1999 Annual Council - Treasurer's Report

Treasurer's Report

by

Robert L. Rawson, Treasure

During the years of this current quinquennium we have experienced the Lord's leading in many wonderful ways. This church has moved forward in faith and as we have moved in faith we have seen the promises of the Lord fulfilled. As you will see from this report we have much for which to be thankful. In addition to being thankful for the Lord's bountiful blessings I would like to express thankfulness to God for our members all around the world who faithfully support God's work on earth. There are still opportunities for us to improve and yet it is good to pause and reflect on the accomplishments of the past as we look to the challenges for the future.

As we consider how the Lord has used each of us to accomplish His plans I would like to give recognition to the strong treasury team made up of each of the division treasurers as well as those who are a part of the in house team. Each has brought a level of professionalism and expertise that are vital to successfully manage the material blessings provided by the Lord through his faithful people.

At the time of the first annual council Treasurers' report of this quinquennium in 1995 we highlighted six issues of major concern. In this last Annual Council of this quinquennium let us review together these six issues of concern.

Concerns for the Quinquennium

• Self - Reliance -- Progress has and is being made toward this vital goal. It is high on the agenda of the General Conference, its twelve divisions, unions, conferences/missions, and church-operated institutions. Important indicators of self-reliance, such as working capital, cash position, indebtedness and dependence on appropriations are constantly under review at every level of church organization. While a quick overview of organizational financial statements would indicate significant progress, we are aware that a considerable amount of work yet remains to reach the ultimate in self reliance. This will continue to be an important part of financial reviews at every level of church organization.
• Decrease in General Conference Working Capital -- In 1995 it was reported that over the previous 5 years there had been a decrease in the General Conference working capital of 42.3% due in large degree to operating losses and the construction of the new General Conference office building which used funds previously set aside from the sale of General Conference property sold for this purpose. The receipt of these funds temporally provided a higher then normal level of working capital. In 1996 we reported an upturn in the working capital but 1997 again showed that working capital was below formula requirements. This was in large part due to the transfer of working capital to the North American Division as per the 1996 Annual council vote.
  

Working Capital Trend

By 1998 with the General Conference operating within budget, with increases in tithe, a slight increase in World Mission offerings, and the release of some blocked currencies, working capital increased to percentages in excess of required levels.

Given the fluctuation in world currencies, volatility of financial markets, and need for a strong financial base to take advantage of special opportunities we are proposing to this 1999 Annual Council that the working capital requirement be increased from 20% of Unrestricted Income to 30% with 5% of the 10% increase to be implemented this year and the remaining 5% to be increased 1% per year for the next 5 years. We are further recommending that any working capital excess over the new proposed bench mark be made available to divisions and General Conference institutions in the form of a supplementary budget to be voted at each Annual Council when applicable. If approved the supplemental budget for distribution in 1999 will be US$ 8,392,510.

• Decline in Cash Reserves -- In 1995 I reported a severe erosion in the cash position of the General Conference thereby affecting the stability of the General Conference during economically uncertain times.

Liquidity Trend

1996 showed an improvement in the cash position but still below required levels. By 1997 the cash position of the General Conference had improved to the 100.08% level. This upward trend was maintained in 1998 and continues in 1999.

While these trends are positive it is imperative that we continue to be vigilant.

• Decline in Mission Offerings -- In 1995 I reported that for several years there had been a steady decline in giving to missions through the Sabbath School Mission Offerings. This decline continued in the reports of 1996 and 1997 with 11.1% reported as the decline from the 1996 report to the 1997 report.

World Mission Offering Trend

It was reported in 1997 that membership growth was between 5% and 6% but that World Mission Fund giving had dropped per capita from $7.50 to $6.44. By 1998 we were able to report that North American Division World Mission Funds given through regular channels showed an increase of 1.58%. While the North American Division World Mission Offering continues to show a slight increase in 1999, I maintain concern regarding the continued decline in per capita World Mission Fund giving in North America.

NAD Per Capita World Mission Offering

Our 1996 report gave the good news that Global Mission had opened our members' minds to the opportunities of sharing the good news of a soon coming King. At the same time it was noted that as members participated to an increasing degree in Project Giving that not only must this form of giving be nurtured but at the same time it must not destroy the base needed to support and maintain the very initiatives established by Global Mission. This tension between the avenue of Project Giving and giving to the World Mission program through regular Sabbath School offerings continues to exist and creative ways to deal with both styles of giving need to be developed such that the styles are complementary.

• Blocked Currency -- The report of 1995 stated that the General Conference and affected local fields were facing some unique challenges due to the issue of blocked currency. In 1997 we reported that approximately $23,000,000 were on deposit in foreign accounts that were subject to governmental currency restrictions.
  

Blocked Currency

In 1998 over $17,000,000 in blocked currency was released for use by the world church. This has been a real blessing to the strength of the financial statement. At the 1998 Annual Council a supplemental budget of over $13,000,000 was voted and disbursed. With the realignment of the Asia Pacific Division and the creation of the Northern Asia Pacific Division with headquarters in Korea , there is a continuing benefit in terms of some issues related to blocked currency.

Continued diligence and creative thinking are required to take advantage of every opportunity to legally address this challenge.

• Balanced Budget Operation -- Progress in this area has been encouraging. Improvement can be seen in the net worth of the General Conference which reflects the gains that are shown in the year end statements for much of this quinquennium.

Unrestricted Net Assets

You will be interested in the budget as will be presented by Robert Lemon later in this Annual Council. It is a budget that is prudent and yet provides levels of support for the various programs of the Church.

In keeping with the importance of operating within a balanced budget it is worth noting that continued study is being given to each of the divisions' needs and how to balance each divisions' individual needs against the needs and opportunities in other parts of the world field.

Unrestricted Net Worth

Expansion of Operating to highlight the down trend starting in 1992 which was a cause for concern in the 1995 Annual Council Treasure's Report

General Conference Operating Cap

The General Conference has consistently operated under the cap established in 1992. Administration continues to remain committed to operating within this cap and to continue to provide budgets that are balanced.

It would be well to note of that the current strengthened financial statement reflects the injection of blocked currency in 1998 in excess of $18,000,000 which represented an accumulation over several years. Future annual releases, as experienced will be much smaller.

 

Challenges for the Quinquennium

• Tithe Sharing
• Wage Scale Philosophy
• Develop better channels to regularly report financial facts to our members
• Develop Financial and Administrative structures that can be more responsive to a rapidly changing world environment
• Mission Statement driven resource allocation
• Develop clarity and consistency in recognizing and responding to issues of ethics and integrity
• Move forward with confidence and prepare to meet "Our Lord"