Section 1: Types of Documents

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2 Section 1: Types of Documents Does your church have policies? Are they written down and approved by the church body? The wisdom in a definite method of action set down in writing will guard against disagreements and conflict. Constitution, bylaws, policies and procedures will guide and determine any present and future decisions. The documents should be an overall plan embracing the general goals and acceptable procedures of a church. Having policies in place is not enough to prevent problems. Conflict may be caused by the fact that the church has never placed in writing a policy governing the question at hand, or they may arise out of a lack of understanding of the existing church policies and procedures. In order to be of help, policies must be clear, concise, and effectively communicated. Simple, concise policies are usually better than long complex policies. This book is intended to guide you as you write policies and procedures. The documents considered necessary: 1. Purpose Statement or Mission Statement: After the Bible, this is the most important document a church has because it guides the future direction and decisions of the church. The statement informs the congregation of the Biblical basis of the church and why it exists. The statement informs the congregation who they are and what they are going to accomplish as a church. 2. Constitution: A constitution is general and encompasses the organizational aspects of the church. It should be durable and be resistant to the internal shifts in the personality of the congregation. A few members can easily change the church that is loosely organized and fails to have a solid constitution in place. It is the structure, composition, physical makeup, and nature of the church. 3. Bylaws: Bylaws are rules adopted by the church chiefly for the regulation of its affairs. They can be added to the constitution as needed. 4. Articles of Incorporation: Incorporation is strongly recommended for legal reasons: To allow the church to hold title to property; It is recommended to file as a religious corporation rather than a not-for-profit corporation; An incorporated church, through its leadership, may be more flexible and effective in the use and administration of its property; Incorporation provides some protection against lawsuits by shielding the individual members from personal liability.

3 5. Policy Manuals: Polices and procedures are very specific and are easily changed by a simple majority vote. Polices are a list of the correct things to do. Procedures are step-by-step how-to guidelines on the correct way to apply them. Here are a few examples: Church operating policies; Financial policy; Church office policies and procedures; Personnel policies. A. Policies: Policies define authority, boundaries, responsibilities, and guidelines. They define who, why, when, and under what circumstances. Who sets policies? Generally, the church delegates the authority as follows: Church-wide policies are set by the church; Personnel policies by the Personnel committee; Financial policies by the Finance committee; Office policies by the administrator or Personnel committee. B. Procedures: Procedures tell how a task is done. They provide a list of supplies and equipment needed plus a detailed list of actions to perform a job. The person who does the work writes procedures which are reviewed by their supervisor and the administrator. Procedures are extremely useful when an employee is absent. Copies are then provided for each person involved. Examples: Policy - file minutes of business meeting Procedure - make three copies of the minutes of the business meeting and file one copy in the secretary s file cabinet, one copy to the church clerk and one copy in the pastor s file. 6. Job descriptions: A list of each staff member s responsibilities. 7. Organizational Chart: A graphic representation of the organization, communication, and responsibilities of the church. 8. Employer Identification Number from the Internal Revenue Service: Get a form SS-4 Application. This is required to employ staff at the church, whether it is a pastor, secretary, or custodian. The church will need this number to open a bank account. NEVER open a bank account for the church under someone s name and social security number; it will be taxable. 9. Tax Exemption Number from the state of Illinois: After filling out an affidavit to be incorporated and having had it recorded at the County Recorder of Deeds office, send a copy of this affidavit to: Legal Services Bureau Department of Revenue 101 W. Jefferson Springfield, IL 62702

4 Send along with it a letter on your church stationery requesting a tax exemption number. 10. Property Tax Exemption: This should be done through your county tax assessor s office. Once the church has these documents in place, you will want to affiliate with your local Baptist Association, Illinois Baptist State Association, and the Southern Baptist Convention. Section 2: Developing Documents What will be the effect of change on the church? Does the need outweigh the effect of change on the church? Be aware that this process is time consuming. Be carefully to consider church customs and have a respect for tradition. Pray for wisdom and watch the bottom line - the benefits in efficiency versus the cost of grief. Decide on the appropriate committee or group to write the policies. The appropriate committee or group, once appointed, begins to gather information. Research current books and brochures on creating church policies. Survey churches that have policies and procedures and look at your own existing policies and documents. Your state or local association will have information on church policies and procedures. Getting started: Determine the people who will be directly affected and secure input from these involved participants. Develop a questionnaire or set up interviews that will assist the committee or group in gaining their insights. Write and/or revise policies, adding any that are needed but are not currently in place, making sure to list the group, committee, or title of the individual responsible for administering the policy. Start the policy with a one-sentence statement of the purpose of the policy. Then state the full policy including the following: Date written; Date(s) approved by the committee and church; Specific steps of the process you are describing; Individuals referenced by title; Simple, easy to understand words; Strive for briefness and completeness. Collate and index the policies. When your committee comes to a consensus, distribute copies to all involved. Encourage questions and conduct a question and answer meeting. If possible, conduct two meetings allowing time between the first reading and the vote for revisions. Evaluate and update the policies annually, if necessary.

