Record Amounts in Accounts
What do churches do with 1.6 Trillion in US savings and Checking accounts?
~1200 words - just over 4 minutes of reading time. But highly valuable if you apply it. Could be the best ROI all week.
There are record amounts in American's checking and savings account, and it isn't all Jeff Bezo’s money.
As mentioned in previous newsletters, we are experiencing a K Shaped economic recession. What does this mean for church leaders?
1. Some households, around 20% across America, have suffered economic decline in the past year. That is slightly elevated from normal. In all economic times, some households are experiencing declines in income and wealth.
Some of that is due to unemployment. Other sectors include those exiting the job market for other reasons, such as parenting or care duties for others. Still, yet others move from employed to retirement stages with some loss of income.
While unemployment remains high in some communities, the job growth we have seen over the past year was not expected. Economists and policymakers expected much worse employment conditions.
2. Many households now have dramatically more in both paper wealth and real cash in their accounts. This includes those whose incomes have gone up but also includes those with stable incomes and fixed incomes.
Much of that has been because of decreased expenditures due to the pandemic. While expenditures have increased for groceries, furniture, and electronics, they have dropped for restaurants, travel, commuting, and clothing.
Some of the cash in accounts are the government stimulus payments that many set aside to hold for potential downturns personally. Some of it is increased income during the pandemic season.
Whatever the source, much of that money remains in very liquid accounts – what could be labeled savings and checking accounts.
As a data point, the US average savings rate in February 2020 was 8.3%. In March 2021 it was 13.6%. This is the amount of income that households save during the period as a percentage of disposable income. That is down from the pandemic peak and down from January, but still historically high. If you exclude the one-time peak of July 2021, this is the highest rate since 1975.
Some amounts of money have gone to investment accounts in the markets or retirement accounts for the future.
Some of that wealth has been generated in increased housing values reflected by demand for housing across the country. That particular percentage varies based on the area of the country and specific markets. But most housing markets are up when it comes to owner-occupied housing.
Last year this week we expected retirement account balances to decline through the end of 2020. Instead, those invested in market equities and similar accounts saw dramatic rises in those account paper balances. As an example, in round numbers, The Dow Jones Index was at 24,000 mid-April last year and now sits in the high 33,000 mark, or almost a 40% rise.
Inflation is rising slightly, especially for things like building materials. If your church is trying to build something with wood and steel you have realized this. Plus, you can’t find contractors to do the work!
3. While many small businesses closed during the pandemic season – somewhere around 22%, there was also an increase in small business startups in the past year. Just as a point of comparison, the census bureau estimated around 3.47 million were formed in 2019, but that number jumped to 4.41 million in 2020.
Small businesses have a high failure rate over five years, but the increase indicates that some who were unemployed found new outlets in creating their own business.
4. There was a dramatic rise of well of investment in digital currencies – Digital currencies such as Bitcoin and related assets saw a tremendous rise. Just as a data point, in March 2020, Bitcoin was priced at a little over $7000 per coin. Today it is just under $60,000.
There are multiple digital currencies, exchanges, and platforms that create a web of investors in these assets. I confess I am no expert and have refrained from these assets. But many have been steadily showing good returns in these.
5. Donor Advised Funds grew and gave out in record amounts in 2020. Think of a donor-advised fund as a giving tool that allows for a tax deduction in one year and future giving in future years. These are now accessible to middle-class families to use to help them with their giving to nonprofits, including churches.
Implications after this word from our sponsor:
Most churches need to rethink their future strategy. It won’t look like the past chapters in many ways.
Storycrafting for Strategy Process™ is my proprietary process to help your team think creatively about the next chapter of your church’s ministry impact.
God is always writing new chapters in the leader’s life, the congregation’s life and the community’s life. Determining how those sync up helps a church develop a robust pathway to the future.
To schedule a call to talk about it, just go here.
Implications for leaders:
There is more money out there than you think – Almost all my clients reported giving at the end of 2020 as higher than expected. Some had record giving. Part of the reason is that people have more to give.
Some of that "excess money" is going to be spent on housing improvements, post-pandemic travel, new durable goods, or even second homes. But some of it has the potential for giving to worthy causes.
Those clients creating special purpose initiatives during the pandemic also had a good response – Thinking in chunks to fund pandemic-related initiatives such as improved online efforts, food assistance, and other relief initiatives. Some had so much come in that they cannot distribute it all yet.
This is the right time to plan for a generosity initiative – as I have mentioned in the past, I don’t do that sort of work personally, but I have a team of colleagues that do. Those churches planning now for fall generosity initiatives, such as a campaign or one fund, could be liberally rewarded in commitments.
This does not discount the discipleship and spiritual work of God in people’s lives. It merely points to the fact that when people feel rich, the abundance mentality kicks in.
(If you want my help to find the right consultant for you, just ping me with an email.)
Can you receive digital currency giving in your current approach? While online giving moved steadily upwards for churches, digital currencies like Bitcoin are not included on many platforms. That is because they are more like assets to be sold upon receipt. Almost like a gift of stock.
Many churches have learned how to handle stock gifts, but have struggled with gifts of digital currency.
Our Senior Pastor Happy Hour covers some of this TODAY. (If you want to apply for an invitation, email Linda.Stanley@generis.com. We don’t record these conversations so one has to be there to participate.)
Likewise, there are ways to draw out giving from those that control a donor-advised fund account that can help fund projects your church needs. Regular reminders in your normal communications of ways to give can help there.
In general, I see that people use their donor-advised funds to make larger gifts to nonprofits but give directly to their church by other means. That is often because we have not encouraged them to do so.
Need a handy pdf document of this newsletter to hand around to your board? Just email me directly for a quick presentation for discussion. You can just hit reply to this email and ask for a PDF in the subject line.
This week on the podcast GREAT THINGS GOD HAS DONE
Matt Evans – Rock Bridge Community Church – a multi-location church in Northwest Georgia and Tennessee.
Matt returned from the Navy to plant this church and now serves as its lead pastor. He also serves his community as chair of the school board.
Take a listen here, and all the past episodes here.
Many of you missed a great edition two weeks ago in the run up to Easter. Go back and check out:
“What’s the word for that?” Words that enlighten, entertain and drive change.