Temple Management in a Meltdown World
BY: JAHNAVA DEVI
Sep 27, CANADA (SUN) On May 1, 2008, the Sampradaya Sun ran its first Special Edition issue, focused on the Global Meltdown. In the feature article, we wrote:
"What were once conspiracy theories are now undisputable facts. The world is facing tremendously complex problems and few viable solutions are seen on the horizon. Greed, ignorance and corruption seem to be winning the battle."
Since that time, the global economy - cascading out from the United States - has deteriorated at a rapid pace. Even those few Sun readers who were critical last May of what they took to be an alarmist tone in our Global Meltdown edition must by now be convinced that the financial system is indeed imploding.
It's becoming clear, even to those lowest in the economic food chain, that not only America but the entire developed world is in dire financial straits. Granted, the impact will be felt most heavily by Americans, who are again at 'ground zero', but the evidence is now inarguable that the meltdown is having a serious impact throughout the world: in Europe, India, China, and elsewhere.
Many have shrugged off as "conspiracy theory" the idea that this economic crisis was intentionally created, but that evidence is now becoming a matter of public record, too. Basically, we are seeing a massive and orchestrated displacement of wealth in the world, as the long-struggling middle class is being forcibly merged with the lower class. From the Vedic construct, the imbalance in western society is obvious - the sudras have been given access to a tremendous amount of money (in the form of credit), and have been living at a level of opulence beyond the norm for their varna. Meanwhile the rich, many of whom are now being publicly exposed as demons, have attempted to circumvent Lord Krsna's perfect plan for the operation of society by stealing from the sudras rather than compassionately looking out for their well being.
Predictably, this foolishness is coming to a bad end. The financial world is now sitting on the precipice, waiting for news of a government bailout that it is hoped will fix what's broken. But in reality, what has broken cannot be easily fixed, and certainly not by a mere $700 Billion bailout.
For those interested in the economic dynamics, here's a recap of the Bailout pro's and con's:
If the Bailout succeeds:
- banks will get some temporary relief
- the dollar will tank, oil will rise, and gas prices will rise
- foreign capital will leave U.S. markets
- Treasuries will be sold as yields rise, and mortgage rates will go up
- the Fed will not be able to cut rates because of inflationary pressures
- the national debt will become an enormous problem
- income taxes will rise by at least 30%
- incomes will be further reduced
- fewer will be able to buy a house, further tanking the housing market
- banks will need another bailout, and another, and another
- the economy will weaken dramatically
If the Bailout fails:
- Treasury will remain the lender of last resort
- many financial institutions will fail
- credit will remain very tight
- panic bank runs will be likely across the country
- small businesses, unable to get loans, will shrink or fail
- large businesses, unable to fund with commercial paper, will shrink and fail
- only the most well-funded businesses will survive
- unemployment will rise dramatically
- economic activity will decrease dramatically
- the dollar will strengthen and commodities will stay low
- the FED will be able to lower rates
- job losses will severely damage the economy
Whether or not the Bailout occurs, the damage is done and the piper must now be paid. The best we can do as individuals is to get out of debt, save as much money as possible, and become self-sufficient in all the ways Srila Prabhupada instructed: "simple living, high thinking" is the order of the day.
How Can North American Temples Prepare?
While we are not financial planners or legal experts, common sense dictates that it would be prudent for ISKCON temple managers to explore the following lines of inquiry. (And for that matter, we hope our individual readers will find something of value here.) Again, while the meltdown dynamics are most relevant to North American temples, the impact will be felt around the globe. Temples in India are in a unique position, given the age-old history of their relationship with local communities, but temples in Europe and the rest of the world will likely experience a dynamic similar to the unfolding North American experience.
We will refrain from presenting the many sastric arguments in favour of judicious temple management, and how they jive with the fact that Krsna is the Supreme Controller. We know that Lord Krsna is not poor or hungry, and does not need our daily offerings of bhoga or opulent paraphernalia. At the same time, Srila Prabhupada was an exacting manager, always in favour of prudently managing temple resources so that the preaching, book distribution, Deity worship, and association of devotees could go on nicely. In that spirit, we humbly offer the following suggestions for the consideration of our temple managers.
First, it is now imperative that you consider every aspect of your temple's financial life. What have you come to count on or take for granted that might not be there in the months ahead, should the economy completely breakdown? We suggest that you develop a new 'filter' - scrutinize everything as if the old rules no longer apply. Begin to engage in a serious process of inquiry. Temple managers and involved congregational members should now be about the business of questioning everything. Operating in the right mood of inquiry, there is no question that should not be fairly asked - and answered - by temple managers.
