals and the World Evangelical Alliance.

Mr. David Wills is president of theNational Christian Foundation, Alpha -retta, GA, an ECFA member, servingover 7,800 families by providing givingsolutions and tools to maximizeresources for kingdom purposes. An

Attorney, David is the co-author of two books and afrequent lecturer. He is also a member of the ECFAboard.

Mr. Mark Holbrook, ex officio Com-mission member, is president and CEOof the Evangelical Christian CreditUnion, serving the banking needs ofministries and missionaries around theworld. Mark currently serves as ECFA’s

board chair.

Mr. Dan Busby, ex officio Commissionmember, is the president of ECFA. Serving with ECFA since 1998, Danbecame the President in 2009. He hasbeen Zondervan’s church and nonprofittax and finance author since 1990, and is

a noted speaker across the U.S.


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• Cell phone guidance awaited.Nonprofits that provide their staffmembers with cell phones got somerelief from burdensome substantiationrequirements when the Small BusinessJobs Act (SBJA) was signed into lawon September 27, 2010.Six months later, we still await

guidance from the IRS on the applica-tions of SBJA. An IRS spokesmanrecently announced that the IRS is“very close to getting something out”on the guidance relating to employer-provided cellphones.• When donors commit fraud,nonprofits often pay the price.Charities nationwide are facing analarming demand from state and fed-eral courts handling the clean-up ofcollapsed investment schemes: Giveback donations.The legal process, known as a claw-

back, is not new. But as the economicdownturn has sped up the demise ofbig-time investment scams, more andmore charities are learning that thegifts they received in good faith—andinnocence—may not be theirs to keepif the donors turn out to be criminals. • Tax Court reaches unexpectedconclusion on housing allowance. Ina split decision, the Tax Court held thatan ordained minister (Phil Driscoll) andhis wife were entitled to exclude fromgross income a parsonage allowancethat was paid by the ministry to the min-ister as compensation and used to pro-vide a second home. The court concluded that nothing

in Code Section 107, its legislative his-tory or the relevant regulations limitedthe phrase “a home” to only one homefor purposes of the excludible parson-age allowance.• Supreme Court decides majortaxpayer standing case. TheSupreme Court, in Arizona Christian

School Tuition Organization v. Winn,held 5-4 to reverse a lower court deci-sion holding that a state tax credit wasa violation of the establishment clauseand therefore unconstitutional. Thisstate tax credit was for donations thatoffer scholarships to private schools,both religious and non-religious organ-izations. The Court held that tax payerslacked standing to challenge a stateprogram allowing tax credits.Some legal scholars believe the

outcome of this case could lead to thedismissal of the 2009 Freedom fromReligion Foundation lawsuit challeng-ing the constitutionality of the minis-ter’s housing allowance.• Expanded 1099 reportingrepealed. Before health care reformmodified the Form 1099 reportingrequirements, there were exceptionsto the reporting requirements, mostnotably payments to a corporation.Health Care Reform removed thisexception, however H.R. 4 has nowreinstated the exception. • Important Supreme Court“ministerial” employment case.The U.S. Supreme Court has agreed totake an employment discriminationcase involving the “ministerial excep-tion.” The Court's eventual decisionwill be important for churches andalso for parachurch organizations thatdefine staff as ministers. The decisionwill tell us how well the current Courtwill protect religious freedom. The case of Hosanna-Tabor Evan-

gelical Lutheran Church and School v.EEOC concerns whether Cheryl Perich,who was fired by a Lutheran elemen-tary school in a dispute about her suit-ability to resume her teaching positionafter disability leave, is a “ministerial”employee. If so, then under the “minis-terial exception” doctrine, the courtsand the government cannot second-guess the school’s decision.

May 4 – Update on Health ReformIssues for Churches

Rich Hammar, attorney, CPA,legal counsel to the Assemblies of God denomination

Dan Busby, CPA, ECFA president

May 10 – Business as Missions Legal Issues

John Haley, attorney, Arnot & Haley, PLLC

Stuart Lark, partner, HolmeRoberts & Owen, LLP

June 22 – Charitable SolicitationIssues

Karl Emerson, attorney, Montgomery McCracken

Dick Travis, president, The Travis Group, LLC

June 28 – 7 Key Issues to ProperlyHandle Missions Finances

Dan Busby, CPA, ECFA president

Samantha Cave, global impactadministrator, McLean BibleChurch

Pat Willow-Kulesza, director ofinternational serving, WillowCreek Community Church

