• The resource crisis, both financial and human, faced by many ecclesiastical entities and religious congregations requires greater caution in planning their financial future.
• The use of complex accounting models and integrated financial statements is now essential for guiding and supporting decision-making.
• New technologies provide significant assistance for ecclesiastical accounting. For example? Cloud-based accounting applications supported by user-friendly yet highly capable accounting tools.
• The key lies in implementing a forecasting model that assesses the possible scenarios an entity or congregation may encounter in the short, medium, and long term while considering key variables.
• Often, ecclesiastical entities and religious congregations face immediate financial challenges, compelling them to sell off real estate assets under less-than-ideal conditions. However, proactive strategic planning can help mitigate these pressures—let’s explore how.
• This is not about doing business but acting now to secure a future. Here’s how IMC Consulting actively supports ecclesiastical entities and religious congregations.

New challenges, new opportunities

The world continually presents new challenges, especially for complex organizations operating across multiple continents, such as ecclesiastical entities and religious congregations. As highlighted in a previous article, these organizations are currently facing both financial and vocational declines due to increasing secularization. This translates into a crisis of both economic and human resources.

This scenario calls for greater caution in planning the financial future, which is essential for sustaining their members. In short, strategic planning is necessary. But how can this concept be effectively implemented, and what solutions are available today to ensure efficient accounting for ecclesiastical entities? Let’s explore them together.

Ecclesiastical accounting: between strategic planning and new technologies

The use of complex accounting models and consolidated financial statements is now indispensable for supporting and guiding decision-making at the central level (General Council), as well as at the Provincial and ministry levels. New technologies also offer valuable support. For instance, creating a cloud-based accounting structure with user-friendly yet highly capable accounting tools such as QuickBooks or Sage allows financial management in local currencies while maintaining centralized consolidation. This presents a strong opportunity to establish strategic planning for an ecclesiastical entity or religious congregation by developing a forecasting model that assesses possible scenarios in the short, medium, and long term while considering key variables:

• What will the estimated net assets be in 30 or 40 years?

• How many members will the religious congregation have, and what will be their average age?

• What is the average yearly cost of living for each member?

Providing precise answers to these (and many other) questions enables strategic decision-making without the pressure of financial emergencies that often leave these entities in financial shortfalls. In many cases, this situation leads to the forced liquidation of real estate assets at unfavourable prices to meet short-term cash flow needs.

Canonical foundations

Discussing ecclesiastical accounting and strategic planning in these terms is not an overstatement but rather a forward-thinking approach. The Dicastery for Institutes of Consecrated Life and Societies of Apostolic Life itself emphasizes this perspective. The canonical foundations can be found in the volume Economy at the Service of Charism and Mission¹. It states that a Christian is called to be a steward, a manager of the multifaceted grace that also manifests through charisms and should be circulated for the benefit of all. In God’s salvific plan, the Church is “like a faithful and prudent steward […] tasked with carefully managing what has been entrusted to it.” Indeed, “it is aware of its responsibility to protect and manage its assets attentively, in light of its mission of evangelization and with special care for those in need.”

What’s needed to get started

Now, let’s dive deeper into the topic of strategic planning and accounting for ecclesiastical entities and religious congregations. To begin and move forward effectively, it is essential to have:

• accurate chart of accounts;

• greater homogeneity of these account plans among each province;

• a thorough evaluation of assets (real estate) and their administrative, cadastral, and urban due diligence;

• shared and standardized accounting principles across Provinces, including the application of International Accounting Standards (IASs).

Accounting for Ecclesiastical Entities and Religious Congregations: key parameters to consider

What often distinguishes accounting plans are the activities carried out and sources of income. Typically, for an ecclesiastical entity or religious congregation, these include:

• payroll from self-employed or employed work;

• pensions paid out to members;

• income from activities and/or profits derived from the management of healthcare and social assistance facilities (nursing homes, hospitals, private clinics, etc.), educational institutions (kindergartens, schools, universities, vocational training centers), or hospitality services (hotels, retreat houses, etc.).

• Leases of real estate owned;

• Financial investments.

Additional elements to consider include financial investments such as fixed-income or equity investments, as well as real estate assets (rental income) and donations.

The value of a forward-looking perspective

When discussing strategic planning and accounting for ecclesiastical entities and religious congregations, it is not about doing business but rather about foreseeing and analysing which ministries (missions or activities) are operating at a loss. Understanding this allows for necessary financial support while planning for property maintenance investments and evaluating which real estate assets are no longer strategic or could potentially be repurposed.

In short, a forward-looking perspective is crucial. In this regard, IMC Consulting actively supports ecclesiastical entities and religious congregations in Italy and worldwide. From setting up and managing proper accounting structures to implementing cloud-based accounting and consolidated financial statements, IMC Consulting also develops complex forecasting models for strategic planning. Acting today to build a lasting future: that is the essential step.

Find out more about our approach
and IMC solutions
for ecclesiastical institutions and religious congregations

 

NOTE

¹ For further reading: Economy at the Service of Charism and Mission, Congregation for Institutes of Consecrated Life and Societies of Apostolic Life, 2018