2018 Annual Report Frequently Asked Questions What is the church s current financial situation? What are our church s goals for the upcoming year?

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1 Apex UMC Family Generosity 2019 Frequently Asked Questions October 14, 2018

2 Each year in October our Apex UMC Family spotlights how we live into our mission of inviting and equipping all to follow Jesus in transforming the world through our investment in discipleship. Your service and your gifts make our kingdom work possible. Significant information on the state of our church is included in the 2018 Annual Report. Following are Frequently Asked Questions to supplement the Annual Report as you consider your 2019 giving. What is the church s current financial situation? Overall, the church family s financial situation is solid as year-to-date giving is higher than the two prior years and expenses have continued to be managed tightly, yet responsibly. As a result, through the end of August our comprehensive budget across all campuses showed a modest surplus of $7,634. Our Finance Committee originally anticipated and planned for a $45,000 year-to-date deficit, so we are encouraged by recent trends. We are however mindful of significant anticipated and unanticipated expenses that will be incurred during the last few months of the year and remain in prayer for continued strength in pledged and unpledged giving. What are our church s goals for the upcoming year? With our collective mission of inviting and equipping all to follow Jesus in transforming the world, we consistently work to increase the impact and reach of our ministries. In fact, we have set a long-term vision of doubling the number of people reached through the equipping ministries of our family as measured by their being involved, invested and connected in the life of our worshiping communities. To support and enhance this work, our Administrative Council at an August Charge Conference commissioned a Covenant Team to shepherd the development of the AUMC Family Covenant over the next year. This team will collect and define family processes across our faith communities and provide organizational clarity supporting the cooperative mission and ministry of the family. What changes do you see in our church s needs in 2019 versus 2018? As our ministries grow serving record numbers of children and youth, meeting the needs of our local neighbors and vulnerable communities, recruiting and retaining great staff we aim to grow our annual budget meaningfully in 2019 and beyond. At this point, we estimate that an 8% increase in 2019 will be needed, but we remain committed to managing the church finances prudently to keep expenses in line with giving.

3 Budget challenges forced us to freeze all staff salaries and reduce hours for some staff members in 2018 as our focus remained on funding critical missions and ministries and fulfilling our fixed obligations. An 8% increase in the overall budget will enable our missions and ministry teams to continue this good work while allowing our Staff Parish Relations Committee to give much-deserved cost-of-living increases and merit raises for our staff team. Further details of the requests that will make up our annual budget are forthcoming. Local campus steering teams, with the support of their campus pastors and staff teams, are developing their campus-specific budgets during September and early October, so we will have more detail on those budget requests soon. How is the budget developed and who approves it? A year ago, we moved to greater local budget authority, transparency and accountability and guided the development of local campus budgets for each of our faith communities. Last year, some local steering teams began to play a more significant role in budget development. Other local steering teams are increasing their involvement this year. This fall, all steering teams are providing leadership in the budget development for their campuses. In 2017, our church also established an Apex UMC Family budget that more clearly captured and represented the services and materials shared across all four faith communities. As we continue in this evolution to increased local authority, responsibility and accountability, the 2019 budget development process is led by the lay leadership of the church with the support of our pastors and staff teams. For example, all standing committees (Finance, Staff Parish Relations Committee, Trustees, Nominations/Leadership Development) provided input and requests for the Family budget. The Chairs Team, composed of chairs of all standing committees and steering teams, now oversees this budget. At a budget work session in August, the Chairs Team considered requests from standing committees and is recommending an initial 2019 family budget with a suggested 7.95% increase over Those campus-specific budget requests, plus the family budget requests, will all go to our Finance Committee at a November work session. At this November meeting, committee members will consider pledged giving from all campuses along with the proposed budgets and make recommendations for a final budget to the Administrative Council. Our Administrative Council will consider and vote on the final budget at a charge conference in late November.

4 If approved at charge conference, those budgets will be in effect for If they are not approved, the Administrative Council will provide guidance to our committees and campus steering teams for adjustments. What is the Family budget and why is it needed? The Family budget was first established a year ago for 2018 and includes shared services and materials used by all four faith communities. The goal of this component of the budget is to find places where we are better together than we are individually. Sharing such expenses is intended to increase efficiency (for example, a shared finance office) and effectiveness (for example, shared youth and children s programming). Examples of items included within the proposed 2019 Family budget: Programming o Shared adult, youth, and children s curriculum o All Family children s events such as Confirmation, Vacation Bible School and Jingle Jam o All Family youth missions such as AOSP and YES o Lay leadership development Administrative Support and Services o Finance and generosity expenses such as the annual audit, annual report, giving communications and banking fees o Insurance including property and liability insurance for all of our campuses o Financial Secretary and Finance Office. These are contracted services with Durham-based Trinity Concepts which specializes in church financial operations. o Technology support through Durham-based Secure Network Administration which provides the church s help desk and computer oversight. Leadership o Nursery supervisor and employees who staff our nursery for worship and midweek activities for all faith communities. o A portion of the Lead Pastor s compensation, reflecting his role across the Family. After a 3-year phase-in, 25% of the Lead Pastor s compensation will be included. o Executive Director. The Executive Director has administrative functions across the Family, including oversight of financial operations, Standing Committee support, HR, strategic planning and Conference reporting.

