INTRODUCTION of Situation:

I have determined that this schedule is not sustainable for me, senior pastor Greg Smith informed the congregation after six months of preaching at multiple church sites. It takes me at least two days to recuperate, physically, emotionally, and mentally, after Sundays three church services. Currently I travel back and forth between two locations on Sunday morning and preach three sermons within three hours. I still am committed to being a multi-site church despite the wear and tear on my body caused by the current working arrangement. I am requesting that we meet to discuss our options. The Elder Board of First Act Church has called a congregational meeting to discuss the situation and seek the input of church members and attendees. The overall attitude among the parishioners is positive, and there is an overall desire to ease the burden on their preaching pastor while still maintaining effective Sunday morning services.

Using the below Current Financial Data, Do the Following:

1. Using Excel, prepare a one-year cash flow analysis of FACs current annual operating cash flows before considering any of the options presented by the elders. Include an analysis of the estimated annual cash inflows, outflows, and net cash flow. Present data in total and per attendee. Determine the breakeven point and margin of safety (in number of attendees).
2. Provide a cash flow analysis (similar to the analysis of the current year prepared in the prior question) for each of the alternatives for the coming five years. For each option, determine how many people must attend to breakeven for all five years, in addition to the margin of safety (in attendees) for each year based on projections.

Data Projections for Options 1 and 2

• The estimated cost to staff a second preaching pastor is $85,000 per year in salary and benefits.
• The elders have determined that additional administrative expenses equivalent to 10 percent of non-preaching pastors salaries and benefits would need to be incurred if Option 2 is chosen.

Current Financial Data

• • Average weekly Sunday morning collections are $20,390 except for two weeks in December, which have historically shown a doubling of normal weekly giving.
  • Typical Sunday attendance is around 850 persons, split evenly between the three services. FAC also hosts Wednesday night activities for both children and teenagers. In addition, FAC strives to serve its community by being involved in serving at a local soup kitchen, outreach to the homeless, serving at local food pantries, and serving incoming refugee families. The church does not want to see their outreach to the community decrease and, therefore, $100,000 in annual outreach obligations must be met before any additional funds can be spent on additional capital improvement or expansion.
  • The paid pastoral staff includes the following positions with salaries and benefits:
    • Senior Pastor, responsible for preaching, $80,000.
    • Worship Pastor, responsible for planning and leading music ministry, $45,000.
    • Youth Pastor, responsible for administrating and overseeing ministry to teenagers, $45,000.
    • Reaching and Sending Pastor, responsible for administering and overseeing programs that minister to people outside of the church body, $38,000.
    • Adult Discipleship Pastor, responsible for administering and overseeing programs that minister to adults attending FAC, $40,000.
    • Childrens Pastor, responsible for administering and overseeing programs that minister to children through age 12, $42,000.
• • Yearly operating costs (excluding the salaries, benefits, and outreach obligations) are $200,000 at the old site and $175,000 at the new site. In addition, FAC is paying the $1.8 million mortgage monthly over 20 years at 5.45 percent. This amount is in addition to the other operating costs. FAC elders request that 10 percent of revenues be set aside each year as cash reserves for unexpected expenses and opportunities.