September 2, 2002

Economic downturn hits Texas Baptist
ministries in earnings and giving
___By Mark Wingfield
___Managing Editor
___The nation's current economic crunch has dealt a double blow to Texas Baptist ministries, but leaders report these tough times aren't as bad as the downturn Texas faced in the 1980s.
___The recent drastic drop in stock values experienced nationally means lower investment income from endowments, which most Texas Baptist universities and child-care agencies rely on to fund a portion of their operating budgets. To add insult to injury, falling stock values have left many donors wary of giving away assets they have seen shrink to half their previous values.
___"The downturn in the economy has definitely hurt our income," said Jerry Bradley, president of Texas Baptist Children's Home and Family Services based in Round Rock. "We will have no increase in our budget for next year and are going to try to absorb some of the cost of operations by using our 2002 dollar projections."
___The decreased income for non-profit ministries also comes at a time when most are facing double-digit percentage increases in health-care insurance costs.
___"The situation is a great concern to us because of the increase in insurance costs, which is a burden our staff has to bear, and other expenses we must carry," Bradley explained. "We are facing the challenges to the best of our ability and feel confident in the security of the agency."
___That confidence, according to Bradley and other ministry leaders, is based on the unflagging loyalty of Texas Baptists to their causes.
___Several ministries affiliated with the Baptist General Convention of Texas report they have not decreased in number of donors, only in the average dollar amount received from those donors. Some donors also are looking for more creative ways of making gifts or switching to planned gifts rather than immediate gifts.
___"We've been blessed with some very good, generous donors who continue to give," said Craig Turner, president of Hardin-Simmons University in Abilene. "We actually had more people give to the annual fund last year, but the average amount was smaller."
___On the whole, Texas Baptist universities report they are faring better than many of their counterparts nationwide. Recent articles in the Chronicle of Higher Education have reported on staff cuts, budget reductions and other drastic measures being taken at many of the nation's private colleges and universities.
___One reason ministries affiliated with the BGCT of Texas have been cushioned somewhat from the economic fall is the investment policies of the Baptist Foundation of Texas, noted Neal Knighton, vice president for advancement at Buckner Benevolences in Dallas.
___The foundation bases distribution of income from most of its investments on a 16-month rolling average of performance. Looking at such a long time span to determine valuation evens out the peaks and valleys of the stock market.
___"Most of our Baptist institutions have benefited by that kind of conservative use of our cash income," Knighton said.
___Other Texas Baptist leaders agreed. "They stored up for winter when times were good. That's on the good side," said Harold Preston, vice president for finance at Hardin-Simmons.
___"Our endowment amount is down, which means we have less scholarship money and funds available. However, the rate of funding from the foundation has remained the same," said Bob Riley, president of East Texas Baptist University.
___Texas Baptist universities also are sailing through these turbulent economic times with less damage than some other private schools because the Baptist schools are not as dependent on endowment for operating income, explained David Brooks, chief financial officer at Baylor University.
___At Baylor, for example, 80 percent of operating funds come from student tuition.
___And even though the Waco school recently launched Baylor 2012, an aggressive plan to become a first-tier university, the economic downturn is not slowing progress, Brooks said. One of the major goals of Baylor 2012 is to raise the university's endowment from its current $600 million level to $2 billion.
___Meeting that endowment target will not become critical for funding projects until the seventh year of the strategic plan and beyond, Brooks said. "If I thought this dip in the stock market was going to last 10 years, I would be worried."
___Despite the economic downturn, BGCT ministries of all kinds face no shortage of people desiring their services. Leaner economic times mean greater needs for child and family services offered by Buckner, Baptist Child & Family Services of San Antonio, South Texas Children's Home in Beeville and Texas Baptist Childrens' Home and Family Services in Round Rock.
___Enrollment at BGCT-affiliated universities also continues to rise.
___"The economy has not affected our enrollment at all," said Carol Woodward, spokeswoman for the University of Mary Hardin-Baylor in Belton. "In fact, we anticipate another record enrollment. Our housing is full, and our classrooms are at capacity."
___Similar reports were given by other Texas Baptist universities.
___Meanwhile, Texas Baptist ministries have found some silver linings in the dark cloud of the U.S. economy. One of those is low interest rates.
___"Our short-term investment income was down due to the low interest rates created to spur the economy--$150,000 less this year even though we had more short-term money invested," said Keith McPherson, comptroller at the University of Mary Hardin-Baylor. "On the other hand, we are borrowing $10 million at the lowest rates in history."
___"The money we're borrowing, at 4.5 percent and 5 percent interest is helping us finance some of our buildings," concurred Preston of Hardin-Simmons.
___And while some donors may have to rethink major gifts or postpone medium-size gifts, development officers at BGCT ministries see a world of opportunity before them.
___For example, low commercial interest rates make gift annuities more attractive than ever, said Brooks of Baylor University. In a gift annuity, a donor gives a charity a certain amount of money, from which the charity pays the donor a monthly dividend until the donor's death, then the charity receives full benefit of the gift.
___With banks paying around 3 percent on CD investments today, Texas Baptist ministries in some cases can pay out twice as much through gift annuities, Brooks said.
___Tough economic times motivate non-profit ministries to become more efficient and to do an even better job of telling their constituents about their needs, Knighton said.
___"It has allowed Buckner to help our donors understand more of the importance of their gifts for current operations," he explained. "We need to ... increase endowment in order to sustain not only these times but also to realize that growth is just as important.
___"The trumpet we need to blow is a call to donors to recognize that our institutions are going to continue doing the work the Lord has called us to do. We may simply refine the scope of some of those and concentrate on the real priorities."

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