The Only Safe Financial Policy by W. T. Knox

Review and Herald Publishing Association · Takoma Park Station, Washington, D. C. · Mar 6, 1913

The Only Safe Financial Policy

By W. T. Knox

The following instruction has been given to the leaders of this people:—

The Lord would not be gratified by your placing a yoke of debt upon the General Conference. In a special manner he has wrought to break from the necks of his people the binding yokes of debt which they have worn so long. The conference must not again tread the same path they have trodden.

In another communication this emphatic warning is given:—

By working on wrong plans, men have brought debt upon the cause. Let not this be repeated. Let those at the head of the work move carefully, refusing to bury the cause of God in debt. Let no one move recklessly, heedlessly, thinking, without knowing, that all is well.

The General Conference, acting upon this instruction, in 1902 enunciated a financial policy in keeping therewith, and reaffirmed and somewhat enlarged it at the fall council of 1912. It is as follows:—

Whereas, The work of carrying on the third angel’s message is rapidly enlarging and extending into new fields; and,—

Whereas, Unless careful management be given to the operations in extending the message, large debts will be contracted; therefore,—

We recommend, That all evangelical and missionary enterprises carried on in the name of the denomination, or under the denomination’s support, be conducted on a strictly cash basis.

Whereas, Most of our corporations and institutions are carrying large liabilities; therefore,—

We recommend, That said corporations and institutions be requested to give special attention to the rapid liquidation of their obligations.

We further recommend,—

1. That the General Conference or Mission Board from this day shall not be held financially responsible for any obligations which they have not assumed by their own action.

2. That the foregoing be the general policy of the union and State conferences and other organizations and institutions of the denomination.

3. That all parties undertaking local enterprises such as institutions, church buildings, and other undertakings in this country, secure their means in their respective local territories, and not by general call for means, unless previously arranged.

To this action we recommend that the following counsel be added:—

Whereas, Investigation shows that our present indebtedness has, to a large extent, been created by the starting of enterprises, and the erection of buildings by individuals, boards, and committees, without due counsel with the people upon whom such obligations fall; and,—

Whereas, This indebtedness is steadily growing larger because of the failure of various enterprises and institutions to meet operating expenses; therefore,—

We urge, 1. That when any local conference committee proposes to start an important financial enterprise, erect or purchase an institutional building, or make any large addition to either the buildings or equipment already provided, it shall first secure the authority of the people who are to furnish the funds; and further, that it shall obtain the approval of the union conference committee having general supervision of said local conference.

2. That when such authority and approval have been obtained, the local conference shall raise the funds required to meet the proposed expense, so that no additional debt shall be created.

3. That any union conference committee desiring to launch any large financial enterprise, erect a building, or take over an institution, shall, before doing so, secure the vote of the union conference in session, or of its several local conferences in session; and also obtain the counsel of the General Conference Committee.

4. That having been duly authorized to make such expenditure, the committee shall proceed to raise the amount necessary to finance the enterprise so that no debt shall be incurred.

5. That we earnestly counsel all committees and boards in charge of enterprises and institutions already established and carrying heavy financial obligations to maintain the most rigid economy consistent with the purpose and welfare of said enterprise.

6. That our people be requested to loan to the institution without interest as far as they can do so, and that those who need interest make it as low as consistent with their needs.

7. That continuous and earnest efforts be made to secure donations to pay off liabilities.

8. That well-planned efforts be carried forward with relief books to raise funds.

9. That the financial condition of each institution be kept before its staff of workers, that they may be stimulated to aid in every possible way to remove the financial burden.

10. That an appeal be made to our people everywhere to stand by conference committees and institutional boards in their efforts to carry out these recommendations.

The safety of the denomination lies in our making this policy our practise. A resolution that involves no more than that we shall no longer conduct our institutional work by borrowing money, will not suffice to meet the General Conference policy, nor the denomination’s present financial condition, although it would be a step in the right direction, and a great improvement on our past practises. But the present situation calls for provision to liquidate the existing indebtedness resting on any institution. It seems to the writer that now the only reasonable thing to do is for each conference or group of conferences served by any institution that is in debt, to formulate some practical plan for raising funds for the payment of the indebtedness, a plan that will be acceptable to all, and begin at once to execute the same. It may require years to accomplish it, but if so, then it is high time that we were at it. It may not be a pleasant task, for in most instances, these debts are legacies handed down to us by our predecessors, but they must be cared for.

When our people see and believe that as leaders we have finally and completely turned away from a debt-making policy, and will not again enter upon the same, they will surely rally to our support, and help us with their means.

Much can be accomplished in this particular by entering into annuity contracts at reasonable rates with our brethren, these to take the place of our interest-bearing notes. Many legacies can be obtained when the people’s sympathy is enlisted in our effort. Help can also be obtained by securing loans without interest, or at low rates, to tide over the first years of our efforts. Much can be accomplished also by relief campaigns with books devoted to this purpose, and without doubt, as the work broadens, much help will come to us in donations, for the people are heartily tired of our present condition, and if they can see a reasonable prospect to correct it, they will help liberally with their means.

With the inauguration of these plans to provide for existing indebtedness, there must, however, be a well-settled policy that no further debts shall be created in operating. Each institution should be expected at the close of the year to render a report that would not show debt created in operating, and if careful study shows that any institution can not be expected to operate within its legitimate income, provision should be made to meet the prospective deficit by other agencies, and so avoid increased indebtedness.

Earnest and untiring effort should be put forth to accomplish this, but if this can not be done, what then? The instruction given by the spirit of prophecy leaves no room for doubt. “Shun debt as you would the leprosy.” “Refuse to bury the cause of God in debt.” “The conference must not again tread the same path that they have trodden” (speaking of creating debt). To follow this instruction will certainly result in discontinuing such an institution. Some will, without doubt, object that to close up or abandon one of the Lord’s agencies would be to bring reproach upon his cause and to suffer defeat at the hands of the enemy. But it appears to the writer that it is far better to take even this drastic step than to go on blindly, year after year, increasing the indebtedness, with no tangible plan to change this condition, against which we are so definitely warned by the spirit of prophecy.

Careful search should be made to find any leaks that are draining the resources and causing the loss. Earnest study should be given to the matter of strengthening the institution in every way, and to the establishment of an economical and efficient management and service, and no effort should be left untried that promises to bring relief; but when all this is done, and the institution still continues to run behind and increase its indebtedness, there seems but one course left to pursue, and that is to discontinue it. The writer believes, however, that cases that call for this extreme action will be very few, if any, if the brethren connected with the institutions and responsible for their operations, will give their cases the careful study and thought called for. W. T. Knox.