2020 CWM Budget Update

Everyone,
 
As it is almost halfway through this fiscal year it is important to provide you with a brief update on the status of our 2020 budget and our budget management decisions to be effective July 1, 2020.
 
For quick reference, we started 2020 with an approved budget from the September 2019 Mission Conference. This was a balanced budget for $544K in expected revenues and associated expenditures.
 
Our revenue budget for 2020 was comprised of a stretch target of $150K from Congregational Support which was 50% more than in 2019. Our current forecast suggests this target will not be met and only $100K is expected for this fiscal year.
 
Donations of $64K as Contributions from Individuals does seem to be keeping pace with our 2020 revenue budget and so our forecast is for this revenue target to be met. We have also budgeted $10K from Investments as returns and we remain hopeful this target will be met by end of this fiscal year.
 
Revenue from Programs and Activities was budgeted for $201K in 2020. Our forecast is this will definitely not be achieved, however the counterbalance to this shortfall is there have also not been any significant expenditures for Programs and Activities so far for various reasons; and although this means we will miss on the revenue target this will likely be offset by a reduction (or savings) in the expenditure budget.
 
In 2020 we were planning to have $119K transferred from reserves to support the operating budget but based on the final accounting for 2019 we had greater use of our reserves available than was expected, so this reserve transfer is not recommended at this time.
 
In total, we forecast shortfalls in 2020 revenues and reserve transfers of $169K plus other expenditure savings of $51K for a total $220K in budget and amendments. This will reset our annual budget to $324K ($544K-$220K=$324K). Our objective with a balanced budget is to apply budget management so we remain sustainable for the remainder of 2020. This means we have made reductions to our operating costs by $220K in order to balance our budget at $324K for 2020.
 
To take us quickly back to what we knew in September 2019 when we set this 2020 budget, we realized we had a sustainability problem is 2021. We realized 2020 was not sustainable or feasible without using investment reserves. We forecasted 2021 would only be feasible if Donations, Contributions and Congregational Support maintained the 2020 budget levels. We realized we may need to take from Investment reserves in 2020 and again in 2021.
 
When we approved this 2020 budget we expected we had approximately $330K in Investment reserves and this would leave approximately $130K in reserve at the end of 2021, but only if this plan was successful. This plan has not been successful and our fiscal problem moved from the fourth quarter at December 31, 2020 to the second quarter at June 30, 2020 as a result of unmet budget revenue targets and spending more by the end of 2019 than expected. Our beginning Investments at the start of 2020 were $230K not $330K based on overspending in 2019.
 
In financial terms, the problem with deferring is avoiding the inevitable. The decisions we must contemplate now would be the same ones required at the end of fourth quarter December 31, 2020 anyway, based on our forecasts. Not following through on decisions now will mean using our Investment reserves as resources to postpone for no identifiable benefit. Our budget management guidelines and our accountabilities should not buy more time if nothing will change. In simple terms, we need to use resources to move us forward, not just maintain or avoid the inevitable.
   
In fiscal terms at June 30, 2020 we need to move to a sustainable and balanced budget in order to achieve our sustainable operations and programs at the end of 2020 and carry forward into 2021.
 
Therefore, effective July 1, 2020 our Mission Leadership Team have taken steps to reduce commitments for the remainder of the 2020 operating budget to half of $324K and resetting the budget for third and fourth quarters of 2020 (6 months) to a sustainable $162K as follows;

Our identifiable sustainable costs are:
Program Management                 $32K
Revitalization                                 $23K
Canadian Strategies                     $12K
Administration                               $10K
Programs (cost recovery)            $85K
Maximum Commitment                $162K

Our forecasted sustainable revenues are:
Programs (registrations)              $85K
Congregation Support                  $50K
Donations /Contributions             $27K
Maximum Opportunity                  $162K

These budget management changes will make a sustainable budget adjustment now in 2020 at June 30, 2020 and will enable a 2021 budget with the same elements to continue forward as a new base for sustainability. Further, this would protect our $230K in reserves for investments as much as possible for 2021 and the future.               
 
Certainly, if there are any questions, please contact me.
 
Respectfully submitted,
 
Sam Smalldon
Mission Centre Financial Officer
sam@communityofchrist.ca