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Risk Management Minute

Valuable Information to Help You Protect Your Ministry

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Each week we send out blogs with pertinent information pertaining to your ministries. We talk about policies you should adopt, procedures you should incorporate and things that are happening you should be aware of. While we have talked about this before, I feel that it is one of the most important steps you can take in protecting your ministry. I'm referring to our Risk Management Assessment. 

Have you ever received a text message, read it, and hours later realized you forgot to respond? Mentally you processed the info and most likely reached a conclusion, but physically you did nothing. The same can be said of our blogs. You read them each week, hopefully, and may think to yourself, that is something we need to be doing! However, as soon as that thought is finished you've moved onto the next task never actually incorporating said policy. 

So although most times we have the best intentions, things can slip through the cracks. That's where our Risk Management Assessment comes into play. Take a few minutes and do some examination of where you ministry falls. This is not for us to chastise you, or tattle tail to anyone. It is designed so that we both can be aware of the areas you still need to work on and we can help you accomplish those tasks. We've already done 90% of the work and are happy to help you complete the remaining 10%. So take our Risk Management Assessment. Even if you can't complete it today, set a reminder on your phone or schedule a time in your calendar when you have flexibility. I promise this will be the best thing you ever do for your ministry. 

Risk Management Assessment 


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First Insurance Group is excited to announce we will be speaking at the Mt. Zion Baptist Church Preaching & Ministry Conference, April 12 - 14, 2016. 

As we've mentioned before, it has always been our goal to help ministries in any way we can. We are excited and thankful to be partnering with Mt. Zion Baptist Church to bring some insight on insurance and risk management to the attendees. 

Mt. Zion also puts out a wonderful publication called The Flaming Torch. which I highly recommend you subscribe. Flaming Torch 

While there is not enough life in us to write insurance for every Church out there, we love the opportunity to help educate ministries on how to protect themselves through our Risk Management Seminars. If you know of a preacher's conference you have enjoyed attending in the past, we would love to hear from you. Our dream is to educate as many Pastors as possible! 

If you would like more information on the conference, check out the link below. 

Preaching & Ministry Conference 

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Workers Compensation Insurance, typically know as work comp, is something you may be familiar with. However, you might not realize that coverage can differ between Corporations, Partnerships, LLCs, LLPs and Sole Proprietorship.

LLC Members, Partners and Sole Proprietors:
Are automatically excluded from the workers compensation coverage. However you may elect to be included by submitting your request in writing.

Officers of a Corporation:
Are automatically including in the workers compensation coverage, but, by written request may elect to be excluded.

So what does all this mean? Let me tell you a story….

The owner of Lighting Installation Services LLC was on some scaffolding installing new ballast when he lost his balance and fell resulting in severe but not critical injuries. The owner did not elect work comp coverage so he turned to his health insurance provider. When he submitted the claims to his provider, coverage was denied based on the fact that it was a work-related injury.  Regardless of whether the accident could have been avoided, coverage would have been granted through work comp or his health care provider had he taken the necessary steps.

Many times the mentality of businesses is to save as much money as possible. While being frugal is a great outlook, sometimes you can’t afford to save that much. Owners regularly ask, “Why would I, as one of the owners, officers, partners or members of the company, want to pay for worker’s compensation insurance on myself when I would never file a claim? Besides, I have health insurance.”

This is where the false sense of security comes into play. Not all health insurance policies will cover job-related accidents. In fact, most policies exclude them unless a special rider is put into place.

No matter what the savings is, I recommend that all owners, officers, partners, and members of a company elect to be included in the workers compensation coverage; unless the following steps have been taken to replace it:

1. Health Insurance Policy with a rider that covers job related injuries. Again, don’t assume your health insurance policy automatically covers your for job related injuries.

2. Disability Income Policy which will provide reimbursement for lost income from a job related injury where you are unable to resume any sort of work duties.

3. Life Insurance Policy that equals the amount of the death benefit offered through the workers compensation policy.

Even if this doesn’t apply to you directly, I guarantee you know someone who owns their own business. I would highly encourage you to pass this information on as a majority of owners have no idea that they are automatically excluded from coverage they purchased.  So the next time someone says their health insurance will cover their work related injury you can respond with FALSE! 



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As your partner in risk management I spend a lot of time doing research on various topics that I believe will benefit your ministry. Recently I came across an article on Church Executive  that struck a cord and prompted me to create some new policies and procedures for your ministry. I’m going to use some examples from this article, written by Crispin Ketelhut, to help explain how critical this in today’s modern ministries.