5 Developing a Constitution Select a Constitution Committee. Secure samples of constitutions from other churches. Write the document, being as general as possible, deferring everything specific to bylaws and policies. Remembering that this document will need to last a long time, avoid specific dates and numbers. Rather than naming committees, assign this task as follows: the number of committees needed and the duties of said committees shall be determined by church policy as set by the church. Use simple easy to understand language, striving for briefness and completeness. Use the following as a guide: Preamble; Name and Location; Objectives; Statement of Beliefs; Church Covenant. Make sure to include the date written, date approved by the committee, church council or leadership team, other necessary groups or committees, and the church. Present the document to the church, and discuss the proposal, revising as needed. Then reach a consensus and vote. Review and update every three to five years. Developing Bylaws Select a Bylaws Committee. Gather information such as the Purpose Statement, Articles of Incorporation, church constitution and business meeting minutes. Secure samples of bylaws from other churches. Write the document, using simple, easy to understand words. Use the following guide: 1. Membership a. Qualifications and Procedures b. Candidacy for membership c. New Member Orientation d. Full Membership/Rights of Members e. Termination of Membership f. Discipline of Member a. Reconciliation: Mt 18:15-17, Gal 6:1-2 b. Exclusion c. Restoration 2. Church Officers Deacons a. Composition b. Qualifications c. Nomination, Election, Rotation d. Powers and Responsibilities e. Meetings

6 Trustee: a. Composition b. Qualifications c. Nomination, election, rotation d. Powers and responsibilities e. Meetings Church staff a. Purpose and Responsibility b. Composition (With the exception of the pastor, do not attempt to give specific positions and titles in the Bylaws but leave these for church policies.) i. Pastor [be specific] ii. Pastoral staff [General description] iii. iv. Ministerial staff [General description] Support staff [General description] such as clerical, custodial, food service, weekday education, instrumentalists, and others. c. Call and termination of the pastor i. Call ii. Resignation iii. Termination of staff iv. Waiver of notice v. Severance policy Church leadership team (or church council) The membership of the council is specified by church policy. a. Nomination, election, rotation b. Responsibilities Clerk; a. Nomination, election, rotation b. Responsibilities Church Treasurer a. Nomination, election, rotation b. Responsibilities Other officers a. Nomination, election, rotation b. Responsibilities 3. Committees: Administrative: a. Church nominating committee b. Church personnel committee c. Church property and space committee d. Church stewardship committee e. Others as specified in the Policy Manual Functional Areas as specified by church policy. This may include, but is not limited to: a. Church baptism committee

7 b. Church benevolence committee c. Church flower committee d. Church food service committee e. Church history committee f. Church Lord s Supper committee g. Church preschool committee h. Church public relations committee i. Church weekday education committee j. Family enrichment committee Special committees (Ad Hoc committees or task forces) as specified by policy, such as: a. Building, survey, planning committee b. Church audio services committee c. Church usher committee d. Constitution and by-laws committee e. Long range planning committee f. Pastor search committee Councils as specified by policy, such as: a. Evangelism Council b. Missions Development Council c. Age-Group councils d. Others as specified 4. Church emphasis ministries/programs as specified by church policy. For example: Sunday School, WOM, Baptist Men, Youth groups, etc. 5. Ordinances (Do not specify a frequency or a specific schedule. Simply state, As specified by church policy. Such as Baptisms and the Lord s Supper.) 6. Church meetings as scheduled by church vote or as specified by church policy. Sections should include Worship services, special services, regular and special business meetings. Policy should mention regularity of meetings, how and why to call a special meeting and what the percentage of members is required to be present to make a quorum. The rules of order used during the meeting such as Robert s Rules of Order or moderator and succession should also be mentioned. 7. Church finances. The budget, accounting procedures and fiscal year. 8. Church Operations Manual. The manual should include all policies, procedures, and organization charts. This should be kept in the church office and made available to all church members. It should be maintained and reviewed regularly. Include the date written and approved by committee, church council, deacons and church. Present the document to the church and discuss the proposal. Revise as needed. Reach a consensus and vote. Review and update every three to five years.

