First, I have to deal with this word “blog.”  Its definition is not in any dictionary I use regularly, but in research with the technocrats in the family, the term comes from WEBLOG - a place where people wrote random thoughts about the web sites they were building.  It shortened to “blog” and here I am writing one.  I prefer this to twitter or chirp or tweet or stumbleupon.  As I write along, I hope I get comments or questions from those of you for whom this is new information, or those who remember along with me.

     The Financial Advisor reports annually to the General Assembly and is accountable only to that body, but the work takes place in countless meetings in the Board Room at 25 Beacon Street, with dedicated people who share my commitment to this extraordinary denomination.

     Denominational involvement started for me like a blind date that matured into a full-fledged love affair.  It was 1962 and the Rev. Arnold F. Westwood, our minister in The Unitarian Church in Westport, discovered I was going to be in Washington, DC. visiting my in-laws during General Assembly time.  He insisted I go as a delegate, possibly Westport’s first delegate, and when Arnold pressed, one never resisted.  I soon realized a General Assembly  was more compelling than spending time with my in-laws.  It was the first year after Merger, and I saw and listened in awe.  I had no idea of the action which lay ahead for me.

     I continued attending GAs, year after year, and when the children were old enough to leave, Carolyn attended with me.  The New York GA in 1974 was our first together, and by then, I was chairing the Board of Trustees in Westport for the second time.  Going to GA became part of our early summer routine - - we had become GA junkies!    We were frequently asked by our own congregants what was so compelling about GAs, and our minister, the Rev. Edwin A. Lane, suggested I explain it at a Sunday Morning Service, and somehow, it came out in poetry.

     “I meet a lot of people from day to day
     Who are hard to talk to --
     But I never meet them at General Assemblies.
     We come from many different places and perspectives.
     But we have a great deal in common,
     We know each other well,
     Before we even meet.
     We take up from there
     As if we were old friends,
     Apart since last year.
     The importance of the General Assembly
     Lies not only in what happens on the floor at the plenaries –
     It is in the sense of interconnectedness
     Revealed and reinforced,
     The exchange of energy and of good feeling,
     The stimulation of the religious, the ethical,
     And the intellectual, within.
     We know we are not a religious persuasion of great numbers
     And so it is especially important for us to gather
     And touch each other’s lives.”

And so it began...

     During my tenure as chair in Westport, I also served on the Metro New York District Board as its first male secretary.  (There is no truth to the fact that I was elected just to keep me busy taking minutes, lest I voice too many opinions!)

     After a lot of encouragement and organization from friends like Sandy Caron, Mary Hart, Jerry and Denny Davidoff, the Rev. Dwight Brown, and the Rev. Jack Mendelsohn, a weight of some substantial proportion fell on me at the 1981 GA in Philadelphia when I was elected Financial Advisor.  Like many experiences in our lives, this one cannot adequately be anticipated on reputation or warning, but must be grappled with directly to be understood.  And so it began…

     I found the position of Financial Advisor itself in good health.  Rumor had it that my predecessor, Bob Adelman, was occasionally thought to be controversial in his more public moments.  Let there be no confusion however, about the fact that this association was fiscally more healthy for his having served as Financial Advisor.  There was on the Board of Trustees, an attitude of responsibility in dealing with financial matters – not a lack of differing opinions about priorities in the allocation of available funds – but a willingness to make difficult decisions, an atmosphere in which no one questions that the budget will be honestly balanced, an acceptance of conservative methods of crediting income from our endowment funds for current budgetary purposes, a recognition that the needs of an uncertain future have a place in our thinking as well as those of a seemingly finite present.

     In a sense, Bob Adelman had created this important denominational responsibility in a form in which it didn’t quite exist before.  I knew I would not discharge it in quite the same way as he, but it was a responsibility in which I was at once proud and humble to serve.

     When I was a wee lad, my knowledge of finance was largely limited to that small territory to the right of the decimal point.  Money, in my early life, was almost entirely a matter of the present.  Later I learned that it can have a past as well as a future – as it does for us in the Denomination.

     I readily understood that our treasure was ourselves and what we stood for.  It was not our endowment or our annual cash giving, although they nourished and gave strength to our religious body, and without that nourishment we should surely approach ineffectiveness or die.

Leading up to my first GA as Financial Advisor

     The good health of the Financial Advisor’s position manifests itself in clear delineation of the tasks to be done, and, most important, a Board educated to those tasks. I found the Board members knew what I was supposed to do: they were quick to remind me if I didn’t seem to be doing it and they were prepared to listen to my recommendations on financial matters. They were reasonably loving about my occupational needs to be in the minority, sometimes by myself, and to be the perpetual semi-professional pessimist, looking on the dark side of things for those risks, those fiscal exposures which would eat away at our institutional strength.

     I had heard a lot and wondered some about the conflict which certain UUs perceived between the Financial Advisor as critic and consultant on fiscal and related matters, and the same person as UUA Trustee. I believed the Financial Advisor had to be a full-fledged working member of the Board, participating fully in its deliberative and decision making process, and must be bound and accountable in recorded votes, as well as responsible in the legal sense as a fiduciary for the Association, as are all other Trustees. When I voted, I could not escape the bias my financial and legal
background gave me any more than could the other Trustees escape from their personal and professional backgrounds as educators, ministers, business people, social scientists, etc. Only once can I recall an instance in which I voted on a matter from under my Financial Advisor’s hat, knowing I would have voted the other way elected as a district or at-large Trustee. I hoped to be able to deal with this concern in a responsible fashion; I knew I could count on others to tell me if they believed I was not.

     My first report to the General Assembly was made in Brunswick, Maine, in 1982. The year had been one rich with new experiences and new “issues.” (We no longer used the word “problem, ” perhaps because problems can be solved but issues are ongoing and can be discussed forever!) I couldn’t fail to notice how many people left the plenary hall when my report started: note to self, not everybody loves finances the way you do.

     I began with a summary of the operating results, in which I reported that in the 1980-81 fiscal year, our Association remained within the framework of the balanced budget previously adopted, and the Annual Fund surpassed its objective. It was expected that the same accomplishments would characterize the 1981-82 year. However, I felt it necessary to commend to the General Assembly’s attention the sharp rate of increase in our budget levels over the last five years which indicated a budget increasing from $2.7 million to $4.0 million through 1983-84. It was time to look at how we were funding these increases.

Brunswick, Maine

     Beginning in 1981, certain expenditures having to do with extension, theological education, the Canadian Unitarian Council and the International Association for Religious Freedom, which might have been charged to the UUA budget, had been funded by the Liberal Religious Charitable Society. In considering the UUA budget and the LRCS budget together for purposes of examining trends in the overall costs of funding our common religious concerns, we would find the joint expenditures growing at a compound annual rate of approximately 13% over the 5 year period, versus a growth rate of 11% for the UUA budget alone.