John Van Drunen, attorney, CPA, ECFA vice president

8

18. Joy Ministries Evangelistic Association, Virginia Beach, VA

19. Life Choices Center, Binghamton, NY

20. Life Without Limbs, Agoura Hills, CA

21. Living Ministry, Pittsburgh, PA

22. Messenger International, Palmer Lake, CO

23. Messianic Jewish Alliance of America, Broomall, PA

24. Missio International, Atlanta, GA

25. mPower, Louisville, KY

26. Operation Inasmuch, Knoxville, TN

27. Orphan Relief and Rescue, Burien, WA

28. PowerPoint Ministries, Dallas, TX

29. Pregnancy Resource Center Carrollton, Carrollton, GA

30. Real Choices Pregnancy Medical Clinic,Grapevine, TX

31. Spruce Hill Christian School, Philadelphia,PA

32. Strategic Angel Care, Plano, TX

33. The Brooklyn Tabernacle, Brooklyn, NY

34. The Living Word Bible Church, Mesa, AZ

35. Third Reformed Church, Pella, IA

36. Training Leaders International, Anoka, MN

37. Way Cool Angels, Addison, TX

38. Western Carolina Rescue Ministries, Ashville, NC

39. Women’s Hope Medical Clinic, Auburn, AL

40. World Gospel Outreach, Humble, TX

41. World Mission, Grandville, MI

Resignations1. Good Samaritan Health Center Gwinnett,Lawrenceville, GA

2. Central Church, Collierville, TN

3. First Baptist Church of Jacksonville, Jacksonville, FL

4. FollowOne International, Winter Springs, FL

5. Hope, Inc., Mililani, HI

6. Love Incorporated National Headquarters, Minneapolis, MN

7. Project Childhelp, Saint Petersburg, FL

member news

Available at: ECFA.ws

Phone: 800-323-9473

Sold in packs of 5 – $25 plus shipping30 – $120 plus shipping100 – $350 per 100 plus shipping

Latest Release from ECFAPress

Igniting a Life of Generosityby Chris McDaniel

New Members1. Administer Justice, Elgin, IL

2. Africa New Life Ministries International, Portland, OR

3. American Bible Society, New York, NY

4. Anglican Mission in America, Pawleys Island,SC

5. Christian Alliance for Orphans, McLean, VA

6. Christian Union, Princeton, NJ

7. Compassion Connection, Bethel Park, PA

8. Compassion Pregnancy Center, Clinton Town-ship, MI

9. Eagles Nest Ministries, Butler, IL

10. Forward Edge International, Vancouver, WA

11. Friends of iThemba, Silverdale, WA

12. Frontlines Missions International, Taylors, SC

13. Heart of the Bride Ministries, Niceville, FL

14. Hines Ugandan Ministries, Littleton, CO

15. Hope Builders Ministries, Greenwood, VA

16. Hume Lake Christian Camps, Fresno, CA

17. International Ministerial Fellowship, Navarre, MN

ECFA realizes that its members are continually seeking to encourage giving to fund the support of their ministry. In an effort to assist these Christ-centered ministries in their generosity efforts,ECFA is pleased to announce the release of a new resource for ministries to get in the hands of

their supporters that will help individuals learn the basic principles about biblical giving and generosity.Igniting a Life of Generosity, by Chris McDaniel, Chief Business Development Officer, DELTA

Ministries International, is a devotional for those who desire to better understand the wonderful experiences the Bible offers when we grow in the grace of giving.

Not just another devotional – this 60-page devotional will help you develop your practical andpersonal theology for generous giving. You will be transformed on your own stewardship journey.

“Consumerism, materialism, and debt cannot deliver lasting happiness,” said Brian Kluth, founder of Maximum Generosity. “Igniting a Life of Generosity will provide you with the proven path to discover lasting joy and contentment through learning to live a generous life.”

“God calls us to be generous with our time, talent, and treasure,” said Todd Harper, president of Generous Giving. “This devotional is an excellent tool to encourage believers in their journey tohave a transformed heart that is increasingly generous.”

“During these tough economic times, it’s important for Christian leaders to continue to conveyGod’s powerful message about giving,” ECFA President Dan Busby said. “Generosity is a theme seen throughout the Scriptures. We are excited about releasing this resource that emphasizes how generosity correlates to a more transforming journey with Christ.”

second quarter 2011 president’s f e a t u r e pen atime s ... · second quarter 2011...

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