Sharon Watkins' Pastoral Letter of October 9, 2008

Dear Disciples,

As you are fully aware, global economic conditions are as unstable as we have seen for many years. The credit crisis, fueled by sub-prime lending, deregulation and corporate greed, has led to bank failures and mergers, declines in real estate values, higher unemployment, emergency loans and a multi-billion dollar bailout.

Many of you may be wondering about the state of our Disciples financial ministries at this time.

Recently I had the privilege of sitting with the presidents of our Disciples financial ministries to hear their assessment of the situation as it affects Disciples. I am grateful for the wisdom and calm of these leaders and wanted to share with you their insights. Read their comments on the strategies utilized by our financial ministries during times such as these.

What impressed me in addition to their good stewardship of church resources was their care and concern for those neighbors both near and far who will suffer as a result of the current financial crises. I am grateful for these leaders among us!

In times like these, people on the economic margins suffer the worst. The pain is real and, in this global economy, it stretches from our doorsteps to the ends of the earth. As church, we need to be in prayer for those who are most adversely affected by these conditions. We need to find ways to reach out to our neighbors. We need to give voice through public policy for those whose voices are all too often left out of the international conversation.

This is the time to refocus on our calling to be stewards of the financial and spiritual gifts God has given to us. It is time to model faithful dependence upon the God of abundance. In the midst of volatility and uncertainty, let us live a message of generosity born of our faith and hope. Let us remember our calling to love our neighbor as ourselves. Even in the midst of financial fragmentation, let us be the movement for wholeness!


Sharon E. Watkins
General Minister and President

Comments From The Presidents of the Three Disciples Financial Ministries

Gary Kidwell, president of the Christian Church Foundation - our church's "trust department" in which church-related ministries invest their endowment gifts - spoke of the Foundation's focus on the long-term and not allowing short-term market volatility to deter them from their investment objectives.

Gary reports: "Our investments are broadly diversified, both among and within asset classes. Also, the addition of uncorrelated assets we've made to our portfolios helps to dampen volatility.  It is not always easy to be patient and maintain a discipline through difficult market environments.  But overreacting to recent events usually proves harmful. In the last two decades investors experienced the corporate accounting scandals (Enron, WorldCom, Adelphia, etc.), the sharp equity declines following the September 11 terrorist attacks, the bursting of the dot com bubble and the Asian financial crisis in 1997, the savings and loan crisis in the early 1990s, and the stock market crash in 1987.  The markets recovered after all of these crises and in many instances were stronger after the excesses were reduced.  Frightened investors who sold after the losses did not fully participate in the rally. We are facing a challenging market environment with unknown risks, yet there are opportunities if we simply maintain our discipline. In the face of troubling times, we are holding fast because we do not know when the markets will bottom and begin to recover."

James Hamlett, president of the Pension Fund, reports that the Pension Plan of the Christian Church was launched during the depths of the depression in 1931.  From the outset, funds have been managed carefully and with thoughtful discipline.  Funds are managed within policies designed to diversify risk over multiple asset classes which enable the Pension Fund to maintain investment discipline even in the face of dramatic volatility.

Jim said, "The value of such disciplined investment diversity has been proven again in 2008, during which period the Pension Fund has outperformed its performance benchmarks.  While total assets have declined, reserves continue to be sufficient to fund fully all current and future pension obligations on an actuarial basis."  He went on to share with me that the Pension Fund has sufficient assets to fund fully all tax deferred and after tax retirement accounts.  History has shown that overreacting to extreme market volatility can result in unproductive investment decisions.  As difficult as investment markets are today, the staff and directors remain confident in the value and discipline of diversification over the long term and anticipate opportunities will arise as markets return to normalcy.  At the same time, we continue to take actions to assure the adequacy of liquid assets for the payment of pension benefits and for future investment as opportunities emerge.  So, in unsettling markets such as we see today, we continue to focus on investment discipline.

James Powell, president of Church Extension, notes that Church Extension does not engage in sub-prime mortgage lending, one of the underlying causes of the current economic crises. "We believe we have reserves and cash flow necessary to meet the needs of investors and borrowers," Jim explained.

"Church Extension's long-term investment policies and strategies remain in place, rather than reacting to short term market dynamics and volatility. Our focus is on the long term health of congregations related to their capital needs. Most of Church Extension's invested deposits are in loans to congregations. However, we do have reserves, part of which are managed by Christian Church Foundation. We continue to have confidence in their long term strategy in managing these assets," Jim explained.