     What this analysis seemed to tell us was that our budgeted expenses were growing at a greater rate than our total sources of income. Excesses of actual income over budget and the availability of funding from the LRCS had enabled us to move forward in this mode to date, but the facts were that this couldn’t continue indefinitely. The GA attendees were getting a sense of me as the financial pessimist.

     I continued to discuss with the delegates future funding expectations. The Board now looked to two major sources of external funding: the Veatch Program of the North Shore Unitarian Society and the Liberal Religious Charitable Society. Although the LRCS funding planned to increase somewhat in the present, it was expected to level off in subsequent years. Its source of funds was the Holdeen Trust Fund, a trust set up with the intent of using funds for liberal causes outside the United States, with primary application in India. As those programs started, funding for various of the current LRCS programs would end, and financial pressures on the Association would increase.

     In 1984, the Veatch Program was scheduled to make a gift to the UUA of approximately $20 million of invested assets, which were to be added to our unrestricted endowment. This gift was intended to place the Association in a more self-sufficient posture, and coincident with the gift, the annual grants were to cease. I had to remind the Assembly that as terrific a development for the UUA as this generous gift was to be, it did not mean we suddenly had $20 million to spend. It meant that we would be able to substitute investment income for the grants presently received; we would be stronger because the source of the annual income would be under our aegis, but we would not be wealthier on a year-to-year basis.

     This support given by the Veatch program of the North Shore Unitarian Universalist Society was historic - - and by historic, I meant both over time and momentous in its impact. It ensured a grant of an endowment sufficient to support at the $1 million dollar annual level. We continue to be deeply indebted to them for their generosity.

     I further reported to the General Assembly that one of the most exciting things to look forward to in the coming year was a planned major capital funds drive, our first as a merged association.

Winding up in Brunswick

     A major capital fund drive, a test of our commitment, an opportunity to strengthen our financial base, had never been done by the merged Association. It was necessary and appropriate for a religious/charitable organization such as ours. The Board approved the concept and the firm of Arthur Rabin Associates had been retained to assist in carrying out the drive. It was an important new initiative in the development of our future.

     There always seemed to be the need to educate the General Assembly on Board processes, specifically those involving finances. Many delegates were not aware that the Board routinely had three budgets under its eye at any given time. In the 1981-1982 year, for instance, the Board monitored the current year’s budget and made certain minor changes in it as we went along. A full, line-by-line review and final approval of the 1982-1983 budget followed detailed study by the finance committee, and the 1983-1984 budget was received and given a preliminary review.

     This year, the Board adopted a new budgeting procedure focusing on a more streamlined format for the decision packages on which we based our consideration, and a reduction in the time spent in consideration of the budget for the fiscal period two years hence. This new procedure appeared to be working well.

     Our economy as of June 1982 seems to be turning, although it may be the least dramatic and most slow-moving turnaround since the Second World War. The rate of inflation is slowing. There seems to be no sign of an immediate moderating of interest rates, the money center banks tested the lows of prime and then drew back. The stock market closed Friday at its lowest levels in the past 24 months. The trend lines in our picture which we will see illustrated in the report of the Finance Committee are discouraging, showing a tendency toward constriction in our fiscal ability to bear witness to our visions.

     According to Gertrude Stein: “As a cousin of mine once said about money, money is always there, but the pockets change; it is not in the same pockets after a change, and that is all there is to say about money.”

     What Miss Stein is saying for our edification -- and the nice thing about interpreting Gertrude Stein is that no one really understands exactly what she is saying -- is that the money is in our particular orbit -- it is just a matter of getting it into the right places. In other words, the membership of this association has, directly and through sources it can influence, the money to do whatever it wants to do.

     It is, therefore, a tragedy that we have perceived needs and defined programs to deal with them, but we cannot carry them out because we cannot muster the money for staff and materials. Let us recall in this moment a paraphrase of that great theologian Pogo -- “We have seen this institution and it is us.” Its strength is the measure of our strength, its weakness is the limitation we place on its strength.

     My message to you from someone who has completed his first year of study of our financial affairs on your behalf and with your charge -- my financial advice to this Association met in General Assembly -- if you remember one thing I say in this report, let it be this -- go back to your congregations, your area councils, your districts -- and do one small but measurable thing for the financial strength and vitality of this association.

Vancouver, BC

     This is my second report to you as your Financial Advisor, and bridging the mileage from Brunswick, ME to Vancouver, BC is daunting, to say nothing of the seafood opportunities. If you sample, as I do in any new saltwater place, the local clams, the contrast between East Coast quahogs and West Coast gooeyducks is stunning - simply the largest clam I’ve ever eaten.

     Back to finances... it has been a financial year of planning and problem solving, rather than of dramatic progress. We have been significantly affected by external happenings within the economy, the securities markets, and in certain of our sources of funds. An interesting year, a challenging year, in some ways a frustrating year, but one which leaves us with almost as many problems as we brought into it.

     Now these comments are, perforce, directed to the US economy in which the great majority of our expenses are incurred, and which directly affects the securities markets in which all of our invested assets are placed. If I seem, therefore, to be slighting the Canadian camp in our constituency, let me assure you that my concerns are continental though my focus may be more limited.

     I was right last year about what was going to happen in the economy (or at least I read the right experts on the subject, but I really blew it with respect to what, within two months was about to happen to the stock market. What I failed to tell you was that in August of 1982, the market was going to commence a major move upward. As of last Thursday’s close (when I was last in touch with a Wall Street Journal) the Dow Jones industrial average was at 1189, down slightly from its highs over the magic 1200 level, but still almost 49% higher than it was last year at this time.

     Having failed to alert you to the rise in stock prices last year, perhaps I have to say something this year. To suggest what will happen to the market over the 1983-1984 fiscal year requires a degree of prophetic vision I generally leave to the clergy -- although I am never able to get any market forecasts out of the sermons I hear -- but let me extend my neck to say I do not believe we shall see in the next year a market which will be as good to our portfolios as was the past year’s market. I am not predicting a decline, but a hovering, generally at present or slightly higher levels.

     I was watching a program recently on Channel 13, the public television station in New York, on the centennial of the Brooklyn Bridge. There were statements made by New Yorkers commenting on the significance of the bridge in the history of the city and in the image the citizens have of themselves.

     Now I’m am not suggesting the UUA is like the Brooklyn Bridge. I know both are going from one place to another -- both have great underlying strength -- both soar to great heights at some points -- and both have many moving parts which can’t always be seen moving, even from close up.

     What I am saying is that our power and such wealth as is our portion are only meaningful as they are part of, and lend support to, that reality which exists in our institutional mind -- in the spirit which animates us. St. Jerome, some 1600 years ago said he wanted a church “preferring to store her money in the stomachs of the needy rather than hide it in a purse.”

Vancouver, BC II

     The President has referred to the two landmark gifts from the North Shore Unitarian Universalist Society.  There is so little that I can say about these gifts because they say so much for themselves - for the needs they answer - for the character of the donor.  It is a little early in the week for confession, but I must tell you that my written report suggests incorrectly that this grant came from the Veatch Program of the North Shore Unitarian Universalist Society - in fact it comes not from the Veatch Program, but directly from the Plandome Congregation itself.  All these wonders we have witnessed flow from the initial generosity and concern of the late Caroline Veatch.

