Foursquare Financial Solutions

Transcription

1 Foursquare Financial Solutions Proposal to Cabinet March 8, 2011

2 Proposal

3 Proposal To form a new legal entity Foursquare Financial Solutions, under ICFG control, that brings loans, insurance, income properties, retirement, planned giving and the Foundation under one roof with strong fiducial oversight and professional staffing

4 Purpose

5 Purpose To steward the aligned businesses to provide resource that will reduce the dependency on the tithe and accelerate the mission of the Foursquare Church

6 Objective

7 Objective To develop a world class financial services organization, professionally staffed, to serve our Foursquare churches and constituency

8 Goals

9 Goals Develop an effective field organization to help our church leadership better steward the financial responsibilities of their churches

10 Goals Develop an effective field organization to help our church leadership better steward the financial responsibilities of their churches Allow ICFG Board and Executives to focus on the mission and ministry of The Foursquare Church

11 Goals Develop an effective field organization to help our church leadership better steward the financial responsibilities of their churches Allow ICFG Board and Executives to focus on the mission and ministry of The Foursquare Church Reduce Central Office dependency on the tithe for administrative expense

12 Goals Develop an effective field organization to help our church leadership better steward the financial responsibilities of their churches Allow ICFG Board and Executives to focus on the mission and ministry of The Foursquare Church Reduce Central Office dependency on the tithe for administrative expense Help our constituents and churches provide additional resources to their church while receiving sizable tax savings

13 Goals Develop an effective field organization to help our church leadership better steward the financial responsibilities of their churches Allow ICFG Board and Executives to focus on the mission and ministry of The Foursquare Church Reduce Central Office dependency on the tithe for administrative expense Help our constituents and churches provide additional resources to their church while receiving sizable tax savings Utilize the financial assets of The Foursquare Church to bring real benefits to our churches and constituents

14 Goals Develop an effective field organization to help our church leadership better steward the financial responsibilities of their churches Allow ICFG Board and Executives to focus on the mission and ministry of The Foursquare Church Reduce Central Office dependency on the tithe for administrative expense Help our constituents and churches provide additional resources to their church while receiving sizable tax savings Utilize the financial assets of The Foursquare Church to bring real benefits to our churches and constituents Reduce financial risk to The Foursquare Church

15 Opportunities Challenges

16 Opportunities Challenges Funding stream to lessen dependence on the tithe

17 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction

18 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction Risk mitigation

19 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction Risk mitigation Resources to the local church

20 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction Risk mitigation Resources to the local church Budget and financial counseling to the local church

21 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction Risk mitigation Resources to the local church Budget and financial counseling to the local church Engagement with the laity of our churches

22 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction Risk mitigation Resources to the local church Budget and financial counseling to the local church Engagement with the laity of our churches Help the local churches achieve their vision

23 Opportunities Challenges Funding stream to lessen dependence on the tithe Culture and relationship issues Less board distraction Risk mitigation Resources to the local church Budget and financial counseling to the local church Engagement with the laity of our churches Help the local churches achieve their vision

24 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction Culture and relationship issues Up front costs Risk mitigation Resources to the local church Budget and financial counseling to the local church Engagement with the laity of our churches Help the local churches achieve their vision

25 Opportunities Challenges Funding stream to lessen dependence on the tithe Less board distraction Risk mitigation Resources to the local church Culture and relationship issues Up front costs Communication with the field Budget and financial counseling to the local church Engagement with the laity of our churches Help the local churches achieve their vision

26 Background

27 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions

28 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions Nov 2006 AG makes presentation to ICFG board

29 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions Nov 2006 AG makes presentation to ICFG board 2008 ICFG asks Foundation to establish Planned Giving department

30 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions Nov 2006 AG makes presentation to ICFG board 2008 ICFG asks Foundation to establish Planned Giving department Nov 2008 Foursquare Financial Solutions is born with signed partnership with AGFS

31 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions Nov 2006 AG makes presentation to ICFG board 2008 ICFG asks Foundation to establish Planned Giving department Nov 2008 Foursquare Financial Solutions is born with signed partnership with AGFS Feb 2010 Interim President Glenn Burris creates a task force to explore possibility of setting up an organization similar to AGFS to generate income for ICFG as an alternative funding source to the tithe.

