The Economic Engine of a Church

by Don Harkey

I want to use my "Free For All Friday" to talk about a few important concepts we have learned in our Vision and Mission journey at Messiah Lutheran Church. We began our journey almost 6 years ago and are continuing today (its a continuous process!).

This week, we talked about what drives an organization. Is it profit or passion? The real answer is both. Great organizations know their passion and understand what drives profits. However, profits is not really the right word here. The right word is resources. Great organizations know their passion and understand what drives resources to their organization. This is true for profit companies and for non-profits.

So what drives resources to a church? The old model is that members of a church will give "X". To get more money, you need to get more members. If you ask for money for something new, you'll need to take away from something old. When money runs low, you ask the congregation for more. If you can keep pressure on the responsibility of being a good congregant, your members will keep giving.

The new model is that members will give when they see a need. To get more money, you show the members the need and get them to buy into it (or not). If you ask for money for something new, you will get extra money as long as the congregation agrees and sees the need. When money runs low, you show the congregation all of needs being filled by the budget or collect enlist most of their involvement in determining the needs to be filled and how to fill them. If you maintain a focus on the mission of the church, your members will keep giving.

This is a subtle, but extremely important difference. If your congregation is spending its time talking about internal power struggles or trivial issues, the church isn't communicating the need for funds and resources will be driven away. If your church spends its time talking about its mission and how it will fulfill its mission, the church will get the resources it needs.

The best example I can give is at Messiah Lutheran Church. 6 Years ago, the annual budget for the congregation was just under $400,000 per year. The church had paid off its mortgage and had just started its mission process. The church was full and knew it needed to expand to grow, but the congregational leadership wasn't sure how to do it. How do you get the resources to grow with a $400K budget already stretched tight?

Once the Vision and Mission of Messiah was defined, the path became clearer. Growing the church was necessary not only to serve our existing congregation, but to serve others and support all of the existing and new ministry opportunities. The congregation charted a course toward growing the church at its existing site, not just to grow, but to fulfill its mission. More than 80% of the congregation voted in favor of the project.

A capital funds campaign was launched to collect 3 year pledges. The congregation, with an annual budget of just over $400K per year at the time, collected almost $1,000,000 in pledges. Over the next 3 years, the church would collect almost every dime. The construction on the $2.7MM expansion was begun and is scheduled to be completed by early summer. The discussion in the church continues to be about fulfilling our mission using these gifts. What happened to our church budget (giving)? It swelled to over $500K per year! The congregation gave more to the project AND more to the operations budget!

While the economy is down, our giving increase slowed a bit, but the congregation continues to stay focused on its mission. The congregational leadership took several steps to control the budget to show good stewardship, but in the midst of what could have been a crises, the congregation continues to stay focused on its mission. This lead the church to the Lighthouse Ministry (read the blog from 3/18/09 for info). This is a $250K ministry that the church is taking on... and the church continues to find the resources to fulfill the mission!

The "economic engine" of the church is when its members have a common mission or purpose. A friend once asked me during our first campaign (we are currently launching a 2nd campaign to pay our debt from the project) how we ask members for money. I told him that we don't ask for money, we ask for mission.

There is a lot to be learned from this experience and I pray that other churches take this to heart. I also pray that businesses look at the lessons learned here. Passion is truly productive!

Non-Profits vs Profits

by Don Harkey

Most of us are involved with a non-profit organization somewhere in our lives. Whether it's a church or a charity organization, non-profits are everywhere. Yet in the world of organization behavior, non-profits are often considered to be "second-class" organizations. Do the same principles of organization apply to non-profits like they apply to profits? What about principles of motivation and management?

Jim Collins felt compelled to address this issue after publishing his groundbreaking book, Good to Great. Good to Great outlines the common traits of organizations who make a jump from being very good at what they do to being great at what they do. The natural question for leaders of non-profits is, "does this apply to us?". One of the principles of the book, for example, is the "hedgehog concept". It says that great companies know the answers to 3 questions.

1) What are we the "best in the World" at?
2) What are we passionate about?
3) What is our economic engine?

Organizations of all types have great difficulty answering these questions. The buzz from the non-profit leaders came from the 3rd question. What is the economic engine of a non-profit? The "economic engine" of a profit organization is a good understand of what drives profits to the company. For example, Walgreens discovered that the key to its profits comes from the number of times a customer visits their stores. Kimberly-Clark learned that its profit comes from the number of consumer brands they carry.

What is the "economic engine" for a church? What is the "economic engine" for the United Way? This spurred a quick spin off monograph from Jim Collins called "Good to Great and the Social Sectors". The booklet changes "economic engine" to "resource drivers" and contains the statement "why business thinking is not the answer". Do the rules really change from non-profits to profits?

This is the question we will be exploring this week. We'll talk about specific non-profit entities and see how they are similar and different from profit organizations. This knowledge will help us better understand profits and non-profit organizations! Enjoy!