     Some of the distribution of that largess channels through the Veatch Program, but the program itself was funded by - and the gifts for theological education and ministerial sustenance come directly from the Church itself - and we do thank them for their informed concerns and their great generosity.  Perhaps the most remarkable about this support is that it has come free of any attempt to impose the will of the donor on the recipient - it has truly been support in the most positive sense.

     I see from my financial perspective two potential weaknesses of this Association.  The first I dealt with at some length last year in this report.  The membership of this Association, has, directly and through sources it can influence, the money to do whatever it wants to do.  It is a tragedy that we have perceived needs and programs to deal with them and we lack the funds for ample implementation.

     I see a second potential weakness.

     - Our numbers are limited
     - Our resources are limited
     - Our potential impact on our two national societies is limited.

     To the extent that we lack the ability to focus our efforts, to the extent to which our institutional programmatic and financial goals are diffuse, so shall we succumb to weakness.

     I respect pluralism.  Our institutional respect for pluralism is one of the strengths of this organization.  We’re all in favor of pluralism.  But pluralism has a flip side.

     We are a small but hardy band.  If we wish to remain small and perhaps not so hardy, we will avoid the effort and the heat of the forge of coalition.  We will allocate insufficient amounts for a whole series of efforts, each mustering the support for a given moment, of some vocal plurality.  We must decide our direction and pour our energies and our resources to that course.

     I have a dim recall of some medieval sea captain who once drew a map for his crew, showing only the open sea for miles around his vessel, no rocks of danger, no landfalls of uncertainty, and they were of peace because they knew the sea and its demands upon them.  But in the words of Robinson Jeffers, “A sailor loves the sea - when the helm is for harbor.  And so we must focus our energies.

Vancouver, BC III

     Probably the first recorded long-range planner in history was Diogenes who said, “Bury me on my face,” and when he was asked why, replied, “Because in a little while everything will be turned upside down.”

     We are working on a long range plan - - or what might be more appropriately called a strategic plan.  We have a good committee at work: people who know our denomination, who have different perceptions as to where we are, where we should go, and how we should plan to get there, but who are going to forge a coalition because it is too important to our future not to.

     One doesn’t often have the opportunity to attribute a quote to two sources, especially when one of them is not only still living, but in the room at the moment.  In the April Religious Education Clearing House mailing - - the REACH packet - - my fellow trustee, Will Saunders of Brunswick, Maine, representing the Northeast District, contributed nineteen, count them - - one liners.

     One of them - - the original attributed to Confucius - - “Unless we change direction, we will wind up where we are headed.”  It is a complicated job, however, and our short-range plan is to have it largely completed by the end of calendar 1983.  In one sense, the job will never be completed, for a working, long-range plan, to be of ongoing utility, must constantly be updated and the forward range of vision extended.  To paraphrase the Eastern Airlines commercial, an organization without a plan for the future, may not have a future.

     There was also much hope last year for the major effort invested by the DR2 Committee.  It had the promise of solving many of the problems of the relationship between the continental organization and the individual societies.  In the financial area, there was hope for a sharing of resources still held by certain districts and related organizations, and for greater cost effectiveness in the delivery of services to churches and fellowships.  We tripped over a number of conflicting concerns, not the least of which was that we did not have the funds to pay for the new system, the design for which was drawn by the DR2 committee.  Other than tinkering with the Districts Grants mechanism, we have not been able to do much to carry out our hopes in this area.  The problems, however, will not go away and the negative responses that we cannot afford to solve them will not do.

     In our planning process we need to identify where we are, and where our trend lines are heading us.  Then we need to assess our strengths, where we want to take our organization and what kind of plan we need to employ our strengths to get us there.  We have to have a program for bending those trend lines or we will wind up where we are headed.  it sounds simple and of course, it isn’t.  But we are going to do it - - and we are going to share the options and the difficult choices and the needs we find along our way - - and you’re going to help us because we, after all - - are in this together.

     Our future effectiveness, our position in the ethical, religious and societal spectrums, our choice for positive leadership on this continent and in our world may be at stake.

     i tried to start a mini-tradition last year of closing with a few words of non-financial prose or poetry to help us each with a little perspective for the week ahead.  This year, these words from Robinson Jeffers, the great poet of the west coast.

     Sad sons of the stormy fall
     No escape, you have to inflict and endure, surely
          it is time for you
     To learn to touch the diamond within to the diamond outside.
     Thinning your humanity a little between the immeasurable diamonds,
     Knowing that your angry choices and hopes and terrors are in vain,
     But life and death not in vain, and the world is like a flight of swans.

Columbus I

     I have to tell you that we accountants and other financial types have not had to wait until 1984 to try “Being Human in an Age of Technology.”

     “We are traveling with tremendous speed toward a star in the Milky Way.  A great repose is  visible on the face of the earth.  My heart’s a little fast.  Otherwise, everything’s fine.”

     Those words from Bertolt Brecht.  To me, he is talking about our rush into the future -- the speed of it --our outward calm and confidence -- our inner nervousness and uncertainty.  Why shouldn’t we be confident?  Why shouldn’t we be nervous?

     We know that to be curious about the future, to dream and to wonder how much that future can be influenced by our efforts are all essential and differentiating characteristics of our humanity.  We cannot help trying to plan.  But the old certainties are gone.  The unitary view of life to which we have lately subscribed is, I suspect, on the way out.  The confirmation and encouragement we once could look for from science is no longer there.

     My reading is from an essay by Flora Lewis, foreign affairs columnist for the New York Times.  She writes:

     “The extraordinary insight of modern physics about the way the world really works is that:  the world is a mass of uncertainties piling up into likelihoods.  Science has discovered that:  prediction of reality must be based only on waves of probability,”

     Ms. Lewis goes on to say, “While science has marched on in this direction, social philosophy has been left far behind.  There is no longer a unified world view.  We non-scientists still think we know what we are doing and look to science for confirmation, even as science -- with quantum mechanics at its pinnacle -- tells us the point is we don’t know and can’t know.”

     So, do we then give up on the future?  Of course not.  We deal with it.  As a matter of fact, it is a UU kind of  future -- just right for our particular mind set.  The givens:  Change and Uncertainty.

     Now you may be asking yourselves what all this has to do with finance -- and the answer is -- a lot.  And it is the future about which I want to speak this morning.

     FIRST -- financial support.  This is the year in which we began a new and major drive for additional funds over and beyond the solid base we have established in the Annual Program Fund.

     Conceived initially as a traditional capital fund drive, with most of the proceeds earmarked for endowment, the Visions for Growth Campaign has been modified as the Development Office and the Administration have talked with and listened to our constitutency.  What they heard was concern about our immediate and near term ability to pursue growth and to carry out our basic mission.