8 Articles of Incorporation Every church should be incorporated. There are two choices of incorporation: religious corporations or not-for-profit. We recommend the religious corporations incorporation. Steps to take to incorporate your church: Purpose Statement or Mission Statement; A constitution should be in place before incorporation; A copy of the affidavit is in the back of the book under samples. Below is an excerpt from Sections 35 to 51, inclusive of an Act, entitled An Act concerning corporations, approved April 18, 1872, and subsequent amendments thereto relating to: Religious Corporations 35. Any church, congregation or society formed for the purpose of religious worship, may become incorporated in the manner following, to-wit: By electing or appointing, according to its usages or customs, at any meeting held for that purpose, two or more of its members as trustees, wardens, and vestrymen (or such other officers whose powers and duties are similar to those of trustees, as shall be agreeable to the usages and customs, rules or regulations of such congregation, church or society), and may adopt a corporate name; and upon the filing of the affidavit, as hereinafter provided, it shall be and remain a body politic and corporate, by the name so adopted. 36. The chairman or secretary of such meeting shall, as soon as may be after such meeting, make and file in the office of the recorder of deeds in the county in which such congregation, church or society is organized (which shall be recorded by such recorder) an affidavit, substantially in the following form: Developing Policies and Procedures Manuals 1. Church Operating Policy for the way a church functions. Identify structure in four areas: spiritual, educational, financial, and legal. Create a chart showing these relationships with all ministries, programs, and groups. Write a policy for each ministry, program and group, watching carefully for customs and traditions. Communicate this information with each member to cover all aspects. Make sure to mention in each policy the reason or mission statement, the duties, operating procedures, and security for each group. Before the church votes on it, the ministry, program, or group leaders and the church council must read it. Copies of the policy should be given to all interested parties. Examples are building policy (using the building for weddings, etc.), equipment borrowing, vehicle use, committees, mission groups, library, worship services, and any group or event that needs classification and organization.

9 2. Office Policy and Procedure Manual for the way a church office functions. This will contain basic office information such as: a. General information - office hours, holidays, staff information, emergency phone numbers, volunteers and their positions. b. Communications Telephone (incoming calls, messages, long distance, answering machine, and prayer line), mail, memos, computer ( , internet, passwords, etc.), newsletter, and bulletin. c. Calendar prominently displayed, maintained and current. d. Newsletter and mailing list policy e. Bulletins and announcements f. Staff meetings g. Membership records and rolls h. Files and records i. Supplies and equipment Have each employee make out a job description to have on record. It should list all responsibilities and be divided into categories of daily, weekly, monthly, and once or twice a year. Indicate if there are non-scheduled events, things that happen only once in awhile, and the procedures involved. Be as thorough as possible so that someone stepping in to the position in an emergency will have an idea of what is expected. 3. Personnel policy manual for the way personnel functions. This should include a copy of the job descriptions listed in the previous policy. The employment process, qualifications, dress code, benefits and pay policies (pay period, rate, raises, etc.). Time conferences, holidays, personnel days, sick time, hours, lunch & break times, and overtime. Vacation time and how it is accumulated, when the employee is eligible, scheduling and anything else that is pertinent. Questions that need to be addressed: o How may days of vacation per year will full-time staff members accrue? Part-time staff members? o What s the difference between vacation, sick leave, personal time, holidays, bereavement time and any other time off staff members might expect? o How do staff members ask for time off? o Do staff members need to be employed for a minimum length of time before taking vacation? o Should the number of consecutive days that any staff member can take off be limited? o At what rate should the number of vacation days for increasing years of employment be accrued? o Should staff members be allowed to carry over vacation days from one year to another? If so, how many? o Are there certain times of the year when a no vacation policy will be needed?

10 o When it comes to holidays, how many holidays will the church pay for each year? What will those holidays be? o Are there certain times of the year it makes sense to bundle holidays so the church office can be closed? o There may be times when staff may need to work weekends. How will holidays that fall on days of church services be dealt with? o Who will administrate these policies and other benefits an executive pastor, the senior pastor, an office manager, a lay-led personnel committee, or an organization we outsource to? Employee absences for job injury, illness (long term and short term), family illness, death in the family, jury duty, military service, voting, giving blood and etc. should be clear in the policy; if it is paid or not and how long it is covered. Discipline, counseling, demotion, and termination (resignation, retirement, or termination).

11 Samples of Incorporation Courtesy of Church Staff Development Samples of Purpose Statement Constitution & Bylaws Financial Policy Personnel Policy Courtesy of O Fallon First Baptist Church

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71 FINANCIAL POLICY FIRST BAPTIST CHURCH OF O FALLON 1111 EAST HIGHWAY 50 O FALLON, IL (618) Approved by the Finance Committee August 8, 1999

72 Financial Policy FBC O Fallon TABLE OF CONTENTS Page Statement of Ministry General Policies: Funds....4 Receipts....4 Finance Office..5 Finance Committee....5 Budget Purchases Petty Cash & Cash Advances Credit Card &Other Charges Disbursements Expense Reimbursements....7 Payroll Asset Inventory Non Budgeted Expenditure 7 2