If there was ever a time for full disclosure of the temple's managerial and financial matters, this is it. Problems that have been 'quietly managed' or sequestered away from the congregation in order to keep the peace now have the potential to become painful thorns in the heels of management. Disclosure is a great liberation, and congregational members will undoubtedly be moved to help fix whatever is broken, as the whole community sincerely focuses on how to help the temple steady itself for the hard winds about to blow.
The economic fundamentals are simple: how will your temple survive if income is significantly reduced, and/or expenses are greatly increased? Almost certainly, many congregational members who have been regularly supporting the temple will now be facing their own personal financial challenges. Expect temple revenues to decrease, probably proportionate to the degree your local economy degenerates.
Mortgages, loans and credit
Does your temple have a mortgage? If so, be extremely careful that you understand the fine print regarding adjustable interest rates, term re-sets, balloon payments, and consequences of late payment or default. Even a little lateness on a payment can have dire consequences these days. If the temple has any variable interest rate loans, get professional advice now on renegotiating them. The day may soon come when that window of opportunity will be closed.
Banks are fast losing their ability to be flexible. In fact, the evidence indicates that some lenders now see a benefit in encouraging mortgage defaults (i.e., in not helping you to find a solution when payment troubles arise). Some lenders have obviously concluded that by encouraging mortgage defaults (offering no 'wiggle room') and taking foreclosed properties back onto their books, they will benefit more by government handouts tied to the volume of their foreclosures than they would by simply helping you to avoid default on the loan. This is an important change in lender strategy.
If the temple property is mortgaged or there are outstanding loans, are your loan agreements contingent upon the ongoing financial stability of a cosigner? Given the fact that many individuals are now losing massive amounts of wealth in failed investments, you cannot rely on the strength of cosigners. Again, read the fine print of your loan agreements. Does the lender have a right to periodically review the financial stability of a cosigner? If upon review, that individual or entity is judged to be over-leveraged, the temple may be forced to renegotiate its collateral or terms. It's also possible that the lender will refuse to renegotiate, and simply force you into default.
On the other side of the equation, you should consider what might happen if the financial entity holding your mortgage or loan fails. Do you have in your possession all of the documents relative to your financial arrangements? If the bank closes its doors tomorrow, you may no longer have access to important documents in the possession of a trusted bank manager. Again, make no assumptions. All documents should be physically in the hands of temple management, and all verbal agreements should be committed to writing with the lender. When banks fail, the verbal promises made by bank employees mean little or nothing.
It is possible that a temple community might have acquired land for future temple development, and that terms exist in the land mortgage that require a certain performance on the part of the borrower. For example, a lender might include terms stating that within a specified period of time, certain improvements must be made on the land, or a second mortgage must have been closed for the actual temple building. If any such terms exist, but the temple is unable to get an additional mortgage, this could become grounds for default. It is not simply a matter of the borrower being credit-worthy -- the lenders themselves may not be liquid enough to grant new credit in the future. In fact, this dynamic is already well underway as the credit markets freeze-up.
Should land have already been purchased and the hoped-for second mortgage is not forthcoming for building a new temple, then temple managers must also consider how they will make mortgage payments on the land in the event a temple isn't constructed. In other words, if the budget relies upon the expectation of a new temple, full of congregants making donations, the plan could fail.
Aside from mortgages and loan agreements, is the temple engaged in any other contractual relationships? For example, are there performance contracts that require a certain level of activity or revenue in order to be in compliance with the terms? In the case of rural communities, are there requirements or budgetary assumptions based on a certain level of agricultural production? It's possible that rural projects will run out of money to engage in production that generates income the temple relies upon to meet its obligations. Similarly, is temple land being leased to a third party, and is the temple relying upon a revenue share from cash crops? If the farmer can no longer afford to farm (i.e., can't get the credit to buy seeds and operate), that revenue stream could quickly disappear.
What position is the temple in with respect to its checking and savings accounts? What's your risk, should the bank fail? Are you assuming that you're covered by the FDIC for deposits up to $100,000? That could be a very bad assumption. As many account holders in failed banks are now painfully learning, just because you have less than $100k in your account, there's no guarantee that your account is covered by FDIC insurance. Just a few days ago, for example, I helped my father do a careful study of his retirement account agreements. He'd never bothered to read all that fine print, and just assumed he was covered by FDIC for up to $100,000 on his savings account. As it turns out, we discovered that the particular 'flavor' of savings account he'd opened up was not FDIC insured. They never mentioned it, and he never asked.
