Depreciation of U.S. Dollar Gives Missionaries Hard Time
Investors and foreign exchange dealers are not the only ones keeping a close eye on the value of the U.S. dollar, but so are missionary-sending agencies.
With the drop in the worth of the U.S. dollar, which has been described as "freefalling for weeks," American missionaries serving overseas are having a hard time making their financial support stretch.
"Most of the funding, at least for American missionaries, is coming from the U.S. and going overseas," said Ted Esler, executive vice president at Pioneers, an evangelical mission movement with 1,954 international members in 92 countries, on Thursday. "Missionaries who already were suffering because of the economy at large are getting kind of a double whammy, if you will, a two-stroke hit on the funding that they have available to them."
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As the dollar decreases in value, American missionaries living in foreign countries may find that the money they had raised may no longer be enough. The combined effect of the poor economy and depreciation of the dollar could slow the pace of overseas missions. Missionaries who return to the United States to raise support may have to spend more time at home fundraising before returning to the field.
"The downturn in the U.S. economy over the last couple of years has not affected organizations like ours, in which the staff raises their own funds, as much as organizations that raise all their money towards their operations directly," noted Esler. "But the accumulation of this economic environment over a couple of years is beginning to have a definite and obvious effect on people's ability to get funding for ministry."
"So it's the length of the downturn now that we are beginning to see more and more struggle, particularly among people who are raising funds to go out for the first time," he said.
Mission agencies are particularly keeping an eye on the government's proposed "QE2" initiative, or the second round of quantitative easing. Federal Reserve Chairman Ben Bernanke is pushing the government to buy $600 billion in Treasury securities. The aim is to stimulate the economy by pumping money into it. With the dollar costing less, foreign investors may be more interested in purchasing U.S. exports overseas. While in the States, interest rates will go down and will hopefully encourage more small businesses to open and create more jobs.
David Steverson, vice president of finance and treasurer at International Mission Board of the Southern Baptist Convention, said he is monitoring the U.S. dollar on a daily basis and noted how volatile it has been over the past months.
"All the actions that are taken [by the government] are designed for inflation. We have these trillions of dollars of debt and they want to pay them back with cheaper dollars and the way they get cheaper dollars is to inflate our economy and therefore our currency," said Steverson. "When they create that inflation it is going to be a double-edged sword for us because you not only have higher prices but at the same time it will weaken our currency."
The long-time IMB financial officer said one of the ways he is countering the effect of the weakening dollar is working with investment officers on IMB's stock portfolio. IMB is increasing its investment in emerging markets.
"What we hope to do there is grow our portfolio based on higher stock prices in those emerging markets," said Steverson. "But also if those currencies in those emerging markets are also strengthening against the dollar, like we think they are going to, then we make money on our portfolio even though the dollar is getting weaker."
The IMB has had to cut its missionary force from 5,600 to 5,000 over the past two years because of severe budget shortfall. Steverson noted that the IMB recently adopted its 2011 budget, which is slightly smaller than its 2010. It was the third consecutive budget that was less than the year before.