     The set of objectives to be funded by Visions for Growth include $1 million out of the $4 million target for endowment, to add to our ongoing strength.  Roughly $1.7 million will go to programs with long-term impact, from which we have some reasonable expectation of recovering our investment, namely extension, $450,000, new congregational development $450,000, a new hymnal, $300,000, and the Beacon Press, $500,000.

     The remaining $1.3 million will go toward -- field services to congregations and districts, $1,000,000, and peace issues, $300,000.  But of this latter $1.3 million, we cannot fairly expect ever to recover our investment in terms of hard cash or greater future income.  They may, of course, be a return on investment -- but it will not be in dollars.

     I said in my first report to you two years ago, and I believed it important enough to repeat last year, “The membership of this association, directly and through sources it can influence, has the resources to do whatever we want it to do.”   The needs are there for all to see.  But seeing them is not enough.   Membership in this association is not a spectator sport.  We need team spirit and intensive participation in our fund raising efforts -- and we need it from all.  Otherwise this -- and all our concerns -- is a lot of sound and fury.  If we really care -- if we really believe in what we are doing -- we should be proud to give -- and equally important -- we should be proud to ask others to give.

Columbus II

SECOND: Planning as a disciplined function.

     We have done a lot of futuring in this denomination.  We need to do a lot more and to coordinate that effort more than we ever have -- so that all our articulated parts are moving in the same direction.

     In the past year, the Board approved the addition of a planning staff person to lead and coordinate an ongoing long-range planning effort.  This is a most important beginning.  It will (1) focus our efforts on those things we believe are of greatest importance, (2) muster our resources in the most effective manner to deal with them, and (3) coordinate the interrelationship of our various programs in our organic plan.

     We need to send a message that we want a plan for our future.  We need to send a message that we want this to have a high priority.  Let’s not just call this a movement.  Let’s figure out where we want it to go and make it a movement!

THIRD: I want to talk about the proposed new field services program.  I’m concerned that it may be an even more potentially dangerous program in which to invest our effort and money because it is a much more appealing idea -- delivery of field services -- how could anyone be against that?  I cannot help but think of Theodore Parker’s comment,”Magnificent promises are always to be suspected.”

     My concern is that there was no broadly representative committee to study this proposal as there was for DR2.  There was no comprehensive survey -- consistently conducted across our denomination -- to evaluate this proposal as there was for DR2.  There is no detailed financial plan -- as there was for DR2 -- that shows how much this will really work in each District and for the Association as a whole.

     I didn’t clock the actual amount of time spent on this at the April board meeting.  It was certainly less than an hour -- but I do remember that the Board members listed on a blackboard some ten or twelve concerns about the proposal, discussed briefly the first of these -- and then the whole question was called.

     Now I know that there is no shortage of critical faculties among my fellow board members -- witness the number of concerns about this program they listed -- and I have great respect for the way they normally tackle an issue and shake it ‘til its ears fall off.  But I have to tell you I don’t know what happened that afternoon.

     I do know I would have felt a lot better about being on the losing side of the issue if the vote had followed profound and extended discussion worthy of the importance of the issue. 

     Now, this may well be the best idea for reorganization of this Association to have come along since merger, and the decision to go forward with it may well be the best decision taken since merger.  But we didn’t study it in an open and democratic manner.  We didn’t consider it with study materials, District and congregational meetings, feedback mechanisms and alternate final models, as we did with our new Purposes and Principles.  We went ahead even though many questions remain with many District leaders.  It was not our finest hour.

Columbus III

     We all  know the one about the pilot who radioed:  “I have good news and bad news.   The good news is we’re making excellent time.  The bad news is we’re lost.”

     Now we are not totally lost, but we need a lot more involvement and a lot more study of this program and you, my friends, are the ones who are going to have to insist on it, and you are going to have to do that by talking to your District Trustees about costs and organization rationale, asking your District Boards what the financial impact on your District will be, and demanding alternate approaches from among which to choose.  Field Services really needs your attention and concern.

     Those who work in finance ae used to dealing with the seemingly finite.  But we suffered two major losses this year, losses which won’t show up in our financial statements.   Ted MacRae, chair of the Finance Committee, died last October.  As if we had no limit on our ability to come to grips with coincident tragedy, Mary Hart, Ted’s successor as Committee chair, died this past April.

     They were each such different people in temperament, in convictions, and in leadership style, that it may not seem to do either justice to speak of both in the same breadth.  Yet, they were alike in the intensity of their devotion to this institution, and in their ability to work for the common good with those with whom they did not always agree.  I cannot think they are no longer with us.

     These words from Victor Hugo’s “Toilers of the Sea:”

“These are times when the unknown reveals itself to the spirit of man in visions...those that depart still remain near us--they are in a world of light but they, as tender witnesses, hover about our world of darkness.  Though invisible to some they are not absent.  Sweet is their presence, holy is their converse with us.”

     Let us join in a moment of consideration and aspiration.  We have the leadership of our Denomination in this room.  If we hold out our hand, we have the future in it.  If we think of the connection of hand to mind to heart, we have the potential to shape that future.  The potential, I say, only the potential.  We must give life to that potential: we have to make our hands move.

     Good intentions will not do it, good thoughts will not do it, good talk will not do it.  The heart has to feel it.  The mind has to want it.  The hand has to do it.

     One week ago last Sunday, I attended the concluding service in our Church year in my own congregation, The Unitarian Church in Westport, Connecticut.  We have been privileged to have had an award winning minister serve us in an interim year.  I say award winning, because on Thursday, the UUA is going to honor him with the Award for Distinguished Service to the Cause of Unitarian Universalism.

     It’s a matter of public record that Duncan Howlett has 78 years on the odometer.  He could reasonably be expected to be looking loyally to the past rather than to the future.  The theme of that service, the title of his sermon:  “The Way Leads On.”

     Duncan Howlett knows about uncertainty--he does not fear change.  He knows that our Church in Westport and our Association have the potential for the way which leads on -- you’ll get a sense of that on Thursday.

     Let me share with you in closing, the final verse of the hymn with which we closed that service.  The words by Sam Wright, to the music of Sibelius’ Finlandia.

          We would be one
          In building for tomorrow
          A nobler world
          Than we have known today,
          We would be one
          In searching for that meaning
          That binds our hearts
          And points us on our way.
          As one we pledge
          Ourselves to greater service
          To build with love
          A world which shall be free.

Atlanta I

     This is my fourth and final report of my term as your Financial Advisor.  I have been honored and pleased to serve our Association in this way -- this is a great office, unique in many ways among charitable and religious institutions.  This has been a special year, and I’m going to set the scene with a little reading from James Carroll:

     “I bought a new suit a couple of days ago, and I’d like to tell you about the strange thing that happened.  I had put the suit on and stepped into the store’s three-walled mirror.  I was looking straight ahead at the cut of the cloth and the way it hung in front and whether the trousers fit.  When I turned to look at the side view I was suddenly and for a flash, stunned to see not me, but a stranger standing there in a new olive suit.  He had a funny-shaped head and he needed a haircut and his shoes had worn-down heels.  It was me. But it was a me I hadn’t seen before and there was a second of almost terror at being confronted by someone staring away who was me.  I wanted to touch him, this stranger, but there was glass and more, that held me back. I wanted to speak to him, but there were no words.  The feeling lasted for only a fraction of a second and it was gone.

