The Executive Board of the Association approved the Administrative/Finance Committee's Joint proposal at the January 26, 2012 Board meeting. The text of the proposal is below:
The full text of the Administrative and Finance committees' joint report is printed below and is avaialbe for download as a pdf file by clicking on the image to the left.
Administrative/Finance Committee’s Joint Financial & Ministry Investment Proposal
The Finance and Administrative Committees are committed to proper stewardship of the proceeds from the sale of the building. We are excited to see how God uses the funds to further His Kingdom through the VISION 2020 plan. The committees have worked hard to develop the following plan for spending and investing the proceeds.
SPENDING RECOMMENDATIONS
It is recommended that the proceeds from the building be spent over the next nine years with the earnings from the investments going into an earnings account. Each of the five ministry teams will be allocated a percentage of the proceeds to support projects in that particular area of ministry. Each quarter, the association will accept grant proposals from BR-KC churches, church plants, associational ministry teams, or associational personnel. The Finance and Administrative Committees will review the proposals and submit approved applications to the ministry teams who will issue the grants based upon a variety of factors as outlined in the detailed spending plan below.
INVESTING RECOMMENDATIONS
The Finance and Administrative Committees researched options for investing the proceeds from the sale of the building. They reviewed information regarding the potential investment products as well as different providers of those products. The details of this research are contained in the investing recommendations below. In summary, the committees are recommending the funds be placed in a donor advised fund with the National Christian Foundation. The funds will be managed by Steve Cox, a local financial advisor, who will develop a customized investment plan based upon the association’s goals and spending plan.
INTRODUCTION
In 2009 the mission that God had written on the hearts of the churches of the BR-KC Baptist Association was transferred onto paper: “We envision a network of healthy Baptist churches partnering together to transform lives and communities through the power of the Gospel of Jesus Christ at home, in North America and around the world.” Our persistent request has been that God empower us with an unrelenting boldness to live out VISION 2020 for His glory.
We now stand two years later on the edge of what appears to be a unique God-sized provision; the sale of a building for the funding of the mission. Our God is great! Therefore, The Finance and Administrative Committees have worked hard to develop the following plan for spending and investing the proceeds. We are committed to proper stewardship and we are excited to see how God uses the funds to further His Kingdom through the VISION 2020 plan.
SPENDING RECOMMENDATION
GUIDELINES FOR VISION 2020 GRANTS
1. The VISION 2020 Grants of the Blue River-Kansas City Baptist Association shall be a fund used by BRKC churches, church plants or Associational personnel to expand missions, ministry and assistance to our churches consistent with the VISION 2020 strategy previously adopted by the Blue River-Kansas City Baptist Association.
2. The VISION 2020 Grants shall be funded by the proceeds of the Mission Center property sale. The proceeds will be held in a donor advised fund at the National Christian Foundation until granted out for VISION 2020 purposes.
3. The allocation of funds to VISION 2020 objectives will be as follows:
- Gospel Outreach - 22.5%
- Resourcing churches – 20%
- Assisting Community Transformation – 10%
- Church Planting – 22.5%
- Equipping Leaders – 15%
- Restructuring Contingency – 10% (not to be used in year one)
- Earnings Account – All investments earnings (est. $250,000 by year 2020)
4. Funds will be available and allocated on a quarterly basis over nine years. Therefore, the ministry team leading each objective will receive 1/36th of their total allocation each quarter for distribution consistent with these guidelines.
5. The funds not allocated in a given quarter will be invested back into the earnings account.
6. Applications by BR-KC churches, church plants, associational personnel, and ministry teams shall be made to the Executive Director of BR-KC in care of the associational office for further review by the Administrative Committee, Finance Committee and the appropriate Ministry Team.
7. Grant applications must be received on or before the quarterly deadline for reviewing the grants. The application shall indicate the name of the requesting church, church plant, associational personnel or ministry team; the date of the application; the date(s) of the use of the funds; the manner of the use of the funds; and the purpose of the use of the funds. The Executive Director, Administration Committee, Finance Committee and Ministry Teams may require additional information at their discretion.
8. Grants shall be appropriated based on available funds, the degree to which the use of the funds is consistent with the VISION 2020 objectives, the desire to allocate funds broadly among the churches and church plants within BR-KC, and other criteria the Executive Director, Administration Committee, Finance Committee and Ministry Teams deem appropriate.
9. VISION 2020 grants not allocated to initiatives of associational personnel or ministry teams will be approved only for congregations that make a commitment to support missions through contributions (money, volunteerism, etc.) to BR-KC.
10. Grants for any one congregation from the BR-KC Association shall be limited to a maximum of three (3) per quarter.
11. There shall be no limit on the number of grant requests for each church, except there is a limit of one request per church or church plant for capital improvements per year.
12. The scope of capital improvements may include: electrical, plumbing, heating and cooling (HVAC), foundation repair, roof repair, sound improvements, painting. etc.
13. Within thirty days of completing the event, those receiving funds must report back to the associational office on the use of the funds. Future grants may not be considered for organizations failing to complete the report.
14. At the end of one year this allocation process will be reviewed by the Executive Director, Administration Committee and Finance Committee and the review findings will be reported to the Executive Board.
15. The restructuring contingency will be used to allocate additional funds to VISION 2020 objectives based on the findings of the Executive Director, Administration Committee and Finance Committee during the one year review.
INVESTMENT RECOMMENDATION
As God blesses with the sale of the Mission Center building, the Finance Committee is committed to exercising good stewardship of the proceeds. This includes determining where the funds are placed and how they will be invested. The Finance and Administrative Committees have worked diligently to assemble a plan that will best fit the Association’s goals and objectives, as well as placing the funds in a safe and trusted entity.