73 Financial Policy FBC O Fallon Procedures: General Fund (Appendix A) Designated Funds (Appendix B)....9 Bank Accounts..(Appendix C) Gifts & Receipts (Appendix D) Activity Fee and Event Receipts (Appendix E).. 12 Cash and Cash Receipts (Appendix F) Non Cash Receipts..... (Appendix G)...14 Love Offerings.....(Appendix H) Finance Office...(Appendix I)...16 Financial Committee...(Appendix J) Budget... (Appendix K) Purchasing....(Appendix L)..19 Credit Card & Other Charges....(Appendix M). 20 Disbursements.. (Appendix N) Expense Reimbursements.. (Appendix O) Payroll. (Appendix P).24 Asset Inventory..(Appendix Q)

74 Financial Policy FBC O Fallon FINANCIAL POLICY FIRST BAPTIST CHURCH O'FALLON I. Statement of Ministry The purpose of this Financial Policy is to provide standardized fiscal guidance for the ministries of FBC of O Fallon. Every financial transaction should reflect the purpose of the FBC of O Fallon that is to love God, love people, win the lost and mature the saved. II. General Policies 1. Funds. a. General Fund. (See Appendix A) The General Fund is established to provide for the overall operation and functions of the church: (1) Deposits to the general fund consist primarily of budget receipts. (2) Disbursement of funds for budget approved expenditures are made from the general fund. b. Designated Funds. (See Appendix B) (1) Designated fund accounts are designed to help meet the needs of a variety of ministries. (2) When a designated fund account has fulfilled its intended purpose it will be deleted. c. Bank Accounts. (See Appendix C) Bank accounts that bear the name FBC of O Fallon must be approved and controlled by the Finance Committee. (1) 2. Receipts. a. Budget receipts. Budget receipts will be deposited to the general fund. b. Ministries or organizations of the church are expressly prohibited from entering into any type of activity or event, which is designed to generate a profit. (See Appendix D) c. Activity Fees and Event Receipts. (See Appendix E) Certain designated accounts exist to provide for the accounting of various activity fees and receipts. 1. See Article VI, Section 6 of Constitution and By-laws 4

75 Financial Policy FBC O Fallon d. Non Cash Receipts. (See Appendix G) (1) The Finance Committee must approve the acceptance of any non-cash gift. (2) Non-cash gifts can be approved for the General Fund or an approved designated fund. e. Love Offerings. (See Appendix H) Love Offerings will be counted and properly tendered to the recipient in compliance with current Internal Revenue Service tax laws. 3. Finance Office (See Appendix I) Duties: a. Records all receipts and disbursements pertaining to FBC O Fallon. b. Prepares required financial reports and maintains file copies for the appropriate funds. c. Maintains auditable time period records of tax-deductible contributions given to FBC O Fallon. d. Monitors the execution of the church budget. e. Ensures ministry compliance with the FBC O Fallon financial policy. 4. Finance Committee. (See Appendix J) Duties: a. Oversees the financial affairs of the church. b. Develops and approves the financial policies of the church in compliance with current guidelines of governing authorities. c. Provides guidance and oversight in the administration of the church budget with assistance from the Church Leadership Team (2). d. Determines and recommends to the church the proposed budget amount for the next fiscal year with assistance from the Church Leadership Team (2). e. Presents the proposed budget to the church. f. Approves all Designated Funds. 2. See Article VI, Section 4 of the Constitution and By-laws. 5

76 Financial Policy FBC O Fallon 5. Budget. (See Appendix K) a. The church must approve the church budget before the budget year begins. b. The budget serves as a spending guide for various ministries and programs of the church. c. Each department, ministry or committee is responsible for budget executions within the approved budget limits. 6. Purchases. (See Appendix L) a. A purchase order (PO) number must be used for all purchases made by or for the ministries of FBC O Fallon. b. Purchase order numbers must be obtained from the Finance Office prior to making the purchase. c. Invoices received without an approved purchase order number will be returned to the vendor as unauthorized. d. Single item purchases for goods or service that cost $250 or greater, will require the advance approval of the Executive Pastor even though the purchase is an approved budget expense. e. The Church Administrator must sign all contracts for services. 7. Church Credit Card & Other Charges. ( See Appendix M) a. The Finance Committee must approve the permanent issue of a church credit card to Ministerial staff members. b. Church credit cards may be used for mail order or telephone purchases or expenses when away from the church office. 8. Disbursements. (See Appendix N) a. The Finance Office is responsible for processing accounts payable invoices in a timely manner. c. Invoices are to be paid as funds permit and the accounts payable balance kept as low as possible. 6

