Sunday, February 22, 2009

Deleveraging Markets and Missions

Below is a great article from The Mission Exchange that reminds us to embrace change and opportunities to better our processes. Posted with permission from Paul McKaughan.



Deleveraging Markets

& Missions

A McKaughan Musing



In the financial world, deleveraging forces people back to basics

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A new Musing from Paul McKaughan, Ambassador At Large for The Mission Exchange. Comment on this Musing by writing Paul at PMcKaughan@TheMissionExchange.org.

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I find my attention riveted to the Financial channel on TV, and, along with millions of other Americans, I feel in my very bones the wild gyrations of the current market as it dramatically shrinks my retirement account.

New words have intruded into my vocabulary. One of those words is deleveraging. It is applied to banks, hedge funds, and all manner of corporate entities. The talking heads all say these huge corporate entities are deleveraging, and until the deleveraging process is over, the markets will remain volatile and chaotic.

It seems that in the "go-go" 80’s, 90’s, and right up until a few months ago, all manner of businesses borrowed huge wads of money in the hope that they could, by investing it, increase their profits. When the bubble exploded, when the complicated models for investment banking and real estate blew up because they were fundamentally flawed, corporate leaders had to deleverage. They had to find the money to pay back the people they had borrowed from. Brokerage houses, hedge funds, banks and many other business endeavors could not come up with payback funds and were liquidated or were forced to merge. It wasn’t that they didn’t have assets; they just didn’t have enough money available to cover their leverage. In the financial world deleveraging forces people back to basics.

Leverage essentially is the byproduct of inflated expectations, assumptions that lead people to take on additional and unwarranted risk. Yet it seemed so reasonable and safe. Everyone assumed real estate was always going to rapidly appreciate. Look at the track record. Return on investments should always be at least 10% to 20%, so it makes sense to borrow on your real assets to engineer an even bigger financial coup. The past few months have demonstrated quite vividly that even the expectations of very smart people can be unrealistic and quite wrong. Bigger is not always better, and growth at any cost can plunge whole communities into a financially toxic swamp. It is only when the crisis hits, and the bitter bottom is reached, that the deep hidden canker of inflated expectations, and just plain greed, can be lanced. Only then is a painful return to realistic assumptions and corporate health possible.

I have been thinking about deleveraging and missions. "Wait a minute" you say, "we don’t owe anyone any money. Our leaders are not paid exorbitant, even indecent salaries. Mission executives don’t have golden parachutes in their employment agreements." These, and all the other egregious acts, we have read about, were made possible with the complicity of a whole culture that lived on unrealistic expectations and false assumptions. The question that has been bothering me is, what unrealistic cultural assumptions and expectations have we in missions absorbed? Have our expectations and assumptions led us to make unwise decisions? Are they leading us into a situation where we will some day be forced to liquidate or at least deleverage?

We have enjoyed a protracted and unparalleled period of economic and organizational growth. This is true of the whole US evangelical community we are a part of. Our megachurches, schools, the para-church ministries have in the last 50 years prospered and grown enormously.

We tell ourselves that "Missions" has always gotten the economic leftovers. Yet our mission community is far wealthier, better educated and more comfortably sustained than ever in history. As the US has prospered, so have our missions. But have these boom times somehow warped our frame of reference and engendered within us unrealistic and, perhaps, even unhealthy expectations?

For us in missions, money has usually been tied to the support of individuals. People mean money. This may have influenced us to organizationally embrace an ever-increasing breadth of personal self-supported visions. Because expansion was relatively easy, we accumulated all kinds of ancillary programs. We broadened our organizational focus to accommodate greater breadth of purpose and the additional resources that came with it. All this we accumulated because at the time we thought it would make us more productive, and relative abundance allowed us to avoid the hard choices. In trying to get bigger and do a better job, we have, over the years, brought into our ministries all kinds of programs and people (leverage?) that have diluted our focus.

Times have changed. Missional deleveraging may be in order.