A church decides to hire a coach from the congregation for its intramural sports league’s youth softball team. It conducted an extensive screening process with professional background checks, an application process, reference checks and face to face interviews.

Once hired, the coach begins reaching out to the youth and “friends” the congregation’s teens using his personal social media accounts. A year after he was hired, Lena, one of the 15-year-old girls on the softball team, was hospitalized for attempted suicide. Her mother reviewed Lena’s cell phone and found dozens of inappropriate texts and images sent between Lena and the coach. She also discovered cyber-harassment from the coach via private messages on Lena’s social media accounts, threatening that he’d anonymously publish Lena’s compromising photos for the whole church to see. Lena’s suicide attempt was from an extreme coping response to the cyber-harassment and bullying from the coach. 

Eventually Lena’s mother sued the church for negligence, stating it was responsible and subsequently negligent in monitoring its employee and his technology devices – and that Lena’s physical, psychological and emotional trauma was entirely preventable.

I know you’re thinking, they did everything they were supposed to do, how could they be negligent?

It wasn’t what occurred during the hiring process that put the children and church at risk; it was what didn’t occur after.

Even though prior due diligence was performed, rules were never established prescribing conduct and policies weren’t written – nor were acknowledgement receipts signed and kept on file.  The coach had sole, unfettered access to the youth via the internet in intrinsically private electronic communications, without oversight or monitoring.

What should the church have done?

To protect not only the youth within their care, but also the volunteers who work with the youth and the church’s reputation and financial assets, the church should also have established the following polices:

A written communication policy that defines what is and is not appropriate communication methods for each method of communication.  I have created a sample communication policy which can be found in our Risk Management document library.

Permission Slips that denote what forms of communication are preferred by the parents when communicating with their children. If you are allowed to contact their child via email you should always CC their parents.  I strongly discourage communicating with minors via their personal cell phones. Instead I recommend you communicate via their home phone or their parent’s cell phone. In order to contact a minor via their personal cell phone, written permission from the parent must be obtained, and the parent included in all communications via group text.  This communication consent form can also be found in our documents library.

Checks and Balances. We live in an age of social media and most people belong to at least one platform. Many churches have created their own facebook page, and even created sub pages for their youth ministries. These systems are great for spreading announcements and event information to large audiences simultaneously. However, under no circumstances should an adult use their personal account to “friend” or contact individual youth group members. This opens up the door to private communications which cannot be monitored. Instead, create a Youth Group page for your ministry. You can set up multiple youth group leaders as “editors” on that account.  Your teens can follow the page, receive notifications of events/status updates and communicate via that page. In this scenario it is a public platform of communication because multiple adults have access to the information being shared and conversation being had.

I recommend you gather up the parents of the youth and your workers for a quick after church meeting in which you are going to do three things.

1.       1. Have every person who attends the meeting sign in. (This is your proof of them receiving the materials)

2.      2.  Distribute a communication policy to every youth worker explaining these are the new guidelines they are to follow.

3.      3.  Distribute a communication consent form to every parent. They will then select which forms of communication they approve of.

This helps both parties to be on the same page of what your ministry has deemed appropriate communication. After the meeting I would create a spreadsheet with each child’s name and their approved form of contact. I would distribute a “cheat sheet” to every youth worker so they know exactly how to contact the individual.


Churches can’t always prevent bad situations. But, we can at least create a safer environment where, ultimately, risk is lessened because acceptable behavior and expectations are clearly stated, and there’s less opportunity for grooming/bad actions to occur.



Clients: To download the Communications Policy & Consent form please visit our library. Simple log-in on the home screen. If you do not have an account, click the register button. From there select the Ministry Risk Management Tab at the top of the page and select Risk Management Documents. Scroll down to the Risk Transfer section and once selected each document will automatically download. 

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When it comes to the construction industry, architects and contractors have been taught to distrust and even undermine each other to maintain control and protect their egos and pride. No wonder they are the second most litigated industry in the country. The result, according to Project Management Journal, is that over $.20 of every construction dollar goes towards claims and litigation. For the typical church building committee member, this cause and effect process brings about six phases of emotion and action: 

*Search for the Guilty 
*Punishment of the Innocent 
*Praise and Honors for the Non-Participants 

The two top reasons for the above phases and possible litigation are poor pre-planning and improper budgeting. A lack of early expectation management can become a spiral of frustration resulting in poor quality and in the worse case, fractured fellowship within the church. Often the first step of this spiral is needing to reduce the square footage of the design or reduce the quality of the building materials used due to budget constraints. 

