The final report on the financial impact of disaffiliation on the Michigan Conference highlights the creation of the $2.8 million Ministry Innovation Fund that will support future ministries.

JAMES DEATON
Content Editor

The Michigan Conference recently published the final report on the impact of disaffiliation on the conference. A previous article summarized key statistics related to church affiliation, membership, and worship attendance. The report shows that almost 84% of churches in Michigan are committed to remaining United Methodist.

This article gives an overview of the financial impact of disaffiliation on the conference and where dollars received from disaffiliated churches are being allocated. It also highlights the creation of specific funds to bolster United Methodist ministry in Michigan, including the $2.8 million Ministry Innovation Fund that will support new and vital ministries for years to come.

Following the 2019 Special Session of General Conference, churches could disaffiliate from The United Methodist Church and keep their property after fulfilling specific requirements and financial obligations. The Michigan Conference Board of Trustees established the exact terms and conditions of disaffiliation in alignment with the provisions found in Paragraph 2553.

Paragraph 2553 of the Book of Discipline, which expired on December 31, 2023, provided a limited exit path for churches to leave The United Methodist Church as a matter of conscience regarding the denomination’s direction regarding its beliefs on human sexuality and the full inclusion of LGBTQIA+ persons in its life and ministry.

In the final report, a spreadsheet beginning on page 4 outlines the allocation of the funds the Michigan Conference received from the 126 churches that disaffiliated, showing proceeds totaling $21.1 million. Descriptions for each fund are then followed by Addendum A, which gives additional background on the financial responsibilities disaffiliated churches fulfilled to leave The United Methodist Church, along with the process for disbursing proceeds.

Just over $15.5 million — approximately three-quarters — of the total amount will be reserved in a fund exclusively held by the Michigan Conference to be disbursed to Wespath in a timely manner to address clergy pension liability over the life of the retirement plan. This is frequently referred to as the aggregate unfunded pension obligation.

Per guidelines in Paragraph 2553, this money has been placed in a trust managed by the Michigan Conference Board of Pension and Health Benefits. In short, it is designated for use in the years ahead to address funding shortfalls created by churches leaving the denomination and, by extension, the pension plan through disaffiliation. More details are found in this document.

Rev. Brad Bartelmay, Special Assistant to the Bishop, who prepared the final disaffiliation report, led congregations through the legal and administrative steps once a church voted to leave the denomination. Wespath, the pension administrator, gave the Michigan Conference a specific formula for determining how much money each disaffiliated church would be required to pay to ensure the clergy pension fund was cared for, and Bartelmay followed their clear guidelines.

In addition to the pension liability obligation, proceeds have been set aside in a couple of important ways to ease the transitional period following disaffiliation. First, since each of the seven districts will not receive 2024 Ministry Shares from disaffiliated churches, 10% of the 2024 Ministry Share Income (totaling over $112,000, see page 5 in the report) is allocated to them according to how many churches they lost because of disaffiliation. Bartelmay noted, “This prorated amount will help the districts navigate to lower income in the coming years. Think of it as a step-down approach instead of an immediate loss.”

Second, a Disaffiliation Transition Cost Fund (totaling over $253,000, see page 6 in the report) has been set up. According to Bartelmay, this fund, to be used at the discretion of the bishop and cabinet, offers short-term support for appointments where disaffiliation-related membership loss has led to significant financial stress. “We have some clergy,” said Bartelmay, “who were part of a multi-point charge, and suddenly one of those churches is gone, and the remaining churches can’t afford them. Now there’s a financial cushion there that they can use to pay for clergy until the bishop and cabinet get the appointment realigned over the next year or so.”

Additionally, the cabinet is offering some financial resources from the Disaffiliation Transition Cost Fund to churches in the form of Growing Forward Grants to support ministries affected by or are in response to disaffiliation. Information about Growing Forward Grants is available from district offices. EDITORS NOTE: These grants ended November 26, 2024.

One hundred percent of the proceeds pertaining to release from the trust clause, totaling $2.8 million, have been placed in the Ministry Innovation Fund, which will fund future ministry. Each disaffiliated church gave an amount equal to two times the current year’s Ministry Share allocation. This equity amount could be waived if the congregation was current in their payment of Ministry Shares, had paid in full for the past three years, and was joining another Methodist denomination.

This amount represented the church’s property values. The church building and assets belong to The United Methodist Church for the benefit of the denomination unless a congregation fulfills the requirements, including paying this amount, to release them from this legal clause.

This trust requirement is part of United Methodist polity dating back to the denomination’s early days. As Paragraph 2501 states, the trust clause “reflects the connectional structure of the Church by ensuring that the property will be used solely for purposes consonant with the mission of the entire denomination as set forth in the [Book of] Discipline.”

The Ministry Innovation Fund enables the Michigan Conference to preserve the capital raised through the release from the trust clause payments. “The proceeds from investing these funds,” explained Bartelmay, “will be available for use by the Michigan Conference to establish and support new and vital ministries for years to come.”

The Michigan Conference Council on Finance and Administration, in collaboration with the bishop, cabinet, and Conference Leadership Council, will determine how these funds will be used precisely.

Bartelmay gave a few examples of how this fund may be used in the coming years: “It could be used for grants to start Fresh Expressions. Maybe it could support a new church start. Maybe it could build a foundation for missional work. We’ll hopefully grow that fund over time. And the good news is that, by investing in the fund, we will continue to bring the proceeds from disaffiliation in perpetuity into the Michigan Conference. The proceeds will come in for as long as the conference remains.”

The full financial repercussions of disaffiliation will not be known for some time. Still, the Michigan Conference is taking steps to ease the loss of income and plant seeds for future United Methodist ministry and mission in Michigan.