     Thinking about it since, I have realized that such a moment of fear and of yearning was not unfamiliar to me.  I have bumped into the stranger before.  In some way, I am bumping into him now as I write these words for you:  perhaps you are bumping into a stranger of your own.  We are strangers to each other because we are strangers to ourselves.”

     It has occurred to me from time to time that this Association may be a stranger to itself in many ways -- and that if we looked at ourselves in that three-walled mirror -- glancing to look at the side view -- we might see a stranger we wanted to touch and speak to -- but something holds us back.

     In part, that something is a fear about having to face confusion over our institutional identity; a fear of having to face uncertainty about the depth of our commitment; a fear of having to face the question of the effectiveness with which we are living our institutional life.

     When we as a body look into a mirror --  are we seeing ourselves honestly and truly as we are?   Are we seeing two personalities struggling toward reconciliation: the prophetic and the institutional servant?  Are we seeing a stranger, an institution we do not even know, an institution that has changed, and with which we have not changed?

     Or are we seeing a fantasy, an organization we would like to believe exists, doing things we would like to believe it is doing, having an impact we would like to believe it has?

     I’m only going to look in the mirror as to financial and planning matters.  As you proceed through this week and see our association from many angles, you may reflect on whether you are at one with the Association, or are seeing a stranger in any respect.

     As we look in the mirror at our Association’s financial condition, we can appropriately feel a sense of confidence.  The President taking office on June 22 will head an Association in better financial condition than any former President found.  Our assets are greater, our sources of funds more secure, and with good management....

Atlanta II

     As we try to peer through the looking glass into the future, we should know that it will not be easy.  I shall make no attempt to predict the future this evening.  But I am going to predict a little of the present.  I haven’t got my tenses mixed, talking about predicting the present.  The present you know is always reflected in the future.

     We have laid some important foundations in the past four years on which we shall inevitably build in the next four.  Now what does all of this have to do with mirrors -- and strangers who look just like us?

     Just one week ago yesterday, David Osborne preached a sermon at the service transferring the first fund to the UUA.  He talked about making choices and making history -- and he quoted someone whose name escapes me but whose words do not -- luck is the residue of design.  Whose design?

     Can we look in the mirror in our newly acquired three piece financial self-sufficiency and say we did it?  No.  It was Arthur Veatch who found the reserves under the earth.  Caroline Veatch who left the rights to the North Shore Church, probably with no idea of their ultimate value.

     Providence in some form...and the Congregation of the North Shore Church.  Not us.  Keep that in mind as you look yourself in the eye in the mirror.  We haven’t done all that well by ourselves.  We’re often quick to know how we want to apply our funds.

     But can we reconcile our image of ourselves as a caring, committed supportive denomination with what we have actually done in supporting our Association?  You can do something about that this week, you know.  In a sense, if we don’t give that support, much of the rest of what we do here this week, may be sound and fury -- signifying a show.

     Do we realize that -- as magnificent and munificent as the Plandome gift is -- we could match it if each adult member of our churches and fellowships gave only $145?

     This week we will apply our enormous level of energy to the work, the worship, the good fellowship and the campaigning.  Can we reconcile our image of ourselves at that pitch of energy, with the stranger in the mirror who is not making an effort of similar energy, to support and augment our Annual Program Fund.

     Let me also remind you that in the coming fiscal year, the supported share per capita gift by the congregations to the annual Program fund increases, until in the 1988-89 year, it will reach $20.  Will you be with it when it gets there?

     I have said before, membership in this Association is not a spectator sport.  This is a needed standard and we all need to support it when we get back to the real world.

Atlanta III

     We look with pride at our denominational publishing enterprise, The Beacon Press.   And we should.  Seven years ago on this occasion, we had an intensive debate about the future of Beacon Press.  Whether we could afford to continue it -- whether we could afford not to.

     We did continue it, albeit on a somewhat reduced scale, but we should be honest with ourselves as to the Press’s position.  Do we believe we have taken this step simply, directly and that nothing but good will come of it?  We know that nothing worth doing is that easy.

     Two developments having long-term significance for the Beacon Press have taken place in the past two years.  As most will remember, the Press, though it has a distinguished history in publishing, has had a financial history of great concern to the Association.  We have tended to have expectations of it as if it were a business, and not a program of the Association.  Beacon has, in fact, required annual subsidization to keep going.  This subsidy over the past seven years since the Press was reorganized in 1978, has averaged $52,000.  If we were to analogize Beacon to a university press, however, this level of subsidy support would not be out of line.

     The two developments are:

     1.  A consultant with major experience in the economics of publishing companies and long exposure to the industry was retained to do a study of the operations of the Press, and to prepare recommendations for a program to put it on a sound fiscal basis.  That report has been completed;  it makes sense;  it is doable.  All it requires is additional capital to enable the press to increase its operations to a level at which it can hope more effectively to compete with other small presses.

     2.  Visions for Growth has earmarked $500,000 of its total objective for additional capital for Beacon.

     As funds become available from payments of pledges to Visions for Growth, and we can implement the program, we may be able to nourish hope for not only a more successful, but a more solvent Beacon Press.

     On to investment issues:   There was a rumble in South Africa which was echoing at 25:  the rumble was apartheid -- actually a world wide concern with racism.  This concern found focus in the United States with attempts to put pressure on American corporations to modify personnel policies to eliminate discriminatory practices in the workplace.

     Those individuals and organizations in the not-for-profit sector maintained a level of pressure on shareholder relations officials and their seniors.  Their objective was adoption of new policies and practices which would lead to equal treatment for all races, particularly the black majority in South Africa.

What we have here in another example of the conflict often faced by those in leadership positions in religious organizations -- and all of us in this room qualify on that ground.  We are always engaged in a struggle to reconcile our image of ourselves as prophetic and our image of ourselves as institutional servants.

     But let me walk you through our process.

Atlanta IV

     Over a year ago, the Executive Committee initiated a review of Board of Trustees Policies which had been established over many years.  They needed to be coordinated and many were out of date.  The task of codification and revision was divided up and the Financial Advisor was given the responsibility for Investment Policy.

     Last January, after almost a year of study by the Investment Committee, your Board of Trustees adopted a new Investment policy.  Later in the year, as public concern about conditions in South Africa mounted, we took this question up in the context of our new investment policy.  In successive actions at our April and June meetings, our Board adopted a specific policy regarding investment in such securities.

     It was very hard to find the right path, balancing the responsibility to nurture our investments, and trying to achieve the greatest possible return on our investments to fund what the General Assembly, the Administration and Board believed we should do.  As the elected Financial Advisor, I was captive to the dilemma of South African Investments as much as anyone and, perhaps, by background, more caught on each of its horns than many of my fellow UUs.