77 Financial Policy FBC O Fallon 9. Expense Reimbursements. (See Appendix O) a. Approved budget expenses will be reimbursed to an individual when the purchase is made with personal funds and pre-approved by the appropriate minister or their authorized representative. b. Reimbursement requests over 30 days old the Church Administrator must approve. 10. Payroll. (See Appendix P) a. The Finance Office under a policy of strict confidence administers the payroll to the Personnel committee. b. The involvement of the Finance Committee and the Finance Office in the church payroll and compensation process is outlined in Appendix P. 11. Asset Inventory. (See Appendix Q) a. A locally generated listing of equipment items that are the property of FBC will serve as a Schedule of Property for insurance purposes. b. Items with a value of $50 or greater will be included in the Asset Inventory. 12. Non-Budgeted Expenditure. a. The Church Leadership Team may approve non-budgeted expenditure in an amount up to $10,000. b. The Finance Committee may approve non-budgeted expenditures up to $20,000. c. Non-budgeted expenditures are to meet emergency and non-budgeted priority needs. Every attempt is to be made to keep the church budget within the guidelines approved by the church. d. The church in a regular/special called business meeting must approve expenditures over $20,000. 7

78 Financial Policy FBC O Fallon APPENDIX A GENERAL FUND PROCEDURES 1. The purpose of the General Fund is to receive and distribute the funds for the approved ministries of the church. 2. The operation of the church is accomplished through the General Fund. 3. The general fund is used as a tool to help the church accomplish its mission. 4. All cash, checks, and other forms of currency which are not marked for approved designated purpose will be deposited to the General Fund. 5. Any contributions marked Tithe, Budget, Church Budget, or similar classification will be deposited to the General Fund. 6. Contributions must be received or postmarked by December 31 if it is to be recorded in contribution records for that year. 7. The IRS does not recognize the value of time or services contributed by an individual to the church as a valid charitable contribution. Therefore, the church will not provide any form of acknowledgment as a record of contribution. 8. Contribution records are confidentially maintained. Only certain employees, Treasurer, Assistant Treasurer and the independent auditor have access to individual records. From time to time, other specific persons or officers shall have access to records for specified purposes and defined periods of time as determined and authorized by the Executive Pastor and Senior Pastor. 9. Quarterly, the Financial Office prints and mails Record of Contributions Statements to all people who have given $50 or more in the current year. 8

79 Financial Policy FBC O Fallon APPENDIX B DESIGNATED FUNDS PROCEDURES 1. The finance committee and/or Church Leadership Team (2) must approve designated fund accounts. 2. It is the responsibility of the finance committee to periodically review and determine the validity of the designated accounts. 3. Any cash, checks, or other currency received for an approved designated fund will be deposited to that fund. 4. The Finance Office will maintain authorized designated fund accounts. 5. The Finance Office maintains the stated purpose of each designated fund. 6. IRS regulations prohibit tax exempt status for any contribution in which the contributor is a direct recipient of personal services provided by the contribution. 7. Individuals are prohibited from soliciting designated funds for projects that are included within or omitted from the budget unless specific approval is given by the Finance Committee, Church Leadership Team (2) or the Senior Pastor. 9

80 Financial Policy FBC O Fallon APPENDIX C BANK ACCOUNTS PROCEDURES 1. The Finance committee will authorize and maintain the minimum number of bank accounts required to fulfill the functions of FBC of O Fallon. 2. Any bank account that bears the name First Baptist Church of O Fallon must be approved and controlled by the Finance Committee through the Administrative Staff. 3. Authority to sign checks on authorized bank accounts must be approved by the Finance Committee. 4. The Finance Office will reconcile each account on a monthly basis and maintain the accuracy of the account. 10

81 Financial Policy FBC O Fallon APPENDIX D GIFTS & RECEIPTS PROCEDURES 1. Any ministry or organization must obtain the approval of the Finance Committee before engaging in any type of activity which includes the selling of goods or services. 2. To preserve the integrity of the annual operating budget, the church is prohibited from receiving funds through the annual budget from any individual, company, or organization when the funds are designated for: a. Programs or activities expressly omitted from the approved budget. b. The Senior Pastor, Executive Pastor or Finance Committee must approve any designated contributions received for ministries supported by the budget. 3. Any ministry can collect fees from participants of various trips (including mission trips) or projects to cover personal expenses. The tax status of such fees is subject to the regulations of the Internal Revenue Service. The Finance Committee is to see that these receipts are handled properly. 11

82 Financial Policy FBC O Fallon APPENDIX E ACTIVITY FEE AND EVENT RECEIPTS PROCEDURES 1. Due to the nature of activity fees, the church cannot give credit on the member s contribution statement for any activity fee charged by the church functions. 2. The ministry or committee responsible for collecting the activity fee is also responsible for maintaining name listings of paid and unpaid individuals for the event or activity. 3. Proper handling of these funds includes depositing the balance each day with the Finance Office through the use of a designated cash box. 4. Purchases and disbursements for events or activities are to be made in accordance with the guidance contained in this financial policy. (See Appendix M for Purchases; See Appendix P for Disbursements.) 12

