In Trust's editor, Jay Blossom, recently spoke with the Very Rev. Martha J. Horne, dean-president of Virginia Theological Seminary, and Mary L. Hix, the school's vice president for administration and finance. He asked them to describe the seminary's financial picture.
Mary Hix, vice president for administration and finance: The first word that comes to my mind is that they are complicated. We are a very complex organization. We are blessed with resources in the form of our physical plant, our endowment, and our people. And we have a great legacy of stewardship.
What's so complex about your financial picture?
Hix: We're so very dependent upon endowment income and our trust and estate income. And that automatically is a blocking point for many people who are accustomed to thinking of educational institutions, and most other seminaries, in terms of tuition revenues. Any time you start talking about restricted funds, people automatically feel like there is a veil of secrecy or a veil of mystery. So it is very difficult to adequately explain our finances or our total fiscal situation to other people.
|Mary L. Hix
Does that make it a challenge for the annual fund?
Hix: Yes, that's exactly where I was headed.
Martha Horne, dean-president: It's something that we hear constantly from individuals and from congregations. The Episcopal church does not give any financial support to its theological seminaries. We're the only mainline denomination where the national church does not financially support its seminaries. So, we count on gifts not only from individuals but from congregations.
We try to make the case [to donors] partly by saying that we're good stewards but also by saying that there are needs throughout the church, and the church is increasingly turning to us, and other theological schools, to help meet those needs.
Can you give me an example of a program that you're talking about?
Horne: Sure, let me give you a couple. We started this year a new D. Min. track for people who are serving in Episcopal schools -- headmasters, chaplains -- because schools are the most rapidly growing part of the Episcopal church and a lot of rectors of parishes find themselves with schools and don't have any experience in working with them. And increasingly many heads of schools are coming to those positions through the educational ranks but without any theological education. So we've been working with the National Association of Episcopal Schools and we've developed a D.Min. program for folks in schools.
With the help of two Lilly grants, we're just coming near the end of a program that's been sort of a pilot project for helping newly ordained clergy in their first three years. That has been a significant success.
|Class of 2005 at Virginia Theological Seminary
We're starting a new program this summer -- and this is a very ecumenical program -- for clergy in congregations with an average Sunday attendance of under 100. Clergy who've been ordained for seven, eight to 12 years.
I would say also our scholarships are a huge thing we try to emphasize. We have a residential program here. We require students to be full-time for at least two of three years in the M. Div. program. And we are able, for the most part, to provide enough scholarship assistance so that students don't incur educational debt while they're here.
Can you say a little bit about the role of the administration, versus the role of the board, in this area of finances?
Horne: One of the things Mary's been doing in recent years that has been very, very helpful is in the orientation of new trustees -- to walk them through the complicated financial picture and to help them to begin -- as they come on -- to get on board, to get an understanding of the way the finances work here.
To take an issue like the budget -- the preparation of the budget is really done by Mary (in consultation with all the department heads and the business office staff) and presented to the finance committee. The finance committee reviews it, asks questions, sets parameters -- such as spending rate, spending policy -- and then the finance committee makes recommendations to the full board about adoption of the budget.
It used to be that the financial advisors reported to the finance committee. Now we are creating an independent investment committee.
|Virginia Theological Seminary students celebrate Cinco de Mayo.
When the market took a dive five years ago, that must have affected your finances, even with a balanced portfolio.
Horne: The short answer is yes, it did affect us, both the board and administratively. It was a combined effort to try to address realities of those few years when the income was down.
Hix: We were not as heavily invested in tech as many places were. Our conservative portfolio helped us buffer the market. Clearly that is an issue -- my recollection is that it was very much on the board's mind because it was getting so much front-page press.
But we did have a conservative portfolio and, at the time, we had about a 4.5 spending draw. One of the things that we had to do was increase that to 4.6, 4.7, 4.8. Now, we never got over 4.8, so many people would say that we were still in a very good position.
|Class of 2005 D.Min. graduates at Virginia Theological Seminary (ALL PHOTOS BY ALEXANDRA DORR, VIRGINIA THEOLOGICAL SEMINARY)
Do you see any pitfalls in having the sound financial situation that you have?
Horne: In my mind, the major danger is complacency. We've tried very hard these past few years to listen attentively and carefully to different voices in the church about what the needs are, but it would be possible, I suppose, not to listen so carefully if we could continue to do what we've been doing.
If you left Virginia Seminary tomorrow and went to a small, struggling school, what would you do to implement good financial systems there?
Horne: I hesitate to say what I'm about to say because it sounds — I'm afraid it may sound out of touch with the struggles of schools. But Mary said at the very beginning that one of the things that we've been blessed by has been good management. I would say that generations and generations made it a point to operate financially within the means of the seminary. I think if I were going to another seminary one of the things I would want to do — and I realize this is much easier said than done — is to put into place some of the kinds of discipline that trustees here have put in place for so many years — about spending, about not borrowing, fiscal restraint.
Hix: I'm going to risk using a little M.B.A. talk for a moment. I think a lot here about what I was taught in graduate school — core competencies. What are we able to do that is within our mission, that we have the means to do, and that we can make a contribution by doing? My sense is that those questions can be asked anywhere. You know, much is expected of Virginia Theological Seminary because we have a great gift, great resources. But we have to keep asking those questions: What can we do best? What should we be doing? And I think the startup institution or the struggling institution asks itself the same kinds of questions — Where do we put our energies, given what is true?
Stewardship over 175 years doesn't sound very entrepreneurial.
Horne: I think we can be entrepreneurial about some things. I would say that we're not entrepreneurial in the financial sense of leveraging funds, but I think programmatically we can be.
I just think there are fundamental differences between startup institutions that really have to launch themselves — we're in a much more developed place. Again, I think the danger in that is becoming complacent. I think the advantage of that is you really can develop programmatically — excellent programs that support the needs of the church.
(Click image for larger view of the annotated VTS Statement of Financial Position.)