In fact, the protection and certainty of FDIC insurance is now an illusion. With the failure of the IndyMac bank, a large percentage of FDIC money was expended to cover depositors. With the crash this week of Washington Mutual, the FDIC's insurance fund is now essentially fully depleted. They have no more money to cover the depositors they have supposedly "guaranteed" with $100k insurance. It's now understood that all along, the insurance money paid into the FDIC fund by member banks has not been set-aside for FDIC use on a rainy day. It has simply been poured into the government coffers, along with all the general funds. The FDIC will now have to go begging a loan from the taxpayers in order to cover the depositors of Washington Mutual. Given that the U.S. Treasury is now insolvent, there is no certainty that these funds will be forthcoming. In short, do not rely on the expectation that temple funds held on deposit in a U.S. financial institution are safe and sound. If you'd like to know how safe your bank is, visit BankRate.com.
Aside from protecting deposits, temple managers should consider the pro's and con's of pre-paying certain bills. For example, the temple may enjoy significant discounts by pre-paying its mortgage, taxes, insurance premiums, and even utility bills. Property taxes, in particular, may be a good candidate for pre-payment. Defaulting on property taxes can quickly result in the loss of property. Taxes are pre-paid to the government, so there's less worry about them defaulting as a receiving vendor.
The big question is, what are the long-term benefits of making such pre-payments? On one hand, if operating cash becomes tight in the future but the temple has pre-paid its mission critical bills, there will be less anxiety for managers and congregants. Pre-payments can also be a good hedge against inflation. If the value of currency continues to decline (which it most likely will), you could be paying future debts with "cheap money". In hyper-inflationary environments like the Weimer Republic or Argentina, which many analysts believe the U.S. is now headed for, money could be devalued to the point where you need a wheelbarrow full of currency to pay your electric bill. Of course, by pre-paying certain vendors, you're also vulnerable to their imploding and taking the temple's money down with them.
Overall, this financial strategy is a matter for discussion with a qualified professional. Temple managers should be meeting with a chartered accountant to review all aspects of their current financial picture. This review should not be postponed. Rule of thumb: if you sit down right now with your financial planning professional and s/he's not pale-faced and in anxiety about the state of affairs - if they're happy, light-hearted and cheery - go get yourself a more qualified professional. Anyone who is not deadly concerned about the economic situation right now is not paying attention or is incapable of understanding the severity of circumstance.
Temple managers should also assess whether or not there are any potential legal difficulties or claims on the horizon. If your temple corporation has any open problems or issues with your 501(c)3 or society status, get them cleared up now. It is possible that the government will crackdown on tax-exempt institutions in the future, because they're going to have dire need to increase tax revenues. If your temple's tax-exempt status is now vulnerable, all efforts should be made to put it back on solid footing.
With respect to insurance coverage against claims, at this point you can't count on your insurance company being there to cover you. If the temple is sued, and your liability insurance company fails, you will essentially be uninsured. If there are potentially serious claims in the offing, temple managers should consider getting them handled and settled now rather than risk future claims that insurance may or may not cover. And keep in mind that as the economy disintegrates, more desperate people will be likely to look for creative ways to litigate and make money.
Does your temple have an established relationship with a good lawyer? If not, you cannot assume that in the future, good lawyers will be readily available. Given the massive number of lawsuits emerging from the implosion of the financial system, lawyers are extremely busy these days. If you have reason to believe that your temple might need a lawyer for a serious matter in the year ahead, it would be prudent to develop that relationship now, not later. Putting down a small retainer and getting a letter of engagement now might help you to ensure access to a good lawyer when you need one.
Should we experience a full meltdown of the economy, there are many ways in which a temple community could have difficulties in the area of staffing. For example, does your temple rely heavily on a long-distance GBC, Temple President or key manager? Are you prepared in the event that person can no longer afford to fly-in and manage temple affairs? Without getting into all the problematic dynamics ISKCON faces in this department, suffice to say it will now be more important than ever for temple managers to be local and available. As the cost of gas rises, airlines will increasingly raise fares, and we can expect it to become cost prohibitive for leaders to frequent-fly around the globe to manage temple affairs. Local temple communities should explore these issues now, not later, when there's a problem. What are the issues, dynamics and power struggles your community will face if management suddenly has to be taken over by local representatives?
Does your temple have devotees "on staff", who are paid for their services? If temple revenues drop, will they stay on and work without pay? If not, who's available and qualified to take over their duties? If your temple is employing devotees, are you vulnerable to being hit with costs for unemployment or severance benefits, or other claims that may result if the temple can't afford to stay in compliance with the terms of employment agreements?
Do you have temple staff on temporary visas, who need to periodically fly in and out of the country in order to maintain their status? That may no longer be affordable. They might fly home and not be able to afford to come back, or restrictions on travel could make it impossible for them to re-enter. Are you prepared to replace them? Does your temple rely on the service of devotees who are illegal aliens? If the event of serious social unrest, local authorities may very well come knocking on the temple door, looking for anyone who doesn't have proper identification and papers.
