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About Grace United Methodist Church

Merger Frequently Asked Questions

Below you will find answers to the questions asked by a group of Grace United Methodist Church members about the possible merger with Chapelwood United Methodist Church. The Future of Hope Committee has taken the time to do the research to find the most accurate and transparent answers to your questions. As we have gone through the questions, we do realize that it will take more time and more research to get some of them answered. This is part of our long-term mission. Most of these questions will be worked on and answered over the next
three months or so as we meet weekly. We can’t give answers to certain sections as we are finding answers ourselves as we move through this process. We will answer more each week and continue to work with the mission of Grace in mind. If you have any questions, please don’t hesitate to reach out.

 

What is Grace’s current financial situation? Please provide:

1. Current balance sheets (assets/liabilities) for entire Church, including the day school:
  • Neither the finance committee of Grace UMC nor the pastor has historically seen the benefit of producing a balance sheet. The business of the church is mainly on a cash basis and so this document has not, in the past, provided valuable information.
a. Cash as of December 1, 2020:
  • Grace Weekday School - $54,795, Grace UMC - $5,834, Restricted accounts (considered a liability) - $13,065

b. physical facilities

  • Grace UMC owns all of Grace UMC real estate, but it is held in trust by the Texas Annual Conference (TAC). From the UMC Book of Discipline (BoD): ¶ 2501. Requirement of the Trust Clause for All Property-1. All properties of United Methodist local churches and other United Methodist agencies and institutions are held, in trust, for the benefit of the entire denomination, and ownership and usage of church property is subject to the Discipline. 

c. outstanding loans

Outstanding Loan balances (as of 12/1/2020)

TMF loan # 1 (Fellowship Hall HVAC)
 $ 176,664.40
TMF loan #2 (Day School Construction)
$ 67,635.00 
Loan balance
$ 244,299.40 


d. tax liabilities, etc.

  • Our outstanding tax liability with the IRS has been substantially resolved and is near zero as of 12/1/2020. The tax attorneys assisting the church in this matter have told us that there may yet be remaining penalties and/or interest not yet assessed but expect this to be a very small value if anything at all. The IRS case against Grace UMC was closed as of 11/25/2020.

e. Identify specific restrictions on disposition of assets (parsonage, any others)

  • BoD: ¶2542. Restriction on Proceeds of Mortgage or Sale – 1. No real property on which a church building or parsonage is located shall be mortgaged to provide for the current budget or operating expense of a local church. The principal proceeds of a sale of any such property shall not be used for the current budget or operating expense of a local church. Provided that provisions are made for the current and future missional needs of the congregation and the current and future housing needs of a pastor, the principal may be used for capital improvements beyond the regular operating budget when written approval is granted by the district superintendent and pastor.

2. Budgeted and actual expenditures for each of the past several years (say 2017, 18, 19, 20)

  • End of Year (EOY) for both GUMC and GWDS statements have been made available from the Chair of Finance and has been shared with many church members already. If you would like to see this information, please see GUMC Finance Chair.

a. Should include Church operations, day school operations, capital expenditures for Church and school.

  • See answer to question #2.

3. Current expenditure and revenue rates for Church and school.

  • 3Q is available on the 2020 financial spreadsheet (linked HERE) compiled by Collin and presented in a recent church meeting. This will be updated for October and November as those numbers become available. For those interested in more detail, see either Dayschool Board Chair, and/or Finance Chair.

a. Financial reports for each month in 2020.

  • All this information is available on the 2020 finance spreadsheet (link above).

b. Note any belt tightening steps that have been taken or could be taken in the immediate future.

  • Available on the 2020 financial spreadsheet. However, this is an ongoing process taken with all seriousness, as of 12/7/2020, the church and the school have been able to cut or defer over $340,000 in expenses.
4. Projected budget for 2021 (assuming Grace remains independent) -- again for church and school.
  • We plan to make this information available by a called church council meeting on 12/21/2020. To date, the proposed 2021 GUMC budget has been cut by 26% from 2020 to 2021. The GWDS budget has been cut by 40%. The approved budgets are now available on the 2020 financial spreadsheet under a tab entitled, “Church and School Budget 2021.”