     The issue of apartheid itself is simple.  Adopting the appropriate institutional response was complex, and in itself, posed ethical problems.  What the Board put on the scale was a simple question wrung out of the complex issue.  Was there any position, short of a commitment to complete divestiture, that would make clear to our constituency and to the outside world our overriding concern about the moral issues raised by apartheid?

     We knew some of the 60,000 to 70,000 blacks employed by American companies in South Africa could suffer directly, and many more of their dependents and others in the economic chain could suffer as well from a withdrawal by U. S. companies from South Africa.  We knew our action by itself might accomplish little more than a P.R. ripple.  We knew, although we could limit our direct monetary losses to only the transaction costs by carefully executed sales, the test would be:  in what do we invest the proceeds of divestiture sales?  We knew we were going to be seriously handicapped in reinvesting those proceeds.

     The bottom line is that there is an ongoing cost association with the operation of a South Africa-free portfolio and, although it is difficult to quantify, our investment managers placed it between one-half and one per cent per year.  In other words, on the approximately $30 million of assets  in the UUA’s own investment portfolio, we might expect to realize some $150,000 to $300,000 less each year as a result of the adoption of a divestiture policy.

     Sometimes, great issues can only be dealt with in the simplest terms.  The UUA Board of Trustees weighed all these factors and adopted a policy calling for full divestiture.  The ultimate bottom line was perceived to be apartheid and that is what we dealt with.

     I have to tell you that many UUs, myself included, have had a very difficult time with this issue.  I have literally agonized over it for the better part of the past year.  Those of us concerned have had to find the right path, balancing:

     1.  The responsibility to nurture our investments as the Trustees we are and achieve a return on our investments to enable us to fund as many as possible of the programs and services we believe we need;

     2.  Questions about how much a policy of divestiture would, in fact, influence conditions in South Africa; and

     3.  The need, in the context of this issue, to make a religious statement about apartheid that is clear and unambiguous.

     In the eyes of our own constituency and of the world outside, we needed to say -- all investments considerations weighed -- the ultimate consideration was our conviction about apartheid.

     Our decision making process has been as informed as it could be.  We know other responsible fiduciaries of religious and charitable organizations and foundations have taken similar action.  And we have looked ourselves in the eye -- checked our profiles in the three way mirror -- and said:    We must do this.

     To allow no ambiguity, no misunderstanding about our perception of apartheid, we are going to accomplish this divestitute in the quickest and most reasonable way.  We know it will not be easy.

Rochester I

     “You and your accomplice have been caught red-handed.  Together your  best hope is to cooperate by remaining silent:  You will each get off with a 30 day sentence.  But either of you can do better for yourself:  double-cross your partner and you will go free while he serves 10 years.   The problem is, if you each betray the other, you will both go to prison - and not just for 30 days but for eight years.

     When you think about it, you realize that no matter what your partner chooses, you are better off choosing betrayal.  Unfortunately, he is aware of it too - so the inexorable tide of self-interest is bound to carry you both up the river for eight years.  If only you could have cooperated...

     That in a bitter nutshell, is the “prisoner’s dilemma.”

     The words with which I began are from an article by James Gleicke in a recent issue of the The New York Times.  He goes on to say...

     “Half a game-theory paradox, half a behavioral metaphor, the prisoner’s dilemma has become a central model for psychologists, political scientists, biologists and economists trying to understand the dynamics of competition and - more important - cooperation.

     Much of game theory devotes itself to a logic pursued for its own sake.  The prisoner’s dilemma has proved a robust exception, finding unexpected applications far from its abstract origin.  One reason is the simplicity of its basic message:  that cooperation arises from a combination of restraint and retaliation.  It is a game-theory modernization of the eye-for-an-eye rule.”

     When I first read the article, it immediately crystallized for me what I wanted to say to you this morning, about some seemingly disparate concerns relating to the financial affairs of this little Association which is so large in all our lives.

     The Prisoner’s Game model tells us - if we play it out - that the most effective thing for us to do now is accept the decision made and the action taken - (I think it safe to say there is no sentiment in numbers among us to reverse it) - the most effective thing to do is to accept the decision and go forward from there in a spirit of cooperation about the continued fight against the repressive government of South Africa.

     You may say, of course, but some in our community are carping at this action.

     -  Implying that all of the possible positive and negative problems in carrying out divestiture were not adequately considered by the Board ahead of time.

     -  Implying that we did not realize ahead of time that South Africa related company securities tend to have better track records that those of non-SAR companies in which we would be limited in investing.

     -  Implying that if the General Assembly had decided the issue, divestiture would not have been voted.

     These statements are false and misleading to those not familiar with the decision making process as it actually unfolded, and do no honor to those who publish and circulate them.  Neither do they serve the cause of respect for the diversity which encompasses those of conservative political and fiscal perspectives -- among whom I  number myself.

     I spoke at some length in my report last year about how your Board of Trustees arrived at its decision to divest completely of South Africa related stocks.  Our ultimate conclusion was, as a religious institution, we needed to make a clear and unequivocal statement about apartheid - no percentage of the way, no adherence to business principles in the face of the greater reality of discrimination - a focus of the investment community in the world of charitable, religious and other nonprofit institutions, and in society in general on a world wide basis - yes, the holding of securities doing business in South Africa.

     Cooperation, friends:  the battle is fought;  the battle is over.

Rochester II

     One form of cooperation - let me read from the Minister’s Column in a local church news letter:

     “I believe our national association has done the right thing.   Some response was necessary, and it’s hard to see what other meaningful response could have been made.  If the response made wasn’t some sort of a sacrifice, it really wouldn’t have been impressive as moral witnesses go.  I feel it is important every Unitarian Universalist know what we have done because of apartheid through the the Unitarian Universalist Association, and to remember it as one writes one’s pledge check.  Moral witness does require some sacrifice.”  The Rev. Dr. C. Scott Giles.

     There is a great deal more to be said about divestment than can be covered from this platform today - although I thought other gentleman who spoke to the subject this morning said it well.  To make possible more exchange of information and dialogues, Loretta Williams, UUA Director of Social Responsibility, and I are conducting a workshop this afternoon on the message and the mechanics of divestment.

     Now I know it is easy to talk about cooperation when it appears to be a way of suggesting those who disagree with me should go along.  So maybe this is the moment at which we should talk about field services.  Those who heard these remarks two years ago in Columbus may recall I criticized the process by which the new field services program was conceived and designed and the way the delivery system was organized.  In addition, I had a number of reservations about the funding mechanism, short term and long term.  The Board, as it feels quite free to do, did not see it my way and the new program was approved as proposed by the Administration.  I wasn’t the only one who was not entirely convinced, and some legitimate questions are still being raised as the program is being implemented in the various districts.

     The districts have to believe it before it will work without disproportionate reliance on the UUA Budget.  But - it can reasonably be believed and it can work.

