New-Concept Accounting System Consolidates Churches' Funds
Diocesan Press Service. April 9, 1973 [73097]
BOSTON, Mass. -- A totally new concept in church financial management and record-keeping -- a computerized method for consolidating the accounting functions of individual parishes -- was announced here at the office of The Episcopal Diocese of Massachusetts. A pilot program incorporating 24 parishes in the diocese is now under way.
The new system, the result of 18 months of study by an independent planning group of laymen and clergymen, sponsored by the diocese, has been incorporated as The Church Financial Service, Inc. to put the program into operation. The startup was made possible by a $50,000 enabling grant from The Episcopal Church Foundation, a laymen's organization that supports programs furthering the work of the whole church. Other private-foundation assistance is anticipated as the program gains momentum.
Frederick Kauders, president of The Church Financial Service, Inc. (CFS), said most of the parishes in the Diocese of Massachusetts are expected to join the program. When it is fully proved out, he added, the system will be made available to other dioceses of the Episcopal Church and to other denominations. "CFS is a separate corporation whose board, to be elected by the treasurers of the participating parishes at its first annual meeting in the fall of 1973, has complete control over policy, income distribution and availability of records to others," he said. "Parish independence is inherent, since the system is concerned with the management of funds, not how they are spent."
How The System Works
To join the system a parish, upon authorization of its vestry (governing board), applies to CFS. Once it is part of the system, the parish's receipts are deposited in a local checking account as before, the additional element being a telephone call to the central bank (in this case The National Shawmut Bank of Boston) which initiates an automatic transfer from the local bank to the central fund. A detailed record of each deposit is prepared on a preprinted form by the treasurer and forwarded to CFS for computer recording. An initially established small balance, of, usually, $100 is kept at the local bank to cover petty cash needs.
To pay a bill, the parish financial officer completes and signs a voucher check form which is forwarded to CFS for validation and for recording in a Honeywell H-58 computer. The check is sent on to the proper recipients. In the future CFS plans to consolidate payments to common vendors and issue a single check. The computer maintains the financial records, producing monthly and year-end reports. Both the deposit form and the voucher check provide a copy of each transaction for the treasurer to retain for his records.
Features of the new system were described by the Rev. Richard S. Armstrong, CFS executive director:
* It provides an accurate and consistent mechanical means of bookkeeping for individual parishes or church organizations or institutions and insures continuity despite any changes in office of parish financial officers.
* Parishes are relieved of the necessity of requiring an experienced accountant to handle the books.
* Detailed financial reports are produced on a 24-hour-call basis, the computer readout providing the parish with its balance and up-to-the-minute record of all its accounts; a backup record is available to the parish in case of fire or other loss of its own files.
* Church necessities may be bought at discount via volume purchase as buying patterns may be analyzed by the system.
* With funds of each parish consolidated into one large account there will exist a substantial balance or "float " which can be invested; resulting income will cover cost of operating the system. Therefore, service will be provided free to the participants. Cash flow of $10 million a year is expected through the system from Diocese of Massachusetts parishes.
* Parishes can expect better returns when savings accounts also are pooled in this way.
Uses 'International Language'
The H-58 computer already installed in Diocesan House here has been leased with option to buy. It was chosen, Mr. Armstrong said, because although it is an economical model it operates under the same "language " system used internationally in the larger computers, and thus offers the opportunity for expansion and for ease in sharing the software with others. Program and operations are handled by a staff of four under Mr. Armstrong's direction.
The Rt. Rev. John M. Burgess, bishop of the Diocese of Massachusetts, voiced his endorsement of the project, saying, "The Church Financial Service enhances the spirituality of the Church because it brings our parishes together In a common cause, and also frees the church leadership from many of the day-to-day diversionary concerns of parish administration. The time has come to encourage cooperation among our parishes and to dispel some of the old parochialism which has prevented this; by using modern business methods, this program takes a long step toward this end. "
Henry S. Nobel, Episcopal Church Foundation president, said, "The Foundation's purpose is to support projects that have the potential of benefitting the whole church. The Church Financial Service, by offering a means of standardizing accounting procedures for all parishes, certainly fulfills this requirement and merits our wholehearted support. "
The 14-man advisory board that carried forward the study resulting in CFS was commissioned by the Massachusetts Diocesan Convention of 1971 to develop a central cash system. This board operated under the direction of John H. Farquharson, financial officer of the Diocese of Massachusetts, and Duncan Edmands, C.P.A.