Temple infrastructure and services
As the economy crumbles and temple revenues are affected, the costs of maintaining infrastructure may become even more difficult to manage. Maintenance projects and upgrades that have been put off for a "sunny day" may become increasingly difficult to accomplish. Now would be a very good time to put extra efforts into temple fundraising campaigns, to take care of needed maintenance and improvements.
As area residents face their own increasingly difficult financial circumstances, they will be likely to rely on the temple community more for support. This could tax facilities and systems beyond current levels, making the need for maintenance, repairs and upgrades that much greater. It is also possible that your beleaguered local government will look for ways to increase revenues. One of the ways this is classically done during 'hard times' is to put new rules in place, increase manpower to enforce them, and collect the fines that result from widespread non-compliance. Property owners should be prepared for increasing pressure from local bylaws authorities and the like, who may issue fines and citations for property maintenance that is not handled (e.g., broken sidewalk cement, dead tree removal, etc.) Such repairs may be increasingly difficult to accomplish if the cost of materials goes sky high.
Likewise, it is no doubt going to get increasingly expensive to import goods, as shipping costs rise in response to rising gas prices. You can save a lot of money by stocking up on items that will be expensive to ship in the future. Likewise, you can save by postponing certain local purchases. Rather than buying a new sankirtana van today, on credit, you will most certainly be able to buy it at greatly reduced prices in the months ahead. By having adequate cash on hand, your temple will be able to take advantage of many 'fire sale' buying opportunities in the years ahead.
As times get tougher, not only will the local devotees and congregational members put increasing stress on temple resources, you will also have to deal with the likelihood of the general population coming to the temple for help. Because the devotees have become so well known over the years for prasadam distribution, ISKCON temples are likely to become magnets for hungry people and those with no roof over their heads. Does your temple have a plan in place to deal with this eventuality?
ISKCON has temples in a number of densely populated urban areas that will be significantly vulnerable to economic failure: Boston, New York, Philadelphia, Towaco, Atlanta, Miami, Chicago, Denver, Dallas, Houston, Seattle, San Francisco, Los Angeles, San Diego - all these cities are already experiencing an overload of new demands on social services.
Temples who feel they may be vulnerable to being overrun by more hungry people then they can manage on the premises might consider the following: make an effort now to reorganize prasadam distribution and FFL programs. Chose a public venue that is a reasonable distance from the temple grounds. If necessary, partner up with another social support organization who has a visible storefront or location. Do enough promotion now so that the new location is very visible and fresh in the minds of the local population. By doing so, it will be more likely that under dire circumstances, the temple grounds won't be swamped by crowds. There is little point in over-stressing the temple's physical resources in this regards. Temple kitchen staff will be less effective in producing mass quantities of prasadam for distribution if at the same time, there is chaos on the property because masses of people are coming onsite.
Security on the temple grounds is another matter of increasing importance. In dense urban areas, particularly in low-income neighborhoods, temple buildings should be adequately secured against break-in. Obviously, the Deities must be given proper protection from rascals and thieves. One of the fastest growing industry segments right now is the security business, and secure gates, alarm systems, etc. will only go up in price from here on in.
Supporting the devotees and preaching
As the economy implodes, ISKCON temples will not only have to deal with the increasing number of local citizens who come to them for food and shelter, they will also have to deal with what is likely to be an increasing flow of devotees who need assistance. Temple managers: would you rather be about the business of making plans and gathering provisions now to accommodate the devotees in need, or would you prefer to procrastinate, and find yourself in the untenable position of having to turn away devotee families who come to the temple for shelter?
Without a doubt, we are headed into a time of great change and upheaval. There will be a tremendous need for Krsna conscious preachers to be facilitated in their work. ISKCON should now be training up and deploying thousands of new 'street preachers'. It will only become more difficult to facilitate preaching as financial resources grow more scarce.
Now is an excellent time to increase your local temple fund-raising efforts to buy Srila Prabhupada's books in great quantity. Buy them now, and get them shipped and secured on-site, because we are heading into a time when millions of people will need them. As the anxiety and suffering increases, so will the opportunities increase for the fallen conditioned souls to make contact with the Absolute Truth, by the mercy of the Sampradaya Acarya, His Divine Grace A.C. Bhaktivedanta Swami Srila Prabhupada. No temple should allow themselves to be in a position where large numbers of the local citizens are suffering and the preachers are not able to hit the streets, distributing Lord Caitanya's mercy in the Form of Srila Prabhupada's books and prasadam. This would be a disaster far greater than any economic meltdown.
In our opinion, ISKCON should begin an immediate campaign - a maha-marathon of fund-raising for the explicit purpose of buying books and training and facilitating devotees to distribute them and preach on the streets. This is an unparalleled opportunity to advance the cause of the glorious Sankirtana Movement, and to revive it here in North America. How can we justify not putting serious effort into preparing?