     Do I think my approach would have been better?  It doesn’t really matter, does it?  Respect for the worth and dignity of every person and commitment to use the democratic process means we all have to respect the beliefs of those with whom we disagree as much - maybe more - after they have won the vote than we did before.

     However, we have made our decision.  More important, we have set it in motion.  It may never be perfect, but it is working in a significant number of our districts and in the near future, will be working in someway, virtually across the continent.  The financial concerns have not gone away and probably never will - but are far enough along the way so that we can see a financial plan that can work.

     Little good for the greater institution will come of continuing to pick at this program, of seeking special advantages or treatment for our districts, of focusing on parochial district concerns.  The Prison’s Dilemma here is easily resolved by cooperation.

     Build a sense of district, build an allegiance to the Association, make the financial commitment locally, and the program will succeed.

Rochester III

     And now, in a new key, we have made an enormous financial commitment to a new hymnal.  We knew, without asking, that our constituency was ready for new words and music, new forms of worship, and a full selection of gender respectful material.  Surveys we did pre-Visions for Growth indicated potential financial support.

     Consider the fiscal facts:  unless we are all going up the river together for a long time, we really need to cooperate on this one.  I am sure the Committee will give everyone a chance to be heard.  And then, being human, they will bring back to us a book that will look to some like a compromise -- and some will want more of the paperback supplements, and some won’t like the new book because it is (or isn’t) loose-leaf, etc. etc.

     We have to work at this ahead of time, to share, to own by our own participation what is created, to avoid what Clifton Fadiman once referred to as “Man’s painful desire to communicate without coalescing.”  We must do this or we will have not a liturgical, but a financial disaster on our hands.

     Now where is the most significant area touching our finances in which we, as committed co-religionists can cooperate?

     The Annual Program Fund furnishes about 40% of our budgeted income.  But every year we have to do it again.  The only limitation we place on the future growth and potential of this association is the limitation we place on our giving to the Annual Program Fund.

     I say it every year -- it is no less true for the repetition -- this Association has the resources to do whatever it wants to do.  If the aggregate time and energy put into, say, this General Assembly, were replicated in a great cooperative effort by all of us to support the Annual Program Fund when we returned to our congregations, the UUA could truly do wondrous things.  Think about it!

     Remember, the Prisoner’s Dilemma is an illustration having meaning not only for the bad buys sorting out their potential sentences, but for all of us --
     -  Struggling for recognition
     -  Making known our concerns for our cherished causes
     -  Competing to prevail over others for the things we believe most of the time, in fact, trying to do the good, the right.

     Oliver Goldsmith said, “It is difficult to induce a number of free beings to cooperate for their mutual benefit.”

Rochester IV

     Now for the next application of the Prisoner’s Dilemma.  We have made our decision.  There was certainly room for honest and principled difference of opinion about the probable ultimate cost, about the effectiveness against apartheid, about the impact on black South Africans - and no one of us has to change his or her mind about these matters.

     Let me quote again from the Gleick article - he is referring to a game theory model employed at a recent Harvard symposium at which psychologists and economists discussed ways to quantify decision making.

     “The real power of the Prisoner’s Dilemma model comes when the subjects play not once but many times, what is known as the iterated prisoners dilemma.  In a standard version, subjects play for points, paired under the supervision of a psychologist.

     “Over the long run, both subjects will do best to cooperate every time. Yet in any one round, not knowing what the opponent will do, each subject has an overpowering temptation to betray the other, or defect.”

     No principled prose without consequences.  And so, after weighing carefully over two meetings, the arguments for and against, the Board voted to divest.

     What will the cost of this be?  The aggregate cost will never be known because its major component is based on a comparison of how the securities we sold will perform over time, versus how the securities we bought to replace them will perform.  For portfolios in which changes are being made constantly, this is a comparison which can never be made with any certainty.  There are too many variables as to issues and timing.  I have seen no end of studies on this subject. They all lack one thing - the ability to see into the future - only the future will tell us which portfolios will achieve relative success and which will not.

     I said in the letter I wrote last fall to each congregation (explaining the action taken and the reasoning -- as well as some of my own agonies in arriving at and voting for that decision) that I believed, in addition to transaction costs, we might expect to realize some $150,000 to $300,000 less each year. This was only an estimate, an informed guess, we may do better.  We shall have to see.

     The actual cost of the divestiture process itself, in my opinion, approximated $600,000 about 1.5% of invested assets.  This is higher than we expected because we were out of the market for brief periods in October of 1985 while divesting and shifting to new managers, all while the market was moving sharply upward.

     Let me close by asking you to join in a few moments of consideration and aspiration.  We have the leadership of the Association together in this room.

     We hold close our shared commitment to this institution.  We value each person who when added together by congregations makes up our small numbers

     But let us not allow that spirit to rise which seeks advantage at the possible expense of another.

     We do need to engender a spirit of cooperation in matters touching not only our finances, but all of our institutional life  - not because game theory says in the long run, we all win that way.

     We need that spirit because it honors us as  religious persons and honors our stated and felt principles.

     So let our process be:


Little Rock I

     The acrobat stepped out onto the wire, hesitating a bit as she brought her right foot off the tiny platform and placed it ahead of the left foot.  Another evening’s work, she thought, shaking slightly the twenty foot pole she carried perpendicular to her own body as well as to the wire.  She wanted her balance to be dynamic as she moved across to the other platform, which, somehow, looked farther away than usual, although of course it wasn’t.  Dynamic, not static.

     To the 14,000 people seated in the huge oval below, her task appeared to be one of allowing as little movement as possible.  In fact, constant movement was necessary for the acrobat to maintain her balance and to move forward along the wire to the other platform.

     The acrobat had done this hundreds of times before in a dozen arenas and tents.  Tonight for some reason, she was nervous.  Fearful and threatening images disturbed her concentration.

     The wire is a symbol, a symbol of the bridge between reality and the world we imagine we can build.  Our understanding of finances is one of the ways in which we try to build that bridge between reality and aspiration.  We need that understanding to comprehend our own institution and its dynamic, its need to imitate life by crossing the wire to the world we imagine we can build.

     We work hard to maintain a healthy equilibrium in drawing  income from our major funded sources.  The Annual Program Fund accounts for some 40% of our budgeted income;  we are limited by our ByLaws to planning income from the APF equal to the preceding year’s dollar contribution to our income plus an assumed increase of 7%.  The seven percent limit is one of the ways we keep our income budgeting from being too optimistic. 

     In looking ahead, we expect that in the 1988-89 fiscal years, our APF income will probably exceed our investment income as a proportion of our total income.  It does not mean things are not moving on the investment front.  In this area, however, trend lines are slower to assert themselves and more uncertain, slower to assert themselves because we employ a moving three year average in the recognition of income, damping the effort of the recent sharp rises in the equities.  More uncertain because the securities markets are uneven underfoot and subject to crosswinds making the maintenance of one’s balance a bit tricky.

