Each year, the North American Mission Board releases its annual Ministry Report, which elucidates more transparency than other SBC entities into their activities though not without reasons for scrutiny. The story of NAMB’s FY2022 ministry report was that they reported $60 million less in assets, mostly driven by stock market declines. FY2023 would be a year of financial stabilization for NAMB as it recovered from its abysmal hemorrhaging in FY2022, but that is not entirely the case.
Church Plants and Missions
In its report, NAMB is surprisingly very introspective on the first page of its report, something that was not seen in the prior years in that they acknowledged decline.
Baptisms among Southern Baptist churches have been steadily declining since 2000 as the rising tide of secularism makes evangelism more challenging. Christians across the varied denominational spectrum have encountered similar challenges in recent decades. Though baptisms have been on an upswing following the historic lows that resulted from the pandemic in 2020, Southern Baptists still have a long way to go to reverse the downward trend seen in the last 20 years.
Too often, the SBC has attempted to celebrate the post-Covid rebound in baptisms or church attendance while downplaying that they are but a rebound back towards a declining trendline, so this is a positive note in opening their report, even if it is a precursor to promotions of their ongoing evangelistic activities devised to remedy this decline, which is of questionable impact.
In 2023, Southern Baptists added 840 new congregations: 652 new church plants, which includes 44 replants, 122 existing churches that decided to affiliate with the SBC and 66 new church campuses.
It should be noted that while they claim to have added 840 congregations, it is unclear whether they are all SBC churches. Furthermore Lifeway, via their Annual Church Profile, claimed that overall SBC churches fell by 292 in 2023.
Per the Baptist Press, “Of the church plants, 61 percent identified as non-Anglo (or majority-minority ethnic/multiethnic).” Non-Anglo is an anti-white term to label all whites as Anglo-Saxton, which is the equivalent of labeling all Asians as Chinese or Hispanics as Mexicans. NAMB is transparent in its minority outreach push, which is a driving factor behind their support for egalitarianism during the annual convention and the opposition to the Mike Law Amendment.
Balance Sheet Stabilization
Because FY2022 was detrimental to NAMB, FY 2023 saw balance sheet stabilization which would likely persist into FY2024 as the stock market improved after the conclusion of the fiscal year.
Their balance sheet shows that though they reported a decline of $63 million, despite improvements in the markets during FY2023, their investment balance has declined by about $28.7 million. This is because they must liquidate their investments to sustain their operations. Essentially, they either receive dividends (cash) or they must rotate their portfolio—that is buying and selling, as they draw from these investments to finance their operations. Overall, their total assets remains slightly less than their FY2022, which was substantially reduced from FY2021. This would denote stability in operations, yet not without vulnerability.
Too Big to Fail?
NAMB is often thought of within SBC circles as a behemoth, yet because of their bloat, they are not as financially solvent as appearances might suggest. This is because they rely heavily upon investments to sustain their operations. While this would include expenses like those pertaining to retirement, they are dependent upon these investments to support their non-missions-related expenses.
The Cash Flow chart tells the story of how the money flowed in and out of the organization.
From their Cash Flow, they sold $79.7 million in investment assets (i.e. stocks) during this period, reinvesting only about a third back into their investment portfolio. Essentially, they needed to fill a $31.4 million gap created by their negative operating cash flow, up nearly double YOY.
Though NAMB is a nonprofit, based on its operations, it would have been operating at a net deficit of $50 million in FY22, which required it to liquidate assets, mostly stocks, to sustain operations. Though they operated at a “loss” they are sustained by positive cash flows, which is not uncommon since expenses like depreciation are non-cash. NAMB is truthful in its claim that 100% of the Annie Armstrong offering goes towards missions, as it falls short of the expenditures they report for Church Planting.