Life cycle costing is becoming is significant tool and should be taken into consideration. Over the course of 40 years, the life cycle cost of owning a church facility is 11% for actual construction costs, 14% for financing costs and 75% for maintenance and repair costs. What you thought was a great deal on low cost construction materials soon turns into a financial nightmare of repair costs due to poor quality. 


The stewardship challenge begins long before drawings are drafted. It starts with reasonable expectations set and understood by the Building Committee months prior to designing. It has been said that the only place that a church facility can be built ahead of schedule, under budget and with only the finest materials is in a Building Committee Meeting! The fact is that on every project there are three key components to balance. 

The desired size of the facility (square footage) 
The need to stay within a budget to building the facility (finances) 
The desire for the best materials used to building the facility

The challenge here is that the Building Committee must decide which two components are the most important. You cannot have all three! The difficulties that exist with these decisions can be manageable as long as the Project Team understands them early on in the process. A useful tool called Facility Modeling helps everyone understand the unique challenges that are before today's growing church. The following Facility Modeling Tool (based on national averages) can be used to get the Project Team started off on the right track. 


Funds Available for Construction 


Typical fundraising will raise 3.0 times the annual budget, not including special gifts. Financial Institutions will lend approximately 70% of the three year commitments on a separate note. 

__________________ X 3.0 + _________________________  x  .70 = _______________________
(Last Year's Budget)                 (Fundraising Goal)                                 (Funds Immediately Available) 



Church financing is becoming a very specialized industry. Financial Institutions will lend up to 3.0 times Last Year's Annual Budget. as long as the loan payment does not exceed 30% of the annual budget. 

_________________ x 3.0 = __________________________
(Last Year's Budget)               (Financing Available) 


Funds on Hand 

Money Currently in the Building Fund = __________________________________
                                                      (Building Fund) 

Funds from the sale of Properties or Facilities = ____________________________
                                                                 (Sale of Assets) 

Funds available for Construction 
________________________ + _______________________ + ______________________+ _________________________
(Fundraising Available)               (Financing Available)                 (Building Funds)                   (Sale of Assets) 



Amount of Ministry Space Needed 


Today's contemporary worship style and the extensive use of music and drama is requiring almost 15 SF of space per seat. This allows practical seating, aisle ways and space for a large platform area. 

________________ Seats x 15 SF/Seat = ____________________SF 



In many churches the main foyer is used for banquets, classes, displays and is the primary area for meaningful fellowship. The recommendations is 1/3 the size of the main auditorium should be allocated for the foyer/narthex area. 

________________ Seats x 15 SF/Seat = ____________________SF 



Learning areas are becoming the most versatile of all areas. This versatility accommodates changing ministries and sizes of age groups and classroom attendances. A general calculation of 18 SF per Sanctuary/Auditorium seat will provide the total square footage needed for classrooms. This calculation is based on a 50% classroom attendance. 

________________ Seats x 18 SF/Seat = ____________________SF 



Individual spaces in the administration area can be: 

*Pastor's Offices 
*Work Area 
*Conference Room 
*Dedicated Storage Areas 

An average size of 200 SF can be used for each individual space to determine the square footage of the administration area. 

________________ Spaces x 200 SF/Space = ____________________SF 

Multi-Purpose / Gymnasium / Fellowship Hall 

If you desire a full size gymnasium, the size of the playing surface is +/- 60 x 100. This translates to 6,000 SF, which would seat +/- 400 at round tables. A half court gymnasium would be 3,000 SF and see +/- 200 people. Kitchen areas to support either option should be no smaller than 900 SF. 

Full Size Gym (6,000 SF)   = ____________________SF 
Half Court Gym (3,000 SF) = ____________________SF 
Kitchen Area (minimum of 900 SF) = ______________SF 

Cafe / Resource Center / Bookstore 

"Dedicated" and more intimate fellowship areas are becoming more important to foster relationship building and smaller group learning opportunities. About 2 SF per Sanctuary / Auditorium seat is suggested for these areas. 

________________ Seats x 2 SF/Seat = ____________________SF 


Youth Worship Center 

A space where a broad range of ages can gather for praise and worship, prior to breaking up for age appropriate teaching, requires 12 SF per Sanctuary / Auditorium seat. 

________________ Seats x 12 SF/Seat = ____________________SF 


Total Estimated Dedicated Square Footage

Total all of the above areas = ________________________ SF


Circulation and Restroom Areas

Approximately 20% of all dedicated space is needed for navigation of the facility. Building code often allows 4' hallways (for example); a recommendation would be to never make them less than 8'.