     The Investment Committee, under the eye of the Board of Trustees, has been engaged in a program of our invested assets.  This has taken two forms.  The first has involved changes in the professional support organization on which we rely -- retention of a consultant as independent professional advisor to help with investment policy, management and the statistical monitoring of the performance of our funds.  We have also replaced two of our portfolio managers with three others;  these latter changes have been in place for almost two years and we are beginning to form opinions to how these managers are doing.  We need to see them through a full market cycle before we can begin to draw meaningful conclusions.

     The second form of changes has involved diversifying the kinds of investments we employ,  continuing to hold publicly traded stocks and bonds, but also moving into unlisted issues.

     These alternative investments, as the Investment Committee refers to them, consist, in broad groupings, of real estate, venture capital, and oil and gas investments.  We now have this diversification program largely in place, although some of our commitments will be paid over roughly the next year and a half.  By that point in time, these alternative investments will amount to approximately 15% of our total invested assets.  The purpose of this program is to spread risk, position ourselves counter cyclically to fluctuation in publicly traded issues, and to seek others, in some case more aggressive opportunities for capital appreciation.

     Now that’s what we have been doing, how we are positioning ourselves in our investment portfolios.  I want to put us right out on the wire now, and talk about the current context.

Little Rock II

 Let me summarize in four words:  economy calm, market nervous.

     I’m not going to say a great deal about the economy.  We are experiencing disinflation as a result of a significant and suffocating overhang of national and international debt.  Our own federal deficit is financed to the extent of approximately 60% by foreign buyers of our bonds.  We are enjoying relatively low interest rates and a ready money supply, or to put it another way, we are enjoying easy money.  The likely scenario is that a correction of our dire and threatening trade imbalance with the rest of the world will only obtain if there is a recession  in the United States or a boom in those countries with which we trade.  What often happens in a period of low interest rates and an open handed money supply is that the expansionary funds go into financial instruments, into essentially nonproductive investments, moving the money around among investors into takeovers, leveraged buy-outs, and the like.  This phenomenon can make it difficult to stimulate our economy via monetary policy.

     But I said I wasn’t going to speak at any length about the economy.  Our own economy is calm at the moment, it is the clouds overhead which are threatening and extensive.

     Now to the equities markets.  Equities, as most of you know, provide a unique investment vehicle.  They have offered significant returns over the long-term and an opportunity to keep abreast of inflationary trends.  Over several market cycles, not necessarily in any one year, the income stream which can be generated can be expected to be greater from a fund invested substantially in stocks than a fund predominantly in bonds or cash equivalents.  It seems to be the general wisdom, therefore to have a substantial position in equities in a fund with objectives which are longer rather than shorter term.

     I characterized the market as nervous, however.  The US equity market is in the 58th month of a bull market which is substantially longer than any of the last 10 bull markets.  The price rise - up over 175% - has outstripped that of any of the last 10 bull markets.  Only the market of 1924 to 1928 - up over 250% - has had a greater rise.  The S&P 425 Industrials Price/Earnings ratio is near an all time high.   The S&P 425 Price/Book Ratio was higher only in 1929 and the S&P 425 Yield has been equaled in only one quarter since 1929.

     Could this mean that what goes up must come down with a vengeance?  One commentator, an advisor to our Investment Committee, has said, ”There is the potential for a downturn that has the possibility of a magnitude of once in a generation, or even perhaps of once in a lifetime.”  Unfortunately, he goes on to say, “Neither we nor anyone else we know can predict if the downturn will come in the next quarter or the next year, or whether indeed it will come at all.  If we could predict the move, we would know exactly what asset allocation steps should be taken.”

     Perhaps the question is theological and not financial.  I know if I could predict that sort of thing with any consistency, my followers would be full of faith and fervor.  Alas it is not to be.  There is reason however, to believe in the possibility of a downturn within the next year or so.

     This does not mean the UUA or any of you should rush to get out of equities.  It does mean increasing allocations to alternative investments and/or to cash equivalents and watching individual issues more carefully.

     Market timing is a difficult to impossible discipline in which to succeed.  One must be right about the time to sell and also about the time to buy back in.  The market is perverse - it is best to compromise.  The risk of being out of the market entirely at the time of an upward movement is too great to take.  The uncertainties of walking that wire are great, as great as life.

Little Rock III

     The acrobat always paused at the lowest point on the wire.  The tension on the wire was strong, but there was enough slack for her to play it as she took each step, to maintain that constant motion essential to her equilibrium. This day, as she paused, her tension rose -- it rose and, in a sense, matched the tension in the wire.  She began to tremble.  The audience didn’t sense her sudden attack of nerves, but then, as the ends of balance pole began to vibrate in an increasing arc, they knew -- and the tension rose in them as well.  A few seconds passed like minutes.  The audience and the acrobat held their breath.

     One of the essences of civil disobedience is that the person expressing his or her moral or ethical conviction by violating a law expects and is ready to pay the civic penalty proscribed for the breaking of that law.  To cite just two recent examples here in our own UU community:  when the President, the Moderator and other concerned and motivated UUs trespassed on the nuclear test site, they knew they were assuming the risk of arrest and possible penalty as the price of expression of their conviction.

     When the Board of Trustees decided, two years ago, to divest our investment portfolios of our holding of the securities of companies doing business in or with South Africa, we knew there would be a cost to that step and a possible future loss of income.

     Now I have been counseled not to bring up the subject of the cost of our decision not to hold the 1988 General Assembly in Phoenix.  Leave well enough alone, they said.  The Moderator has already explained it, they said.  We don’t want to get into a big hoo-ha over this, they said.  Everything’s going very smoothly, they said.

     This is a financial matter, among other considerations, and I am a Financial Advisor.  I am called upon to give you advice you want as well as advice you may not want.  And my advice to you, my friends and fellow delegates, is that the Board of Trustees, as the elected leadership of a religious organization, has done the right thing, the responsible thing, indeed it has done the financially appropriate thing.

     The very first words I said to the General Assembly Delegates in 1982 as I gave my very first report as your very new Financial Advisor were:  “Our treasure is ourselves and what we stand for.”  What we stand for, not how highly valued our investments, how extensive our properties, how much money we raise every year -- what we stand for.

     Now I am as much of an institutionalist as anyone in this room.  I am as much concerned with guarding our assets as anyone in this room.  I am as much determined to spend every dollar wisely as anyone.  But I say to you that I don’t care about the $130,000 if it is saved at the cost of our conscience -- I don’t want the $130,000 if it is purchased with the institutional loyalty of, and our respect for, concerns sacred to our co-religionists of color.  I advise the delegates that I believe the Board has acted in a manner appropriate for fiduciaries who hold in trust our mission;  they have made a decision to commit funds in a manner consistent with our Principles and Purposes.  I refuse to believe the delegates to this assembly would have had us do otherwise.

     I don’t want to oversimplify this problem or display insensitivity to our co-religionists in Arizona, but I think our perspectives at the continental level must occasionally put certain kinds of concerns of broad social and ethical nature ahead of what we might normally consider our institutional responsibility to our local congregations.