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Chris Mavity talks with Jim Sheppard, CEO & Principal of Generis, about the importance of budgeting in the church, a tip or two to help you get started, and what churches can do in the next 2-3 years to kickstart a culture of generosity. 

Read the full audio transcript here:

 

Mavity: Welcome, I have a good friend of mine Jim Sheppard with us. Jim is one of the principles at Generis. Jim thank you so much for doing this. This is fantastic.

Sheppard: Well, it's a pleasure to be here, Chris. You and I have been friends for a while and we've got a lot of common experiences and we've also got some things that we've done differently, so we always have a good time when we get together sharing that stuff.

"...It does incorporate financial giving, but it means, you know, you can't just give to the church. You need to serve..."

Mavity: Absolutely. So, I want to talk about lots of different things today underneath the general arena of finance or just pure money. Man, you've been around money your entire life. And by that, I don't mean you were born with a silver spoon. Give us a little bit of your background in finance and business and in the industry.

Sheppard: Yes, so it is true that I've been around money all my life. My dad was a banker, both of my grandfathers were bankers. When I went to college, I went to the business school at the University of Georgia Terry College of Business. I graduated with a degree – major in accounting, minor in finance, and had a CPA exam shortly after that launched into a career in corporate finance for a while. Ended up being CFO and senior vice president. Pretty good sized financial services organization at that time of my life. I've kind of spent my life in numbers and money. I didn't go into banking, per se, like my dad and my granddad, but I just kind of went on a little side road there.

Sheppard: Well, I think there's a couple of things. First of all, I think it starts off with my take on what generosity really is. I just use this simple way of explaining. Being from Georgia, I have to explain things simple enough so that everybody can understand.

So, I think it's this idea that when we read Psalm 24:1 “The earth is the Lords…” Everything here is his. And so what I'm called to do is to carry everything in an open hand available to his voice and his promptings to do if he would want me to do with it, not just as I would want to with it. So generosity incorporates a lot of things. It does incorporate financial giving, but it means, you know, you can't just give to the church. You need to serve. You need to volunteer for the day with all these other things. By the way, that's my weakness, Chris. I mean, for me, I'm the guy that my time is more valuable than anything else I have. And so when you talk about a need, I'd rather just write a $500 check and say get to the Norcross Co-op. Whereas, what I really need to do is write the $500 check and go down there and serve and look into the faces of the people who are served by that ministry, because it keeps life in perspective for me and I'm a little bit off the trail there.

But in that just hearing all of that in an open hand. My time, my talents, my treasure. A lot of people say it that way, but a lot of times what they're doing is they're saying, “Is that time and talent?” and never really get to the treasure. And so this idea of generosity as a bigger idea has to incorporate the financial giving piece as well, for a number of reasons. If we look back in the Bible, one of the oldest traditions of the church is the offering. I mean it shows up very early in scripture.

"The church is really good at talking about where the money goes to and it's not really getting good at talking--- about where it comes from."

Of all the things that you do in your church and my church today, there's really only one that we can say that we do today that goes back to the very, very early days — Cain and Abel made an offering, and there's a lot to unpack there in that one moment. One was accepted by God and one wasn't. Giving is a theme throughout Scripture. Then when we get to the New Testament, Jesus speaks about it a lot as well. He not only speaks about it to everybody, but he spent special time talking about those who are prosperous, wealthy people, which we have to pay attention to. And so, I think inside the church it's a really important discipleship issue for us that's being largely ignored. And the evidence of having it, of ignoring it, is that there is so much resourcing available to the church. And unfortunately, the role of my firm is going in and helping churches figure that out. They don't have the resources to match the vision and mostly what I see, Chris, is their people haven’t been taught well, and they haven't been discipled well. In a society like ours in America, we have so much. I know that not everybody does. I know that we have poor people like everybody does, but we have a lot of very prosperous people in America.

Mavity: Well, let me mention that because you bring up the people that don't go to church and all that. Most of the [people here] right now are pastors, church leaders, and men. I want people to be generous to me. Speak to me about this attitude or perspective of pastors and church leaders. People on church staffs doing the work in the ministry and all that. What about their generosity?

Sheppard: One of the things that we run into a lot is church people who are on staff. One of the things they might say is, “Well, you know, I could work in the corporate world, I can make a lot more.” That's not a good argument, theologically speaking.