An author I was reading the other day called for the "creative destruction" of organizations in the light of the challenges businesses are presently facing.

His contention was that when the context in which one operates changes, then the organization that was designed for the former time must change or die. It is a kind of deleveraging process where all that was aggregated, hoping for increased effectiveness, must be paid for. The author was not talking about capricious corporate anarchy. He was calling for a thoughtful strategic deconstruction that would decisively pare the organization back to its most productive essence. Does not that represent a Biblical view of stewardship?

What are your expectations for the future? What pieces of the ministry do you need to "blow up" because they are not very productive today and will be less so in years to come? In hard times leverage, be it programs, people or money, entails the increased risk of irrelevancy one can’t afford.

One final thought: some missions should, as a part of the missional deleveraging process, pursue merger or even go out of business. Missions and other non-profits don’t tend to die decisive and honorable deaths; unfortunately they tend to malinger into irrelevancy, costing the church and its mission far too much.

Your friend, … Paul


Saturday, February 21, 2009

V-Day: Camino de Cruces

On Valentine's day Heidi and I went on an awesome hike with friends on a trail here called, Camino de Cruces. This trail is OLD. It was used by the Spaniards back in the 1500's to haul their loot across the isthmus of Panama. You can still hike the trail from Panama City, on the Pacific (south) side of Panama, to Colon, on the Caribbean (north) side. I have to say that this was one of the best Valentine's day holidays that I have had. Not just because we didn't spend money, but because Heidi and I were able to enjoy nature together and do something we like to do.

These two pictures below are from the top of a waterfall that is dried up right now. When rainy season comes, we've been told it is extremely powerful and beautiful. We got close to the edge and it was a long way down; don't let the picture fool you! All and all it was a beautiful day topped off with a Spaghetti dinner at home! What did you do for V-day?

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Thursday, February 19, 2009

40 days of Water

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Today I want to talk about a commitment that my household has made. Heidi and I, and Carissa, have decided that for 40 days we will drink nothing but water as our beverage of choice at meals or at any other time of the day. This means that we won't drink a morning coffee, have a coke with lunch, and that when we travel we will have to do our best to ignore Starbucks. But we are committed to and can do it.

The idea is that for the forty days (Lent) between March 1 and April 9 (the Thursday before Easter) we will be "giving up" or sacrificing all beverages, other than water, to remember those that do not have clean water in prayer. By doing this we will also be celebrating and giving thanks to God for the blessing that He has given us through water.

Water is an awesome symbol of purity to those of us who have Pure water! We believe all people should have this perception of water--as a cleansing and pure element. "...let us draw near with a true heart in full assurance of faith, with our hearts sprinkled clean from an evil conscience and our bodies washed with pure water." Hebrews 10:22. We believe that all people should be guaranteed access to clean water to drink and for sanitation. We believe that water is a gift of God.

Each of us will keep track of the beverage we wanted to purchase to drink, or we will assign a value to that morning cup of coffee when we first get to work, and at the end of the 40 days we will donate what we saved to help dig clean water wells in Africa through Blood:Water Mission. We want to help this organization to give clean water to those who don't have a choice. You can learn more about the 40 days of Water by clicking on the banner above or here. If you would like to participate with us in this journey you can download this "scorecard" to keep track of the money you save by only drinking water over the "40 days of Water." You can click on the image below to be taken to a site to download the scorecard file.

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So, will you take part in this with us? If so leave a comment so we can pray together for you; or send me an email, privately. We would love to see a lot of people get involved in this and see the fruits of this act of obedience. We will share with you at the end of the 40 days how much money we were able to save as a group of three (if you want to be included in the group just let me know)! We have never kept track of how much we spent on pop or coffee or milk or juice, so this could be very enlightening. (No need to be legalistic, we think it is okay to have milk in your cereal each morning). :-)

I will send a reminder on February 28th as we start the journey the following day. We believe the Lord will bless this.