83 Financial Policy FBC O Fallon APPENDIX F CASH AND CASH RECEIPTS PROCEDURES 1. Cash receipts received other than on Sunday s are to be received by the office manager. 2. A log of cash receipts is to be maintained by the office manager. 3. At the close of each day, the office manager shall present to the financial secretary the cash receipts and a photocopy of the daily cash receipt log. 4. A balance of not more than $100 may be maintained in a petty cash fund. 5. Disbursements of cash received are prohibited. OFFERING COLLECTION AND COUNTING PROCEDURES 1. Designated ushers are assigned to collect the offering at each service. Two (2) ushers take the collected offering to the Finance Office and place it in a locked moneybag where it is then deposited in the safe. 2. The financial secretary and a volunteer retrieve the moneybags each Monday. The contributions are posted to member s records and the money is counted. 3. The counted money is placed in a locked moneybag delivered to the bank for deposit. 13

84 Financial Policy FBC O Fallon APPENDIX G NON CASH RECEIPTS PROCEDURES 1. The church appreciates the fact that certain individuals may wish to provide for the Lord s work through the donation of non-cash items such as real estate, stocks, bonds, jewelry, or other such items. 2. The Finance Committee is authorized to accept only those gifts that are considered practical for the church to manage. 3. The Finance Office will acknowledge the receipt of non-cash gifts with a letter. 4. Gifts with an estimated value of $500 or more must be acknowledged with IRS Form The value of non-cash gifts for determining the amount of any tax deductions is the responsibility of the donor. The church can officially acknowledge receipts but has no authority to assign values to non-cash gifts. 6. If the church sells the item within two years of taking possession, the IRS requires that the church file IRS Form 8283 indicating the sale price. 7. The Finance Office is available to provide assistance in various ways so that estates and individuals can contribute non-cash items to the church. 14

85 Financial Policy FBC O Fallon APPENDIX H LOVE OFFERINGS PROCEDURES 1. From time to time the church may receive love offerings to allow the church to participate in the support of various ministers, evangelists, soloists, missionaries, mission groups, ministries, and certain events. This is intended so that the Lord can provide for their various needs. 2. Love offerings will be forwarded to the intended recipient on the next business day following receipts unless unusual circumstances require other action. 3. Love offerings are to be approved by the Senior Pastor, Church Leadership Team or the Finance Committee. 15

86 Financial Policy FBC O Fallon APPENDIX I FINANCE OFFICE PROCEDURES 1. The Finance Office will ensure that all receipts coming into the church (regardless of source) and all monies going out of the church (regardless of use) are handled in a wise and efficient manner. 2. All transactions will comply with the standard of God s Word, the law of government authorities, the church by-laws and the Financial Policy of First Baptist Church of O Fallon. 3. All funds are to be accounted for in accordance with generally accepted accounting practices. 4. The Finance Office is accountable to the Finance Committee for the ongoing financial operations of the church. 5. The Finance Office will coordinate any procedures or personnel requirements to ensure that the funds are handled safely and properly. 6. An outside accounting firm selected by the Finance Committee will supervise an annual audit. 16

87 Financial Policy FBC O Fallon APPENDIX J FINANCE COMMITTEE PROCEDURES 1. The Finance Committee is responsible for maintaining the highest integrity and trust in the administration of the church finances. 2. Periodically review YTD expenses vs. the budget. 3. Take necessary actions to adjust or make corrections to any budget areas, which exceed the church approved budget limit. Requests for budget adjustments from ministers or committee chairpersons should be in writing. 4. Work with the Church Leadership Team (2) in forecasting projected revenue for the coming fiscal year. 5. Present the proposed budget to the church at large. 6. Authorize and maintain the minimum number of bank accounts required fulfilling the functions of First Baptist Church of O Fallon. Serve as approving authority for individuals to sign checks on authorized bank accounts. 7. Approve and maintain designated accounts. 8. Serve as approving authority for selling of goods or services. 9. Determine wisdom of acceptance of non-cash gifts. 10. Approve assignment of church credit cards and review at least annually. 11. Resolve any questionable reimbursements. 12. Communicate with personnel committee any forecast of funding problems that could affect the payroll. 13. Ensure that the reserve account balance includes a sufficient amount for one month of church operating expenses. 14. The Finance Committee must review and approve any changes to the financial policy. 17

