Inter-American Division Discusses Extreme Financial Measures
By Daniel A. Mora | 14 May 2020 |
The treasurer of the denomination’s Inter-American Division (IAD) recently sent a memo to the administrators of the constituent union conferences and institutions detailing the financial reality of the church in the COVID-19 crisis, and the activation of plans to protect the capital of the division.
The document, dated April 8, 2020 and signed by IAD treasurer Filiberto Verduzco, suggests measures that range from reducing operating expenses to authorizing retirements and a staggered dismissal of denominational employees.
With a membership of 3,835,017 in 23,000 churches, the IAD leadership faces an unprecedented economic crisis. The COVID-19 pandemic has led the countries that make up the territory of the Division (Mexico, Central America, Colombia, Venezuela, the Caribbean islands, Guyana, French Guiana, and Suriname) to order quarantine and a state of emergency. The prohibition of meetings and home confinement of citizens has forced the closure of churches and the suspension of religious meetings which threatens tithes and offerings, the main source of income for the Adventist organization. The drastic and sustained impact on the Latin American and Caribbean economy cannot yet be measured, but it will take a large toll on the finances of the church in the region.
Fear of the future
The new five-year period (2020-2025) will be one of uncertainty for the Inter-American Division. “The year 2020 will be characterized by the impact on the countries’ economic and financial environment due to the COVID-19 pandemic. At the time of writing these lines (April 8, 2020) we cannot measure the depth of the impact of how the financing environment of each entity will be affected, that operates in the territory of the Division,” Filiberto Verduzco said in the letter.
On March 26 the treasury had asked the local fields to restrict spending “to the minimum, necessary and indispensable” lest “operation be almost paralyzed due to the lack of operating income.” The aim is that entities define “the minimum, necessary and indispensable expense … in each entity to operate. The priority is to guarantee the salary and benefits of the employees”.
The Inter-American Division has, according to the 2019 statistical report, 3,435 full-time clergy (ordained and commissioned), 3,420 administrative employees (administrators, accountants, auditors, clerks, support staff, secretaries), 3,264 employees for primary education and 4,718 employees for secondary education colleges, universities, totalling 21,055 active employees. It should be clarified that all these employees do not report directly to the Inter-American Division.
Financial measures on employees
Beyond these adjustments to the budgets and the deep reduction of the operating expenses, another plan is to mobilize the pastors to collect tithes and offerings “house by house.” Verduzco believes that “the shepherds should be organized to do this work”—a recommendation that, if carried out, risks exposing employees to the COVID-19 contagion.
A second part of the plan is that the institutions and entities of the Inter-American Division base their operating expenses “on the level of cash available in working capital and on the levels of cash that can be collected”—that is, budget on real income. This may mean that employee benefits will be suspended, such as “per diem, transportation aid, car help, and other items of an annual nature that are offered, such as public expenses, etc.”
Verduzco says that this may eventually affect the salaries of employees: “if the measure is more severe, it will result in a percentage reduction of the employee’s salary, maintaining some income and medical expenses support.”
If these measures do not work, then the “contributions to the Benefit Plan will be affected, either 100% or in any lesser percentage, and/or to the Employee Protection Plan”. The Benefits Plan (IAD Working Policy Z 05 05) includes money for retirees, life insurance, pensions for the widows/orphans of the employees who died in service, and aid to dependent and disabled children, among others.
The cessation of contributions to the Benefit Plan endangers retired and more vulnerable employees. This involves appropriation of the funds contributed by employees to the Benefit Plan, which could conflict with labor laws of the countries where the Inter-American Division has a presence.
Contributions to higher entities
The option that local entities stop contributing to higher organizations, in whole or in a percentage, is discussed. “The contributions of the deduction of tithes towards organizations higher will correspond to the income that is collected.” This only applies to entities such as conferences and unions. The decision to adjust the percentage of the tithes must be notified to the superior entity.
Early retirement and layoffs
Under the pressure of the financial crisis, extreme measures to safeguard the capital of the Inter-American Division focus on the significant reduction of professional and pastoral personnel operating in its entities. The three measures are mentioned:
- Retirements: “A more severe measure will be to apply retirement to personnel who already fulfill the conditions, that is, those who are older and have more years of service. By applying this measure, these personnel will be informed of the measure to be applied and in the time that it will take place ”.
- Dismissal of administrative personnel: “If the situation is more severe, in the cases of local fields, start with the unemployment of personnel in the offices—that is, cut indirect expenses so that the attention to the parishioners in the districts by the pastoral personnel remains.” This would include secretaries, cleaning staff, auditors, and deputies.
- Dismissal of pastors: “If the measure is to be more severe, a process should be started to cut support personnel first and then pastoral personnel, at the union and local field level.” In applying this last measure, dismissal will begin with the ministers or pastors with fewer working years, to cover indemnities.
Verduzco says that the implementation of these suggestions will be according to the financial impact and the evolution of the COVID-19 pandemic in the region: “We know broadly that the investments that we have have been severely affected. If the situation becomes extremely grave, we will have to implement the aforementioned measures.”
Faced with a possible wave of layoffs and the cessation of operations in some local fields of the Inter-American Division, the church would be deeply affected. In some Latin American countries dismissals are prohibited in the midst of a health crisis, which could trigger legal claims against the organization.
- Filiberto Verduzco, “To all the administrators of the unions and institutions of the Inter-American Division”, letter, April 8, 2020 (Miami, FL: Headquarters of the Inter-American Division, 2020). ↑
- Office of Archives, Statistics and Research, 2019 Annual Statistical Report: 155th Report of the General Conference of Seventh-day Adventists for 2017 (Silver Spring, MD: General Conference, 2019), 8. ↑
Daniel A. Mora writes from Argentina.