7 key considerations for religious organizations this year

As the world navigates a rapidly evolving post-COVID landscape, religious organizations, like all nonprofits, have what might feel like an overabundance of issues to ponder. Here are seven topics that should be top of mind for religious organizations as they look ahead to the coming year.

Faith-based investing
As investors realize the positive return potential of environmental, social and governance (ESG) investment strategies, the market is responding with an increasing variety of investment products and offerings that align with those goals. One strategy gaining traction is faith-based investing, which seeks to align beliefs and value systems of religious organizations to investment decision making. The strategy employed can be exclusive—screening out companies in industries such as gambling, tobacco, and alcohol, or inclusive—advocating for specific causes. Other paths may also be pursued, such as divesting from companies that do not comply with a religion’s values or investing in ESG-focused index funds. Because of the complexity associated with identifying investments that may or may not align with an organization’s goals, this endeavor often involves obtaining outside investment expertise, as well as developing a policy for screening investments that may not clearly meet ESG criteria.

The benefits of board diversity
To carry out an organization’s mission effectively, board members need to understand the context in which they work and appreciate the varied perspectives within the communities they serve. In addition, a massive generational transfer of wealth is underway. Drawing on the skills, perspectives and experiences of a diverse board, including that of a new generation, will enable an organization to deepen its impact and relevance, particularly in a society reckoning with systemic inequities that have hindered many individuals from achieving leadership roles. One approach embraced by many nonprofit organizations is to establish an advisory board, which creates an opportunity to recruit individuals who might not be ready for the full commitment of a board position but are interested in being involved and getting to know the organization at a deeper level. Typically, these are non-voting positions but are used as a sounding board for leadership.

Re-evaluating employee benefits
Many religious organizations participate in traditional defined benefit plans. Given the significant pressure on religious organizations to contain costs, one lever to consider is an evaluation of specific retirement benefits and other offerings currently provided. This effort would include evaluating the current state of the retirement program, considering implications from competitive and comparable markets, and discussing potential enhancements and revisions, as well as alternate approaches and designs. The evaluation should also consider employee benefit best practices, Canon Law, any concerns expressed by current employees and any foreseeable matters that may affect future employees. Oftentimes, this evaluation will identify certain benefits that employees do not actually value and thus can be sunset, resulting in cost savings without affecting employee satisfaction.

Revisiting gift acceptance policies
As the ways in which donors wish to contribute inevitably evolve, so too should an organization’s gift acceptance policies. With an increase in contributions in the form of cryptocurrency and other digital assets in the nonprofit sector, religious organizations need to prepare by having a methodology in place to accept these assets properly, including identification of vendors to assist with liquidations of such assets, if that is the organization’s policy. Planning for this now can help to prevent leaving a funding source on the table later.

Navigating the shift to a hybrid workforce
Hybrid is the future workforce model across many sectors. As a result, organizations with a combination of in-person and remote employees have a much larger talent pool to work with. Fewer candidates are bound by their locations, and organizations can begin looking beyond their office-centric talent pools to find the best fit for a role. While this workplace shift provides more opportunities for employers and employees as well as for fostering diversity, it also requires organizations to rethink their talent and sourcing strategies and employee policies and procedures while keeping in mind the need to consider diversity, equity, and inclusion within the employee population. Compliance with payroll tax and unemployment rules should also be considered.

Technology
Technology is key to enabling an effective and efficient hybrid workforce and creating a positive employee experience. Organizations need to ensure their infrastructure enables proper collaboration tools, client service and operational efficiency. The fast-fix approaches that many organizations deployed to respond to the immediacy of COVID-19 should be evaluated with a long-term strategy in mind. Organizations that did not have strong, up-to-date systems in place struggled to pivot when faced with the effects of the pandemic. Technology may be leveraged to monitor and manage the breadth of risk, compliance and collaboration associated with staff and vendors working in geographically diverse locations. However, as hybrid and global workforces become more prevalent, organizations should proactively assess their current digital strategy and be aware of heightened vulnerabilities, specifically related to cybersecurity concerns for remote employees.

Government funding opportunities
With the billions of dollars in pandemic-related federal funding available through state and local agencies, religious organizations can benefit in ways not previously possible. The Payroll Protection Program (PPP) was a lifeline for many religious organizations at the beginning of the pandemic. For some, the PPP was their first-ever acceptance of government funding. Beyond the PPP, there are programs funded by the federal government and often distributed by states or local agencies that are of tremendous benefit for religious organizations, such as Emergency Assistance to Nonpublic Schools and the Governor’s Emergency Education Relief Fund. Religious organization leaders need to be aware of the opportunities available for government funding and evaluate the advantages and disadvantages of each program. Often there are favorable exemptions from the burdensome compliance requirements that enable the advantages of participating to outweigh the costs. However, different restrictions apply to different government programs. For instance, expenditures for “religious worship, instruction, or proselytization…” are unallowable per the FAQs for the Higher Education Emergency Relief Fund programs. Religious organizations should ensure that they are aware of the various restrictions on the uses of government funds and consult with their financial advisers on these matters.