88 Financial Policy FBC O Fallon APPENDIX K BUDGET PROCEDURES 1. Approximately four months prior to the start of the next fiscal year the finance committee in cooperation with the Church Leadership Team (2) will review receipts and forecast the expected annual revenue for the upcoming year. 2. The Finance Committee will ensure that the church s mission and goals, as well as any budget guidelines, are presented to Ministers, Ministry heads, and committees that are required to submit budget requests. These individuals or committees will present their budget requests and rationale to the Finance Committee within 3O-days. 3. Budget requests should be typed (if possible) on the standard form supplied by the Finance Office. Each request must reflect the standard accounts listed in the budget requests form. Completed budget request forms will be returned to the Finance Office. 4. The Finance Office and the Finance Committee Chair will compile the budget requests, compare projected revenues with projected expenses, and prepare a draft budget. The Finance Committee Chair will present this draft to the Finance Committee for review. 5. Once the budget requests have been reviewed and any adjustments made and communicated to affected staff member or committee, the Finance Office will prepare the presentation form of the proposed budget. 6. The proposed budget will be made available to each church member. 7. The Finance Committee will hold a budget hearing to discuss details of the budget and to receive recommendations from the church concerning budget detailed issues. The Finance Committee will schedule a vote on the proposed budget. 8. The church will vote on the projected budget at the annually scheduled business meeting of the church. Upon approval by the church, the budget will take effect on the first day of the next calendar year. 9. Generally accepted accounting practices require the budget to be closed on the last day of the fiscal year. The church employs zero based budgeting and there is no automatic correlation between current budget amounts and expenses of prior years. APPENDIX L 18

89 Financial Policy FBC O Fallon PURCHASING PROCEDURES 1. A purchase order system exists to effectively manage the church budget and expenditures. 2. The Finance Office will supply authorized individuals with an appropriate purchase order number. 3. The purchaser must provide the estimated amount of the purchase before the Finance Office can issue the purchase order number. 4. The purchase order number must be given to the vendor and the vendor is to include the purchase order number on all invoices or correspondence concerning the purchase. 5. Emergency repairs or services after scheduled business hours are exempt from requiring a number prior to purchase. The individual responsible for the purchase must obtain a purchase order number when the Finance Office opens the next business day and supply it to the vendor. 6. It is inevitable that large budget items are concentrated in one purchase, which can create cash flow problems. Therefore, single item purchases for goods or services of $1,000 or more will require the advance approval of the Executive Pastor even though the purchase is an approved budget expense. 7. Finance Committee approval of large purchases allows those responsible for the church finances to schedule the cash disbursements in a manner compatible with budget receipts. 8. Generally accepted accounting practices require the budget to be closed on the last day of the fiscal year. All purchases and receipts will be credited to the year in which they occur. Date of purchase is determined by the invoice date. 9. Individuals making purchases at end of year must ensure that invoices are delivered to the Finance Office within ten days of purchase so that the purchase can be expensed to the proper budget year. APPENDIX M 19

90 Financial Policy FBC O Fallon CHURCH CREDIT CARD & OTHER CHARGES PROCEDURES 1. The church maintains credit card accounts for certain transactions and purchases. 2. The Finance Office is to supervise the use of these accounts to provide safeguard to the church and maintain integrity in the church finances. 3. Temporary assignment of credit is to allow church groups to have a convenient means of covering emergency and travel expenses. 4. All credit card charges must be reconciled with the Finance Office within one week of completing a trip or event. 5. The responsible person is to submit a signed receipt for each charge. Receipts should be dated for the period of the trip or event. 6. Any charge tickets for meals or any type of entertainment must have the names recorded on the back of the receipt of all individuals who received meals or services from the charge. 7. When credit cards are used for mail order or telephone purchases, transactions are to be handled in accordance with Appendix L. 8. Any telephone order charges must have a purchase order number assigned by the Finance Office before the purchase is made. Upon making a purchase, the individual making the purchase must provide a memo to the Finance Office indicating the vendor s name, date of purchase, purchase order number, and the amount of the purchase. 9. Charges or accounts not expressly covered by any of the above must be approved in advance by the Finance Office. APPENDIX N 20

91 Financial Policy FBC O Fallon DISBURSEMENTS PROCEDURES 1. The Finance Office is responsible for maintaining accounts payable and vendor accounts as current and accurate as possible. 2. Invoices are to be stamped with the date they are received. 3. Invoices are to be verified with the purchase order log and then coded with the appropriate account number (s). 4. An invoice is then to be entered into the accounts payable system for payment. 5. Checks are to be written and mailed weekly, or as often as needed. 6. A copy of the invoice is to be attached with a copy of the check and filed with the current year records. 7. Vendor invoices that do not have a purchase order number will be considered an unauthorized purchase. 8. An unauthorized invoice will be returned to the vendor and a copy of the invoice forwarded to the individual making the purchase. 9. Repeated occurrences of unauthorized purchases are subject to the review and decisions of the Church Leadership Team and/ or Finance Committee. 10. Advance checks will be made out in their entirety including the vendor amount. In the event that it is not possible to write in the amount, the Finance Office is to write in the vendor and an amount not to be exceeded on the check. 11. Advance checks will only be written for approved budget purchases or approved designated accounts. 12. A signed check will not be issued without a vendor name and the amount, or amount not to be exceeded on the check. 13. The person requesting an advance check is responsible to see that the sales receipt for the purchase is provided to the Finance Office the next business day following the event or trip for which the check was issued. 14. If any advance check is to be issued to an individual not on the church payroll, the request must include the person s name, mailing address, and Social Security number. APPENDIX O 21