Here's the one thing that we're seeing. We talked about this in our team meetings. The church is really good at talking about where the money goes to and it's not really getting good at talking--- about where it comes from. It goes to fund budgets and projects and we're not talking enough about where it comes from, which it comes from the heart of a devoted disciple."what we're doing in the church is we're giving people the gospel and giving them all Bibles and getting them on a Bible reading plan and assuming that they’ll figure the tithing thing out..."" A lot of what we're doing in the church is we're giving people the gospel and giving them all Bibles and getting them on a Bible reading plan and assuming that they’ll figure the tithing thing out. Which from my perspective is like buying somebody who's never been to the gym a year's membership to Planet Fitness and just telling them to go get in shape. They might just generally get in shape, but they won't do any of the isolation exercises. And when you're dealing with discipleship and generosity, it’s kind of like going to one of those machines in the gym where you're only exercising one muscle group.

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So for example, if you wanted to have a gun show. There are certain things you have to do in the gym. It's not going to happen on the walking track, and it's not going to happen in other places. And that's what I'm saying about giving and generosity in the church. We have to take people to that section of the gym and specifically teach them. But, the number one factor is the fear of pushback from our people. We're letting our people dictate the theological agenda that we're teaching in our churches, and I just think we have to stop that.

Mavity: Well Jim, when did you start with Generis?

Sheppard: In 1989 Generis was founded. I came here in 1992. I've been a corporate guy until 1991 and briefly, I thought I was called to be a pastor. I realized that wasn't what I was supposed to do. My company got bought out in early 1992, and in mid in 1992 the owners started doing the reorganization. I thought I'd have a new role but they reassigned my job to New York City. They were just consolidating all the financial function in New York City. So, I got an exit package and I spent most of the summer of 1992 trying to figure out what I was going to do with the rest of my life and this story you know, because you've heard it. But the door opened and here's where I ended up. Been here ever since. And then four years after I came in I got a chance to buy out the guy who hired me. Since that time it's been a great run. Chris, you know because you've heard me say it, but I had no idea that I’d be here twenty-four years later. And the amazing thing is, not only am I here twenty-four and a half years later, I love what I do. I travel a lot, I work a lot, I work hard, but at the end of the day, I love what I do and I wouldn’t trade it for anything else.

"What are we truly doing to make disciples in the context of the local church?"

Mavity: That’s beautiful Jim, and the reason I wanted that in there is my next two questions have to do with the experiences that you've had. What financial mistakes do you see churches making that are just common, that if people just knew about it they just wouldn't make that mistake?

Sheppard: I think there's probably a general category that probably has some themes in it and it's not allowing that margin to do what needs to get done. What I'm saying is every dollar is committed before it comes in. And they don't have the margin to be able to react if things come up or not. Now some churches do. But the majority, I mean the vast majority of churches do not have that kind of margin. They haven't planned for the future. They don't have enough reserves on hand. What are some of the things that are allowing what I call salary creeps, or allowing salaries to become much too big a portion of the budget. Number two, allowing building costs especially servicing mortgage indebtedness to become too big a piece. So, to put some numbers on that, let's just say that for example the salaries creep up to fifty-four percent, which I think is high. And let's just say that you had thirty-four percent of your budget comprises building cost. Both the operation of your business and whatever notes you have that you're servicing. Do the math on that, that's 90 percent. About 10 percent to do all the programs in the ministry, missions, and getting all the other stuff joining the church. That's not a good model. You can't sustain that long term and I see way too much of that. Buildings and people costs tend to get out of control faster and it's really hard to rein that back in.

I think that's probably one of the things I see way too much. I think not understanding what matters in terms of metrics, that's another one.

Mavity: You're a funny guy and you know exactly what that means. But many people don't know what metrics mean. So tell us what you mean by a metric.