5 What determines the percentage from each campus to the Family budget? The percentage of total giving represented by the local campus for the 12-month period prior to budget development. For 2019, those percentages are Apex campus, 69%; 519, 16%; The Peak, 14%, and Fiesta Cristiana, 1%. How will giving within our individual campuses be affected by the change in structure for our Apex UMC Family? Our leadership teams believe giving will likely be enhanced due to greater transparency paired with increased authority, responsibility, and accountability for each faith community leadership team. As background, our Administrative Council, at a charge conference in August, voted to approve Apex UMC Family s evolution to one church made up of multiple interdependent churches, called a Cooperative Parish. A Cooperative Parish is defined by the UMC s Book of Discipline as occurring when local churches, with the guidance of the Holy Spirit, choose to enhance their witness to one another and to the world by showing forth the love of Jesus Christ through forms of mutual cooperation. Strategically, this new structure allows our church family to increase our ability to empower our local faith communities to have greater authority through steering teams with the support of local pastors and staff teams. This decision included increasing budgetary authority for spending and staffing (within overall guidelines, best practices, and parameters set centrally through the Cooperative Parish). This strategic decision was also made to give each faith community more freedom to keep their local context in mind as they work within the family (Cooperative Parish) to achieve our overarching mission of inviting and equipping all to follow Jesus in transforming the world. For the most up to date details about the restructure, visit apexumcfamily.org/restructure. What s the impact of The Peak s purchase of the property at 1200 N. Salem Street on the church s finances? The Peak s purchase of its building and property has a negligible impact on our church s operating finances. The price of the property ($1.6 million) was pre-negotiated with the previous owners who have leased the Peak campus and building to our church for the past eight years, thus creating instant equity in the building upon closing the new loan (the current appraised value is $1.75 million). In addition, the bank loan used to finance this purchase provides a 10-year fixed interest rate.

6 With a successful capital campaign over the next three years that is anticipated to generate a down payment of $350,000, The Peak s annual mortgage payments will be the same as its previous lease payment for the same property. The Peak Steering Team and lay leadership have planned and launched this capital campaign that is designed to keep the mortgage payment to the same level as the lease payment, but also set aside funds for any major repairs and potential enhancements the building may need in the next 5 to 10 years. Do we still budget for buildings and operations in the same budget? (Capital and operating funds) Yes, though we have maintained the flexibility for our faith communities to engage in campus-specific supplemental capital campaigns such as the campaign that Peak has recently launched. Two years ago, we moved to an all in budget, including both capital and operating in one annual budget. Consistent with the move to more transparency for each local campus budget, all lease and/or mortgage expenses are contained within the appropriate local campus budget. For example, the 519 budget includes lease expenses for 1100 Perimeter Park Drive; The Peak budget will include the new mortgage for 1200 N. Salem St., and the Apex campus budget includes the mortgage for 100 S. Hughes Street. Why is The Peak holding a separate capital campaign? The Peak leadership team felt a separate capital campaign was the best way to purchase the building, while keeping expenses consistent for the future ministry of this faith community. The Peak s lay leadership team chose to pursue a capital campaign specific to The Peak faith community to raise funds to ensure the mortgage payment is equal to or lower than the previous lease amount. This campaign also offers the potential to add funds for anticipated future maintenance and building enhancements. While it is The Peak s campaign, members of all faith communities are welcome to contribute if they choose, however the bulk of the campaign communication will occur within The Peak faith community. For more information about The Peak Capital Campaign, visit peakumc.org/welcomehome. Is there a plan for a capital campaign at Apex UMC, Fiesta Cristiana or 519? Not at this time. Our intent in moving to an all-in budget two years ago was to lead one generosity campaign each year to fund both our operational and capital needs. If at some point in the future, the needs of the church require a separate capital campaign, that decision would be made by lay leadership of the local campus church.

7 Why does each campus budget include investment into Fiesta Cristiana? How is the dollar value of that investment determined? Our faith family has been a leader in creating, growing and supporting Hispanic ministries now for 10 years. We have faithfully invested in the missions and ministry of Fiesta Cristiana over the years, recognizing it as a vital partner in fulfilling the overall church family mission. A year ago, the Administrative Council discussed moving to a consistent way of determining the Family s annual investment in this missional congregation. Our leadership determined the need for a predictable formula that allowed for Fiesta Cristiana to grow when the family is was strong financially and to adjust when the overall church family experiences inevitable leaner years. After reviewing historical data from the last ten years, our leadership determined that 3.5% of our Family s annual giving would be consistent with our historical shared investment in Fiesta Cristiana. In 2018, this transition to a fixed percentage necessitated providing additional funding ($28,463) for one year from the Pastor s Discretionary Fund as a bridge year to support the development of the Fiesta Cristiana annual budget. At present, we anticipate a budgeted investment in Fiesta Cristiana ministries of $110,000 in 2019 with these expenses shared on a pro-rata basis across the Apex, Peak and 519 faith community operating budgets. With Fiesta Cristiana now recognized by the NC Conference as a missional congregation, we are hopeful new funding and grant opportunities will continue to emerge for Fiesta Cristiana helping our joint ministry with our Hispanic/Latinx neighbors to thrive. What happens to any surplus funds at the end of the year? Any surplus funds at the end of the budget year are held in reserve for emergency needs of the church. Our Finance Committee has directed that we maintain each year no less than one month of operational funds in reserve in case of emergency (approximately $300,000).

8 For more information, or to make a gift online, please visit apexumcfamily.org/giving.