32 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions Nov 2006 AG makes presentation to ICFG board 2008 ICFG asks Foundation to establish Planned Giving department Nov 2008 Foursquare Financial Solutions is born with signed partnership with AGFS Feb 2010 Interim President Glenn Burris creates a task force to explore possibility of setting up an organization similar to AGFS to generate income for ICFG as an alternative funding source to the tithe. Mar-June 2010 task force has multiple meetings with AG execs and presents proposal to ICFG board

33 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions Nov 2006 AG makes presentation to ICFG board 2008 ICFG asks Foundation to establish Planned Giving department Nov 2008 Foursquare Financial Solutions is born with signed partnership with AGFS Feb 2010 Interim President Glenn Burris creates a task force to explore possibility of setting up an organization similar to AGFS to generate income for ICFG as an alternative funding source to the tithe. Mar-June 2010 task force has multiple meetings with AG execs and presents proposal to ICFG board Governance committee asked to review - multiple meetings with task force

34 Background 2006 Dr. Jack Hayford visits AG and is introduced to AG Financial Solutions Nov 2006 AG makes presentation to ICFG board 2008 ICFG asks Foundation to establish Planned Giving department Nov 2008 Foursquare Financial Solutions is born with signed partnership with AGFS Feb 2010 Interim President Glenn Burris creates a task force to explore possibility of setting up an organization similar to AGFS to generate income for ICFG as an alternative funding source to the tithe. Mar-June 2010 task force has multiple meetings with AG execs and presents proposal to ICFG board Governance committee asked to review - multiple meetings with task force Feb 2011 ICFG board approves presentation of proposal to Cabinet

35 Advice from AG When the day is done stewardship is a spiritual matter. Randy Barton Founder and CEO AG Financial Solutions Set up the right governance structure, helping your church be the church and helping the business be the business. Attract talent. We have a very interesting incentive structure within our organization. All the team members are involved. Gerry Hindy, current CEO

36 Current Situation

37 Current Situation - Loans

38 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent

39 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M

40 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of 2012

41 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans

42 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement

43 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement - Average savings only $ 22K

44 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement - Average savings only $ 22K - Need to help pastors save more for retirement

45 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement - Average savings only $ 22K - Need to help pastors save more for retirement - Property Management

46 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement - Average savings only $ 22K - Need to help pastors save more for retirement - Property Management - Need long range plan for Echo Park

47 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement - Average savings only $ 22K - Need to help pastors save more for retirement - Property Management - Need long range plan for Echo Park - Insurance

48 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement - Average savings only $ 22K - Need to help pastors save more for retirement - Property Management - Need long range plan for Echo Park - Insurance - Need to price and position insurance products differently

49 Current Situation - Loans - $107M IFLF, $32M delinquent; $309M outside loans, $60M delinquent - ICFG made $2.3M in outside loan payments for churches, balance >$5M - $74M in outside loans mature by end of Outside banks make $12-15M profit from our loans - Retirement - Average savings only $ 22K - Need to help pastors save more for retirement - Property Management - Need long range plan for Echo Park - Insurance - Need to price and position insurance products differently - Need to collect $ 2.2M in past due payments

50 Current Situation

51 Current Situation - Foundation

52 Current Situation - Foundation - The Foursquare Foundation was established with the approval of the Cabinet in October of First grants were made in 2005 though pilot tests as a separate legal entity with the full scale grant operation up and running by July of The initial corpus was $186M. Since inception we have given out $52M to support the mission of The Foursquare Church. Five hundred and forty grants have been awarded to proven leaders in 107 countries and we have seen 5,535,187 reported decisions for Christ, 252,759 water baptisms, 237,192 Holy Spirit Baptisms, 5,893 churches planted, and 122,853 leaders received training. The corpus as at a current value of $176M despite the distribution of $52M and the tumult experienced in the markets. The Foundation tithes to ICFG on the gain of the corpus in any given year and has tithed a total of $3.8M since inception.

53 Current Situation - Foundation - The Foursquare Foundation was established with the approval of the Cabinet in October of First grants were made in 2005 though pilot tests as a separate legal entity with the full scale grant operation up and running by July of The initial corpus was $186M. Since inception we have given out $52M to support the mission of The Foursquare Church. Five hundred and forty grants have been awarded to proven leaders in 107 countries and we have seen 5,535,187 reported decisions for Christ, 252,759 water baptisms, 237,192 Holy Spirit Baptisms, 5,893 churches planted, and 122,853 leaders received training. The corpus as at a current value of $176M despite the distribution of $52M and the tumult experienced in the markets. The Foundation tithes to ICFG on the gain of the corpus in any given year and has tithed a total of $3.8M since inception. - The initial establishment of the Foundation board had ICFG executive and ICFG board members on the Foundation board and an unhealthy distance between the two boards. Bringing the Foundation under FFS will greatly strengthen this important partnership as well as provide significant financial assets that will greatly strengthen FFS. The purpose of the Foundation is very much in agreement with the purpose of FFS. Namely, to provide resource to accelerate the mission of The Foursquare Church.