The committees met with a number of organizations to determine the best method of investing and dispersing the funds. Within these organizations there are a number of different products that could be used to accomplish our goals and objectives. After meeting with three groups, it was determined to first choose the product that best fits our needs and then compare the organizations that offer that product.
There were four different criteria used to determine the best product:
1. Cost – With every investment option there are associated costs. It is the committees’ objective to keep the costs as low as possible, but also receive the assistance needed when it comes to the investment decisions.
2. Flexibility – The committees worked diligently in devising a plan that will work well to get the funds into the hands of those churches who desire to use it to fulfill the VISION 2020 goals. However, value was placed on the ability for the committee to change the plan at any time depending on any number of factors.
3. Investment Options – The proceeds from the building are sizeable. The committees wanted to know that the association has a competent advisor that is adhering to our investment objectives. In addition, value was placed on the number and kind of investment tools available.
4. Fiduciary duty for the Association – The finance and administrative committees are comprised of volunteers from the association. These members are not qualified to make detailed investment decisions. Although some protection is provided by liability insurance, the committees took the level of fiduciary duty into consideration when choosing the investment products.
The committees looked at several different options, but focused in on three different products:
- Internally Managed Account
- Endowment Trust
- Donor Advised Fund
1. Internally Managed Account – Just like any individual, the association could open up an investment account with any financial advisor. The proceeds from the building could be placed into this account and the advisor could assist in managing the funds for us. Using the four criteria mentioned above, the committees came to the following conclusions:
a. Cost – the internally managed account has the lowest cost of any option. Management fees would be assessed on the balance of the funds. No other costs are anticipated.
b. Flexibility – this option is very flexible and would not constrain any future changes to the spending plan, should they occur.
c. Investment Options – with an internally managed account, the investment options are many. The investment options would only be limited by constraints the Finance and Administrative Committees set in place.
d. Fiduciary Duty – this option comes with the greatest amount of fiduciary duty. The committees are responsible for the investments and therefore can be held liable for any investment decisions.
2. Endowment Trust – the proceeds could be placed in a foundation that would serve as trustee of the funds. The foundation would take on the fiduciary duty and investment decisions based upon the investment goals and spending plan.
a. Cost – the cost of the endowment trust is the highest of all options. Each foundation charges an additional amount for the trustee service. This cost may be 2-3% annually.
b. Flexibility – an endowment trust has much less flexibility after it is set up. Although minor changes can be made, if the association wanted to make significant changes to the spending plan the options are limited.
c. Investment Options – depending on the foundation, the investment options are limited to the investment pools of that particular foundation.
d. Fiduciary Duty – along with the higher fees, the endowment trust takes on the fiduciary duty of the investments. Therefore, the committees are open to very little liability for the investment decisions.
3. Donor Advised Funds - There has been tremendous growth in the number of donor advised funds in the last 10 years. They now outnumber private foundations two to one (according to the 2010 Donor Advised Fund Report from the National Philanthropic Trust). The reason for the growth in the number of funds is the same reason the finance and administrative committees are recommending this product. They are relatively low cost funds that provide the flexibility and the fiduciary protection that individual donors and non-profits need without the administrative burden of private foundations.
a. Cost – the cost of the donor advised funds are much less than endowment trusts, but greater than internally managed accounts
b. Flexibility – there is a significant difference between providers on the restrictions on disbursements from the donor advised funds. Some have no fees or restrictions on when or where disbursements are made and other providers charge fees. None of the providers place restrictions on the timing of the disbursements and therefore this product provides a great amount of flexibility if the association desires to change the spending plan.
c. Investment options – depending on the provider of the donor advised fund there are many more options. Some providers limit the options to the investment pools they provide and with others the option exits to have a customized investment plan from an outside financial advisor.
d. Fiduciary duty – this product places the fiduciary duty on the provider rather than on the contributor into the fund. This option provides the protection that the finance and administrative committees desire.
Based upon the information above, the committees determined the best product for the association will be the donor advised fund. The committees then focused on which provider will best assist the Association in accomplishing the goals of the spending plan.
The committees reviewed information provided by three different donor advised fund providers:
- The Missouri Baptist Foundation
- The Baptist Foundation of Oklahoma
- The National Christian Foundation
After reviewing information from all of the providers, the decision was made to recommend the National Christian Foundation (NCF) for the following reasons:
NCF has no restrictions on the timing of the disbursements of the funds
NCF has no fees associated with disbursement of the funds
NCF is a much larger organization that provides greater stability and safety of the funds
NCF allows for greater individualized investment planning using a local financial advisor
The committees felt the need to have individualized financial advisement for the investment decisions because of the amount of funds and the unique spending plan. As the funds draw down over time, it will be necessary to invest in such a way that we can maximize the returns in the long run while protecting the funds that will be disbursed in the short term. A professional advisor will greatly assist us in these investment decisions.
The committees are recommending Steve Cox of Providence Financial Advisors. Mr. Cox is a registered investment advisor and a Chartered Financial Advisor with over 23 years in the investment field. He is also an approved advisor by the National Christian Foundation to manage assets held within donor advised funds.
Mr. Cox is a long time member of First Baptist of Raytown and has served faithfully in various leadership positions and as a Sunday School teacher. The committee has met with Mr. Cox and recommends that he manage the proceeds of the building that are placed in a donor advised fund with the National Christian Foundation.