5. A bare bones budget with expenditures equal or less than estimated revenue -- for church and school.

  • The 2021 budget for both the school and the church will be reviewed by the Finance Committee on 12/9/2020 and the presented to the Church Council on 12/21/2020.

What is the case for a merger at this time, and why is Chapelwood the right choice?

  • Currently, Chapelwood is the only church in the TAC that can point to a statistically successful merger (Fairhaven UMC has seen 80% increase in worship since merger with Chapelwood in 2017). Other congregations have certainly merged in that same timeframe, but Chapelwood-Fairhaven has proven to be the most successful example in the conference.

1. What was the genesis of the concept of a merger with Chapelwood?

  • Due to the immediate impact to the church finances as a result of the pandemic Collin began to realize that they only way to continue ministry in our current form was to find a partner in ministry.

a. Whose idea was it?

  • Conversations between Collin and the Senior Pastor of Chapelwood have been informal and ongoing since we invited the Upper Room to share space on our campus, but the conversation was never seriously considered until August of 2020.

b. What other alternatives were considered, including other merger partners?

  • No other merger partners are being considered at this time as no other church has the successful history of mergers than Chapelwood UMC. Ultimately, Church growth at Grace is the long-term goal, and Chapelwood’s successful history demonstrates a way to achieve that goal. Moving forward, The Future with Hope Committee will be evaluating any and all options that lead to fiscal solvency and ministerial growth.

c. Who reached out to Chapelwood?

  • The idea has been discussed over the last few years between the Senior Pastor of Chapelwood and Collin, only recently has it been considered more fully.

d. Who authorized this outreach?

  • Collin, acting under the authority granted him by the Book of Discipline, authorized this outreach. ¶ 332, “…to order the life of the Church for service in mission and ministry.” And ¶340(2)(c)(1) To be the administrative officer of the local church and to assure that the organizational concerns of the congregation are adequately provided for.

e. What information has been provided to any potential merger partners and what terms, financial or otherwise, have been proposed or discussed?

  • No terms have been discussed to date. Chapelwood UMC has been made aware of the Grace’s financial situation. Work in this area will be more fully pursued by the Future with Hope Committee.

f. When was this transaction presented to the various committees of Grace,
including the Administrative Council, Trustees, Finance Committee, and what actions have been taken by any committees of the church with respect to this transaction?

  • To date, no actions have been taken. All committees have been advised of a possible merger but since neither the pastor nor the committees have any authority to take action regarding a merger, no actions have been taken. The Future with Hope committee was been created to explore all possibilities with regards to a merger with Chapelwood, and that work is ongoing. A recommendation will be made to a called Church Council meeting on or around 3/31/2021.

2. Why merger and why Chapelwood?

  • Both the short- and long-term rationale behind a merger with Chapelwood were discussed in a weekly column from Collin on released on September 10, 2020. You can re-read that column by clicking here.

a. What goods, would Chapelwood or any other merger partner with whom this transaction has been discussed provide to Grace under the terms discussed thus far with that potential partner?

  • In short, the merger with Chapelwood would allow Grace to recover financially, and to then make plans to re-gain the growth pattern that it was recently on. The longer answer to this question is to be discerned by the Future with Hope Committee and will be shared with a Church Council meeting on or around March 31, 2021.

b. What terms have been discussed with any potential merger partners with
respect to transfer of assets, cash, debt, credits or other financial aspects of the transaction?

  • Under the type of merger in consideration all financial aspects become owned and would be the responsibility of Chapelwood UMC.

c. What alternatives to a merger have been evaluated and by whom have they been evaluated?

  • To date, no other alternatives have been evaluated. Given the current financial situation, there are other more drastic outcomes that could result. These include eliminating ministries, drastically cutting pastoral capacity or even insolvency. As the Future with Hope committee continues to work other alternatives will be evaluated.
d. What documentation exists (such as pro forma financial statements, projections, worksheets etc.) with respect to financial alternatives for Grace?
  • Please see answer to 2C, as well as the forthcoming 2021 GUMC budget. The Future with Hope committee’s work will include the production of projections for any viable alternative.

3. Will those involved in the discussions make all documentation and communication with respect to any proposed transactions available to the congregation for review?

  • Yes.

There are a number of additional questions under consideration, however, to date the answers to the other questions are not ready to be published. The Future with Hope Committee will continue to work through these questions and release them as soon as possible.

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