54 MANAGEMENT ICFG Services & Management Contract Foursquare Financial Solutions Services & Management Contract Services & Management Contract LOAN FUND RETIREMENT Insurance IFLF Income Properties FOUNDATION

55 GOVERNANCE AND LEGAL STRUCTURE === Firewall ICFG Insurance Loans Income properties === Firewall RETIREMENT FUND FFS Planned Giving Included === Firewall === Firewall FOUNDATION LOAN FUND

56 Principles of Governance & Missional Alignment - ICFG, FFS, FF Governance Controls - The FFS Board of Directors should be appointed by the ICFG Board. - The FFS Bylaws should describe the mix of desired Board make-up to include spiritual leadership from ICFG as well as business leaders with financial acumen who have demonstrated commitment to ICFG. - Bylaws of FFS, Foundation and all subsidiaries must be approved by and cannot be amended without ICFG Board approval. - Board Members of subsidiary organizations of the FFS will primarily come from the FFS Board and shall be submitted to the ICFG Board for ratification. - Dissolution clauses of FFS will be in favor of ICFG. - Dissolution clauses of the FFS subsidiaries will be in favor of the FFS and alternately the ICFG. - The FFS Board will be chaired by the ICFG President to assure continuity of spiritual oversight.

57 Principles of Governance & Missional Alignment - ICFG, FFS, FF Policies - INVESTMENT POLICY - PLANNED GIFT ACCEPTANCE POLICY - LOAN POLICY & PROCEDURES - GRANT POLICY

58 Principles of Governance & Missional Alignment - ICFG, FFS, FF Operational Accountability - QUARTERLY INVESTMENT REPORTS to ICFG - QUARTERLY LOAN REPORTS to ICFG - Approval of any loan in excess of $1,000,000 - Approval of any action to reacquire a church property for disposition when all other steps have been exhausted - Approval of all management contracts between the consolidated FFS operating entity and the operation managed - QUARTERLY OPERATIONAL FINANCIAL REPORTS of FFS and each subsidiary - Commonality of auditors between ICFG, FFS, and all subsidiaries

59 Principles of Governance & Missional Alignment - ICFG, FFS, FF Financial Benefits - FOUNDATION: Tithe of all net investment gain - PLANNED GIVING: 100% of all undesignated gifts, & 50% of operations surplus after required annuity reserves - LOAN FUND: 50% of all operating profit after appropriate loan loss reserve is funded - INSURANCE FUND: 50% of all operating surplus - IFLF: 50% of all operating surplus - REAL ESTATE: 50% of all operating surplus - RETIREMENT FUND: 50% of all management surplus

60 Objectives and Timeline Loan Fund - Prepare offering circular and register for issuing loan certificates - Establish transitional management team in conjunction with Corporate Financial Services - Engage an outsourced underwriting capability - Hire a field based loan consultant to coach churches to be ready for loan application - Transfer Foundation s $10M on deposit with AGFS into FFS loan certificates - Hire a CFO with banking background (2012) - Only make tenured term loans with 20 year amortization as an alternative to outside lenders Retirement Fund - Enter into management and services agreement with ICFG for retirement plan - Train field consultants and provide marketing collateral - Upgrade website

61 Objectives and Timeline Planned Giving - Complete registration for Gift annuities across the US - Conduct seminars on Planned giving in cooperation with Districts - Assume responsibility for existing trusts and annuities Property Management - Identify and appraise all corporate owned residential income properties - Transfer title from ICFG to FFS for corporate owned residential income properties - Enter into management and services agreement with ICFG for income properties - Develop strategic plan for Echo Park properties - Maximize cash flow from portfolio Insurance - Enter into management and services agreement with ICFG - Develop Strategic plan for insurance business - Implement new policy to fully insure properties - Manage receivables

62 Next Steps

63 Next Steps Incorporate feedback from Cabinet

64 Next Steps Incorporate feedback from Cabinet Develop detailed budget for 2011 and a 5 year business plan

65 Next Steps Incorporate feedback from Cabinet Develop detailed budget for 2011 and a 5 year business plan Conversations in the field (District Conference calls)

66 Next Steps Incorporate feedback from Cabinet Develop detailed budget for 2011 and a 5 year business plan Conversations in the field (District Conference calls) Present to convention body

67 Next Steps Incorporate feedback from Cabinet Develop detailed budget for 2011 and a 5 year business plan Conversations in the field (District Conference calls) Present to convention body Form FFS, populate board, and enter into management and services agreements

68 Conclusion The FFS task force strongly recommends approval of this proposal