The declines in Cooperative Program (-3.79%) and Unrestricted Revenues (-3.62%) are minuscule in gross dollars while the Annie Armstrong Easter Offering (+0.64%) remained steady for 2023. The YOY decreases in Unrestricted Gifts and Cooperative Program contributions could be due to headline risks that have dissuaded donations to SBC entities, which would suggest that the efforts of SBC dissidents like the Center for Baptist Leadership can have an impact on NAMB receipts.
It should be noted that Restricted Gifts for 2022 included contributions pertaining to the Ukraine War processed through SEND Relief. This is reflected in the decline of nearly $10 million in Contributions, but NAMB does divide out restricted and unrestricted, with the former category suffering the larger decline due to lack of revenue-generating geopolitical events in FY2023. Overall unrestricted donations directly received by NAMB were down about $278K. The majority of what is listed as a Contribution is restricted. Their FY2024 reports will probably reflect increased restricted donations pertaining to Israel following the events of October 7th.
Their administrative expenses have increased by $8 million YOY, which is not tied to one specific area. This denotes that their overall operations are getting more expensive to manage, perhaps due to inflation, but perhaps due to bloat. Their 2023 report discussed new projects like Evangelism Retreats, Evangelism Tool Kits, and an emphasis on chaplains. The former, though it might have an upfront cost for participants, would likely at best be a break-even project. Many projects that are not directly related to church planting could be unnecessary bloat.
It was predicted from their FY2022 report that they would show massive improvements in their portfolio since the markets had improved, but this was not evident.
During the fiscal year, the S&P 500 returned roughly 20%, so despite positive market conditions, their stock portfolio shrank because they utilized these investments towards normal operations. Not only is NAMB subject to stock market risks, their portfolio requires sustained aggressive returns to account for their $176 million in expenses. Another bearish market, similar to that of FY2022, would be catastrophic for their balance sheet as it would take their investment portfolio dangerously close to their retirement obligations. The market cannot outpace their need to draw down their portfolio if support from the Cooperative Program or Annie Armstrong remains stagnant.
Bank of NAMB
Although FY2022 saw an overall reduction in NAMB’s banking operations as their book of loans shrank for the year, FY2023 saw an increase in their loan portfolio to $77 million, which exceeds their FY2021 levels.
The biggest increase comes from loans between $1-2 million, which now became the largest percent of their portfolio at 33%, up from 25%. So while they netted 2 more loans YOY, the bulk of the net new loans are being issued at higher tiers.
Arizona remains the top recipient while Pennsylvania and Michigan join the ranks in topping 5%. The distribution of NAMB loans is slightly less geographically concentrated than in prior years.
The problem with NAMB operating as a bank is not that they assist churches in financing their infrastructure, but that they charge interest, which Scripture routinely condemns. Tithes should not be paying usury to fellow Christian entities. Even though they claim the interest benefits missions, $3.6 million in interest revenue is an insignificant amount towards their overall operations while representing a massive expense at the local church level. Interest payments hinder the ability of the churches to pay down their debts faster, which adversely affects their ability to do other works for the Kingdom. More good towards missions would be accomplished by NAMB offering zero interest loans than through usury.
Conclusions
NAMB is increasingly yoking itself to the financial markets to sustain its massive budget, which is more than utilizing the stock market as a rainy-day fund or retirement program, but an essential facet of its operations. Though FY2023 should have seen rather strong returns aligned with the S&P 500’s above-average 20% gain, their portfolio shrank because they drained their investments to fund operations. One awful year in the markets requires several subsequent years to recover, so they are reliant upon a strong financial market with sustained positive years, or they will hemorrhage significant cash.
This dependency indicates that they are either feeling the impact of inflation upon operations or there is creeping bloat within their expenditures, though these are not mutually exclusive. Southern Baptist should be looking at ways to reduce risk and improve efficiency with regards to how this money is being spent, especially outside of relief and church planting activities.
The North American Mission Board suffered a sustained wound in FY2022, and it will take years for them to recover. They are not too big to fail, but rather, quite the opposite.
