LCMS Convention Workbook St. Louis, Missouri — 2007, Page 75

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SYNOD REPORTS 75

Goal 5: Expand donor relationships in both numbers and levels
of commitment.

Goal 6: Establish and maintain a clear and consistent level of
accountability in gift planning, charitable gift adminis-
tration, and ministry resource development.

Goal 7: Provide competitive investment returns and services.

The Foundation’s annual Ministry Report with supplemental in-
formation, updated financials, and distributions appears on the
Foundation’s Web site at www.lcmsfoundation.org. The Founda-
tion’s audited financial statements are available upon request.

As it enters the next triennium, the Foundation rejoices in the
enormous blessings of the past and looks forward confidently by
God’s grace to the future. With the hymn writer we exclaim: “Our
God, our help in ages past, our hope for years to come!”

Thomas K. Ries, President

R4-02

Lutheran Church Extension
Fund (LCEF) 2004—2007

“One Message: Christ ... His Love Is Here for You”
LCEF Mission Statement (newly approved in 2006)

“To support the Church in fulfilling its mission of sharing the
Gospel of Jesus Christ by being a Christ-centered servant partner of
the LCMS, ensuring that funds and services are available now and in
the future.”

The Lord has continued to bless LCEF during the triennium
from 2004-2007. A few financial and ministry items should make
this point: (Please note all financial data is as of December 31,
2006, unless otherwise identified.)

1. Total assets for LCEF grew to $1.5 billion in July 2006 and
exceeded $1.6 billion in January 2007.

2. Net assets have grown to $171 million. The capital to asset
ratio is 11.53 percent.

3. The loan portfolio exceeds $1.275 billion, and added to that are
the guarantees, where LCEF helps organizations to receive tax-
exempt funds. These two amounts combined reflect the amount
of money at work for the church providing space and place for
ministry . . . $1.327 billion.

4. Reflecting a commitment to provide the lowest cost of funds
possible, and in conjunction with the phasing out of the rebate
program, LCEF lowered the loan rate for congregations by 1/8
(0.125 percent) in January 2007. In total, LCEF has lowered
the margin/interest rate paid by congregations 5/8 percent
(0.625 percent) since 1999,

5. LCEF’s obligation to investors has grown, with an investor
payable portfolio of $1.368 billion. The number of investors is
approximately 72,000. The largest single investor product is
the StewardAccount®, with $207 million invested.

6. LCEF consolidated all of its ministry services into one depart-
ment in 2006 in order to provide more customer-focused
efforts and improved service at competitive fees.

Additional discussion:

Loans and Real Estate

During this triennium, LCEF conducted a rostered church
worker (RCW) housing loan promotion to better serve these work-
ers. The response was superb, and more than 1,000 RCWs now
have loans with LCEF. In addition, in October 2006, LCEF began
offering a new product, the RCW home equity loan, to help church
workers make better use of their assets to the benefit of their fami-
lies. LCEF also continues to participate in the research and analy-
sis of steps that can be taken to improve the financial well-being
of many of the rostered church workers of the LCMS. President

Kieschnick appointed the Commission on Ministerial] Growth and
Support (CMGS) to lead this effort. LCEF continues to assist
CMGS in many ways and encourages all districts to develop an
RCW indebtedness assistance program.

In a similar manner, LCEF is participating in the research to
identify the LCMS school enrollment problems that have appeared
in K-8 schools over the past five years. Research will be com-
pleted during the next year with an action plan following shortly.

Organizational loan demand was strong during the triennium
with more than $800 million in new loan approvals in three years.
The portfolio reflects LCEF’s priorities, with 76 percent of all loans
in the congregation category. Rostered church workers now ac-
count for more than 8 percent of the portfolio loan dollars.

Little activity during the period has been recorded in the inter-
national loan program, with only one loan to the LCMS partner
church in Kenya for a new headquarters building.

In ministry terms, the great news was the creation of the Mis-
sion Site Loan Fund, the fund created when LCEF committed $11
million at a net cost of 1 percent in order to support the Ablaze! ini-
tiative and encourage the planting of new missions. In a related
area, LCEF approved recognized service organization (RSO) status
for Church Development Partners (CDP). This relatively new or-
ganization’s purpose is to provide real estate consulting and assis-
tance to allow congregations and or districts to participate in real
estate development activities leading to the planting of new mis-
sions of the LCMS. Early results are very encouraging. It is antic-
ipated that in most cases, the new ministry will receive a no-cost or
low-cost site to plant and develop its ministry. As of this writing,
CDP has ten projects under development with an additional nine
in the early stages of consideration.

As mentioned above, LCEF continues to seek avenues to lower
the cost of funds for loans so that less is spent by LCMS congrega-
tions on debt service and more can be spent on ministry. To that
end, LCEF has assisted high schools and RSOs to gain tax-exempt
funding through the Missouri Health and Education Financing Au-
thority (MOHEFA) and the Colorado Education and Cultural Fi-
nancing Authority (CECFA) during this period. LCEF will be able
to assist K-8 schools in accessing these lower cost funds through
CECFA in March 2007.

Investors and Their Investments

Two promotions were accomplished in the period, each oriented
on growing funds available for lending and restoring the investor
base to a level above 70,000. The reader is reminded that the
LCMS and LCEF investors are an aging population, and as a re-
sult, the number of investors decreases each month at a rate greater
than new investors. Promotions are LCEF’s marketing strategy for
reversing that trend. The two promotions raised $200 million in
new funds and more than 4,300 new investors. As a result, LCEF is
positioned to meet loan demand for the next 12-18 months.

LCEF is offering a new investment product called a health sav-
ings account (HSA). The HSA is a companion to the recently cre-
ated high-deductible health plan (HDHP). The new product, an
HDHP with an HSA, was specifically developed by the Federal
Government and the healthcare community as a response to rising
healthcare costs. In essence, an insured individual and/or family
has catastrophic coverage and pays expenses out of their HSA until
a specific expense limit is reached. The lower premium charges re-
sult in significant dollars being available to place in the HSA until
such time as the funds are needed for medical costs or until retire-
ment. At retirement, the funds are treated similar to an IRA. Ac-
cording to industry statistics, during the first three years of the new
program, more than 50 percent of the insureds had a carryover from
one year to the next.

2007 Convention Workbook