Sheppard: Most everybody is good at ABC’s, attendance, buildings, and cash right? Everybody has that on their dashboard. But generally, there's so much more to be said there. So for example, what are you taking in on a weekly basis, based on the attendees that are coming in? A lot of churches do that, but a lot of churches don’t. It’s a very telling figure. You know when you go in and look behind the curtain at your giving number, if you’ve got seventeen hundred and nine people who are giving in the life of your church, how many of those people are giving $500 or more because that's the real givers in your church? And that's a real number, 1709, a church I just looked at the other day. "What I'm saying is every dollar is committed before it comes in."" And when we filtered it at five hundred dollars it took it down to seven-hundred and seventy-six. Seven-hundred and seventy-six. What I said to the staff is, you are telling me you have seventeen-hundred and nine givers and I'm telling you you have seven-hundred and seventy-six. Because that seven-hundred and seventy-six give 98% of what's being given on an annual basis. So, you've got a thousand of them that are giving one and a half percent. And they said well, “You know our giving is about four hundred fifty dollars and that's pretty good at that. Well, let's take that and look at it a little differently. What it really says is it's five thousand one hundred and ten, but the families who are giving $500 or more and it’s $161 for the other families are given 500 or less. You basically have two different constituencies in your church and you're not paying attention to them, you know? I asked them, I said, “What are you going to do when you have people who give for the first time this year, how would you measure that? You would find that inside of your church management system. So when you set up a new donor record or new record inside the database that somebody gave a check that ought to trigger in your mind: “Hey, that's a first time gift!” What are you doing about that? Well, we've never thought about that.”

So why wouldn’t send them a thank you note? Why wouldn’t you call up and make sure they're in the group, because groups are important here, and the number one thing you want to do when people come in the life of the church is what? You get them into a group. So, we just talk about these things that are all lying under the surface, but it's really easy stuff to see and nobody's talking about that. But, they're always measuring attendance, buildings, and cash. Meanwhile, there's this other story that's being written in the life of the church and they're not measuring it.

Mavity: It's the number behind the number that creates the number. We talked about a common mistake. I know these are big categories, but what about some financial good moves other than just the opposite of the mistake?

Sheppard: Yeah, I like this one. The strategy. I guess a couple of churches started it. I think Church of the Highlands might've been one of the only ones in Birmingham that ended up doing it, as well as couple of others did this, and it worked for them long term. I think a lot of churches could replicate that, and that is, you basically project next year spending ninety percent of what you took in last year. That way you've pretty much guaranteed yourself that you're not spending every dime, and you've given yourself some financial margin. Particularly if you're a growing church. What it does is gives you flexibility and you can build reserves. You don't need an MBA, you don't need a financial degree, you don't even need a calculator to be able to do that.

"Most everybody is good at ABC’s, attendance, buildings, and cash right?""

Don't let yourself drift into spending every dime your people are giving. I have seen churches that have way too much reverse. I saw clients who have thirteen months worth of expenses in reserve.

I said “Why?” Well I mean you don’t know what could happen. You can be a prepper and you wouldn't need that much money on reserve. If you need thirteen months worth of reserves, there's something else going on in the world and it doesn’t matter that you’ve got thirteen months. You've got money out there that needs to be deployed to ministry. Don't keep too much because the reverse is you want to make sure your people's money is going forward. The other thing is a lot of churches need to just start over and do what I call a zero-based budget. Most churches, what they're doing is they're taking last year's line items and they're constructing this year's actual budget based on those lineups. Every once in a while a church ought to just start with zero and say what do we really need. And that's a very purifying process. It's not an easy process, but it's a purifying process, and I think if more churches would do that, I think they would love it.

I've got another one here, Chris, and this is going to be counterintuitive for a lot of people. I mean most churches that have a budget of a million dollars or less ought to outsource their financial record keeping. I'm a big advocate of that. The reason for that is, you can do it for about the same, if not less money and you get a more sophisticated management system. These people that are out there, there's two or three that I like in particular, that I think they're really good at. They do church numbers all the time. They know the questions to ask. They know the reports to run and it really gives your church a lot of protection from misappropriation. You just pretty much can't be misappropriated. I hear way too many of those stories and not all of them make the press. You know some ten-thousand, some of the fifty thousand. Especially if you have a budget of a million dollars or less, whatever you're paying that person to keep your records, you could probably do that outsourcing that would be done better for you. I just don't see a lot of churches leaning in that direction yet. The church plant guys in the smaller churches get it, but some larger churches can benefit from that as well, they just get a different level of financial management.

Mavity: Well, for those of us that aren't as familiar on the financial side, you might mention an organization or two that you're pretty comfortable with.

Sheppard: Yeah, I like two of them, BELAY. They're doing that. I have a lot of confidence in them. I know the people, I know the process. And then the other one is DIME, back here in Atlanta. He's got a phenomenal team over there and they both do a great job. I love both of those organization’s approaches. They’re friends of mine, and I can recommend both of them very highly.

Mavity: Well gang, this seems like a really good pause point. So, we are going to hit pause right now and then we'll finish the interview next week and till then, I hope you have a great weekend of course. God bless.

There's always a next step: 

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