Missionary Work Challenged as Value of U.S. Dollar Weakens
- Thursday, December 16, 2004
Reaching this year's $150 million Lottie Moon Christmas Offering goal certainly will help Southern Baptist missionaries reach out to the lost - and deal with the weakening American dollar.
The drop in the value of the dollar, David Steverson, the International Mission Board’s chief financial officer, acknowledged, has led to budget shifts and decreased buying power on numerous mission fields.
One of the most significant factors impacting the IMB’s budget is “the weak dollar around the world,” Steverson stated. “We have actually been dealing with the weak dollar for a couple of years now, and it is only getting worse.
"If we were to receive the entire $150 million budgeted for the Lottie Moon Christmas Offering, it would go a long way toward helping with this problem," Steverson said.
To illustrate the situation, Steverson said at the beginning of 2003 he was invited to participate in a meeting in Greece with IMB personnel in Central and Eastern Europe.
He accepted the invitation in January and the meeting was to be held in June. In January 2003, the exchange rate was 1 euro for 88 cents U.S. By the time he arrived in Greece, it cost about $1.15 to buy a euro. According to the Associated Press as of late Monday, Dec. 13, the euro stood at $1.3297 after reaching record highs against the dollar, of more than $1.34, during the previous week.
The dollar also has reached record lows against the Japanese yen. As of late Monday, the dollar was at $105.38 yen, recovering 3 percent from the previous week.
In addition to the IMB, the impact also is being felt by the Canadian Convention of Southern Baptists, which recently trimmed 20 percent of its budget to deal with the drop in the U.S. dollar's value. About 80 percent of the CCSB budget comes from American entities, churches and individuals.
Among IMB workers, the declining dollar has had the most impact on their operating budgets. Currently, the IMB has $128 million budgeted overall for operating needs and $22 for capital needs, mostly missionary housing and vehicles.
Steverson said each region's operating budget is fixed in dollar terms and missionaries must adjust spending based on the dollar's value.
"They don't get more dollars,' Steverson said, "they just have to do less."
With the weakness of the dollar, he said the IMB could very well divert some of the $22 million budgeted for capital needs to operating budgets. The IMB had to take similar action following the $136,214,648 Lottie Moon Christmas Offering for 2003 when it diverted about $2 million to operating budgets in the 11 IMB regions.
Steverson said he did not know of any overall programs that have been eliminated by missionaries' decreased buying power on the field, but some activities have been curtailed significantly.
While most of the IMB's capital expenses go toward missionary housing and vehicles, the mission board does buy some other capital items -- anything that lasts more that three years or so -- such as computers, copiers, printing presses and medical equipment.
"When you have to cut back as we have in the past couple of years, you simply don't replace the vehicle or computer or copy machine as often as you might like to," Steverson said.
Up to 70 percent of missionaries' salaries are protected by the IMB's field parity supplement. The field parity supplement is designed so that each missionary around the world has about the same buying power as their IMB missionary colleagues regardless of where they serve.
To determine the field parity supplement, the IMB uses an agent who prices about 170 goods and services twice a year, Steverson said. The items are weighted according to how often consumers would actually purchase them, so that food items are given a larger weighting than appliances since people consume food every day and only buy an appliance occasionally.
From that information, the IMB develops an index adjusted for the various currencies around the world. While pricing is done twice a year, currency changes are updated several times a year.
However, Steverson said changes in the field parity supplement are based on how much prices have gone up in an individual missionary's location compared to other locations around the world. He said 70 percent of missionaries' pay is protected under the field parity supplement because studies indicate that on average, over a career, that is what the missionary spends on the field.
Steverson said the IMB overspent its field parity supplement budget by about $1.6 million last year and could overspend it by about $2 million this year, based on currency and inflation changes.
In Canada, where the Canadian Convention of Southern Baptists also is feeling financial pressure from the declining U.S. dollar, the Canadian dollar -- or "loonie" as the $1 coin is called, with a picture of a loon engraved on the reverse side -- reached a record low of slightly less than 62 cents U.S. in January 2002. Late last month, the Canadian dollar had reached a 12-year high of more than 84 cents U.S., but by late Monday, Dec. 13, the Canadian dollar had dropped slightly to 81.45 cents U.S., according to a Canadian Press report.
Joan Bruce, CCSB business manager, said the Canadian convention receives 80 percent of its budget from American sources, but the value of the U.S. dollar has dropped between 20 percent and 30 percent in relation to the Canadian dollar over the past two years.
As a result, the CCSB recently decided to cut spending by 20 percent for such items as church planting, orientation programs and ministry assistance. Salaries and benefits have not yet been affected.
"It's more just trying to control expenses," Bruce said. "If by the middle of next year it looks like the U.S dollar is going back up, we can put it back into our budget."
But, as Gerry Taillon, the convention’s national ministry leader, noted in his column in the convention’s Baptist Horizon, “Every indication at this point is that the Canadian dollar may continue to increase in value compared to the American dollar.”
Harold Campbell is a writer in Mitchell, S.D.
© 2004, BPnews.net
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