_________________SF x .20  = ______________________SF
(total dedicated )

Total Estimated New Construction Square Footage Needed =  __________________________SF  
                                                                                    (Sum of the two Blue totals above) 

Projected Cost to Build Facility 

New Construction 

Cost/SF for new construction is difficult to establish based on region, materials used and the use of volunteers or gifts in kind. The National Average to construct places of Worship is $100 SF. Contact a reputable builder and after giving a thorough description of your needs, ask what he thinks the building could be constructed for per square foot. You can also see various types of buildings and their cost per square foot at www.tw-church.com 

__________________SF of New Construction x $ ______________/SF = $___________________________


Fixtures, Furnishings and Equipment (FFE) 

The interior finishes, furnishings and A/V Systems that are going into today's facilities are even more difficult to estimate than the cost/SF for the actual structure. A good rule of thumb is 30% of the Facility cost of construction. 

$________________ X  .30 = $____________________
(Cost of Facility Construction) 


Site Improvements (General Earthwork, Parking & Utilities)

Site Improvements tend to be another of those line items that can fluctuate significantly based on geography and various challenges that each individual site presents.  Those challenges range from wetlands to hazardous waste. Always bring a site engineer into the early discussions of purchasing property; it could save you tens of thousands, or more. 


The ideal ratio of one parking space for every 2 seats is recommended. 

______________Seats/2 spaces/seat x 200 SF/space (10x20) x 2.50 (ration of drive aisles) = _________________SF of Paving 

______________SF Paving x $4.00/SF = $_________________

General Earthwork & Utilities 

Excavation is estimated over the total area that the work is to take place. 

______________SF of New Construction + _________________SF of Paving = ____________SF of Excavation

x $3.00 SF = $_____________

Total Estimated Site Improvement Costs = $ _______________________________
                                                            (Sum of Parking, Earthworks & Utilities) 


Total Estimated Project Cost = $____________________________________
                                           (Sum of New Construction + FFE + Site Improvement Costs) 

Cost & Decisions 

As seen in the following graphic, when the least amount of resources are being invested, the Project Team actually has the most influence on the project design and construction costs. Time spent early in a planning process will directly influence the cost of the project. A myth exists that "value engineering"  (saving the church money) can take place after the design is complete. After the project design is complete the typical approach to "value engineering" is to decrease quality or decrease square footage. This chop and hack approach is not only contrary to positive momentum, but most importantly, it is contrary to the vision and mission of the church. Nearly 50% of America's churches have set plans hidden behind the Pastor's door that will never be built. On average, the other 50% that did build lost their Pastor within 18 months of the completion of their new facility. The number one reason for these disconnects is the lack of an integrated Project Team and a Discovery Process that guides that team carefully through planning each unique project. True value engineering and good construction decisions are made early in the process with a Team approach of Owner-Architect-Contractor equally yoked and in step, pulling toward the same goal. A good Discovery Process keeps the Project Team in step and protects the project from potential disastrous surprises.


Key Components of Discovery are: 

*Alignment of Facility Goals with Financial Capabilities 
*Alignment of Facility Needs with Congregational Needs and Involvement 
*Alignment of the Facility Location with the Challenges that the Building Site Presents 

F.W. Dodge, the largest provider of construction analysis and statistics in the United States and Canada, has verified that the average construction project is 30% over budget due, primarily, to beginning construction design prior to understanding (Discovering) the vision and mission of the client and project challenges that would have surfaced during a Feasibility Study. An integrated Project Team working through a comprehensive Discovery Process together makes good cost and stewardship decisions. 

Design & Functional Relevance 

A project team dedicated to understanding the church will focus on designing a facility around your ministry by actually connecting the facility design to your church's vision and mission. The graphs show that in a growing US population, despite significant investment in building and/or improving our places of worship, we are actually reaching less people. Good construction decisions begin by understanding who the church is, what the church's long range goals are and who is the target of the church's outreach? The Word of God never changes,; the way we convey God's word does. Creating an environment that reaches the firs time visitor and serves the long time member is critical. Designing relevant facilities where people can relax, can be themselves, can connect with others, and can become a part of the community is nothing new. 


The projects that T&W Church Solutions design and build are very unique and they are passionate about each one. Good Construction decisions are made long before the "bricks and sticks" arrive on the job site. A good Design/Build Team can guide you through the process of Discovering the Facility Challenges before you, and Designing a Facility around your Ministry Discovering who the church is and following the Lord's leading will be a critical component for a successful project....long before the "bricks and sticks." 



Copyright Credit: T&W Church Solutions 





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