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Finance Committee Report 6-11

Finance Committee Report to Business Meeting of June 19, 2011

The Finance Committee met after Meeting for Worship on June 5, 2011. Members Greg Cliburn, Simon DeDeo, Peggy Giltrow and Marcy Pompei were joined by incoming Treasurer Shelley Cohen. Meeting began with silence. We continued with the discussion and recommendations below.

Discussion of Lee Carter’s generous bequest to Meeting was postponed from the May Business meeting to the June business meeting. The Finance Committee would like to remind the Meeting that Lee’s basic wishes were clear: some of the money is to go into the New Meetinghouse Fund (restricted to bricks and mortar). The remainder is to go into the General Fund for use as Meeting sees fit. The question is not how to spend the money, but what percentage to put into each of the two funds. Finance Committee recommends that 1/3 go to the New Meetinghouse Fund and 2/3 into the General Fund. Any funds from Lee’s bequest put into the New Meetinghouse Fund will be tied up until building begins.

The Treasurer has spoken with Bettina Raphael about the possible cost of an appraisal of the Olive Rush collection. Finance and Building committees will continue to work together to find out probable appraisal costs. No rider can be put onto the insurance policy until an appraisal is done. Once the cost of an appraisal is determined, Meeting will need to decide whether to fund appraisal and rider.

Business Meeting of Feb. 20, 2011, asked the Finance Committee to propose what would constitute a "prudent reserve" for the meeting in General and Maintenance funds. 

The Building Committee, for a number of years, has told us that a prudent reserve for the Maintenance Fund is a minimum of $5,000. When the amount in the fund drops below $5,000, the committee is careful to build the fund back up before proposing any pricey but postponeable projects. Money in the Maintenance Fund mostly comes from use of the Meetinghouse and guest apartment, unless an individual designates money specifically for the Maintenance Fund.

The question of a prudent reserve for the General Fund is more complex. The reserve should reflect the minimum we’re comfortable having in the bank to pay our expenses just in case. Financial advisers to nonprofits often suggest thinking of this as a fraction (or multiple) of annual budgeted expenses. Practices vary widely, but it is common to maintain a reserve adequate to cover 3 to 6 months’ expenses, or 25% to 50% of the annual budget. Finance Committee recommends that we maintain a 3-month (25%) reserve. Our budgeted expenses for 2011 are about $28,000, so this would mean a reserve of $7,000. This seems reasonable, given that we currently have about $19,000 in the general fund.

Money in the restricted funds (Adult Education, Emergency Assistance, New Meetinghouse, Olmstead, Sufferings, Turkle, and Young Funds) is not available to meet General Fund and Maintenance Fund expenses, except through budgeted transfers.

Finance Committee would like to remind Meeting that the annual budget for the General Fund reflects what we, as a community, value. Meeting decides how much to spend on Good Works, and looks carefully at necessary expenses like First Day School, utilities, and insurance.

People give as they can give. All of us have lean years as well as good years. A few large generous donations make the checking account look good and give Meeting a comfortable cushion, but are not necessarily something we can count on year after year. It is up to all of us to recognize our commitment together and sustain our giving with steady, responsible donations over time.

Meeting has a number of restricted funds. The Finance Committee has written a description of these funds, to become Appendix A of the Finance Procedures Manual. You can view the draft on Meeting’s web site.
Finance Committee will request approval of Appendix A at the July Meeting for Worship for Business.
Respectfully submitted, Peggy Giltrow, Convener, Finance Committee

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