92 Financial Policy FBC O Fallon EXPENSE REIMBURSEMENTS PROCEDURES 1. Travel and ministry expenses must be submitted on the form supplied by the Finance Office. 2. All expense reimbursements are transacted by a check at month end. 3. The purchaser must submit valid receipts to the Finance Office. 4. Individuals submitting purchase receipts for reimbursements must submit them within one week of completing the trip or event. 5. The Finance Committee is responsible for reviewing any questionable reimbursement and resolving any discrepancies. 6. Bona fide expenses for reimbursement are: a. Miscellaneous Business Related expenses which include all items in the approved budget except for any travel and ministry expenses. b. Travel expenses will be reimbursed only for those travels, which relate directly to the performance of the individual s service to the church. (1) Reimbursement for travel will not be made for individuals who are not approved to represent the church in travels. (2) Only those travels which are part of the approved budget and its activities or events will be considered for reimbursement. (3) Employees are encouraged to make travel arrangements through the church s approved travel agent using a valid purchase order number. This eliminates the need for reimbursement and allows for approval of the expense prior to the purchase. c. Automobile (1) Employees using their automobile for business related travel would be reimbursed for preapproved travels, which relate directly to the performance of the individual s service to the church. (2) Employees using rental agency automobiles either locally or out of town are encouraged to rent them with the use of a purchase order number. (3) If an individual has to rent an automobile with personal funds the church will only reimburse the employee for rental that occurs on approved ministry related trips or approved budget activities. 22

93 Financial Policy FBC O Fallon d. Other. Unless the transportation expenses are for an approved ministry related trip or approved budget activity they will not be reimbursed. e. Living and Entertainment. (1) Living and entertainment expenses can only be reimbursed to individuals on approved out of town ministry related trips when these purchases are made with the individual s personal funds. (2) Expenses which arise from trips that are not approved in the budget and are not ministry related cannot be reimbursed to the individual. (3) The individual must submit valid receipts for the expenses. Meals or entertainment expenses must include the names of all the individuals for whom the purchases were made. (4) A brief description of the nature of the business must be included on the form supplied by the Finance Office. This is required by the IRS code. APPENDIX P 23

94 Financial Policy FBC O Fallon PAYROLL PROCEDURES 1. The Finance Office is to maintain appropriate records, pay required taxes on a timely basis, and process the payroll on a scheduled basis as determined by the Personnel Committee and in accordance with the appropriate laws. 2. Before the Finance Office can issue a payroll check for a new employee, the Finance Office must have on file the following: a. A completed application or resume. b. A completed W-4 Form (Income Tax Withholding) c. A completed I-9 Form (Proof of Citizenship) d. Written approval from the authorized hiring authority and personnel committee on a standard form provided by the Finance Office indicating: (1) The job is filled. (2) Job Classification. i.e., Permanent, Part Time, Temporary or Minister (3) The starting date. (4) The compensation for the new employee. (5) Any benefits included for the employee. e. The Finance Office is responsible for maintaining salaries within the approved amounts. f. The Finance Committee will communicate with the Personnel Committee any forecast of financial irregularities which could interfere with the Finance Office s ability to produce and distribute the monthly payroll. APPENDIX Q 24

95 Financial Policy FBC O Fallon ASSET INVENTORY GUILDELINES 1. GENERAL INFORMATION: a. CAPITALIZE items with value of $500 or more. b. EXPENSE items costing $499 or less c. Items that cost $49.99 or less will not be included in the Asset Inventory 2. FOR INSURANCE PURPOSES: a. Inventory everything b. Asset Identification Sheet will only reflect Capitalized Inventory ($500 value or more) c. Expensed items will be maintained on a separate listing ($50 to $499.99) 3. METHOD OF INVENTORY: a. An inventory listing by room number will be produced in December of each year. A copy will be given to each member of the Church Leadership Team. b. Ministry involvement (oversight responsibility) for annual inventory validation. c. A serially numbered Inventory Control Tag should be applied to each capitalized item. d. Validated listings reflecting (additions or deletions) inventory changes will be returned to the Church Administrator by January SYSTEM. (Count by physical layout-compile by system) Computers Telephones Sound Lighting Security 5. OTHER ASSETS TO INCLUDE (Reminder List): 25

96 Financial Policy FBC O Fallon a. Vehicles b. Weekday Early Education c. Kitchens e. Any other not listed 26

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