The church is not a business. Often times we use a statement like that to give ourselves permission to not be good planners. The thought is that since we aren’t selling a product or service we shouldn’t be using any kind of business principles to help lead a local body of believers. We would agree that a ratio like ROI has very limited usefulness inside a church or non-profit, but other concepts and practices can have great impact if embraced and implemented by a local church community. Let’s not throw the proverbial baby out with the bathwater.
The word “budget” can strike fear and trepidation into the heart of any ministry staff team. It becomes synonymous with going to the dentist or cleaning out the hall closet. For many, those activities would much rather be avoided than addressed. Keep the door closed on a nightmare storage room and the potential problems inside just don’t exist, right? But we must confront the brutal facts, especially when it comes to a church or ministry and how it stewards resources given to it.
According to a recent article from Deseret News, 98% of the average church’s funding comes from congregational giving. Thus, stewarding these resources well is of critical importance though my suspicion is that many churches don’t create this critical tool. Much like our personal lives, trying to achieve any kind of financial goal without a plan is a waste of time. Given that the church is not a business with arguably more of a definitive ability to estimate things like sales, growth and marketing, how should a church go about implementing and executing a budget plan? At 412 Project, we advise organizations to follow this budget pathway:
- Buy into it
- Build it
- Live into it
Buy into it
The executive team must be on board with the need for and purpose of a budget. Without a commitment to this tool, it will never (I repeat, never) be truly useful. We would advise you to build a team that is responsible for stewardship and oversight. This gets into church governance a bit so look for a future article on this area.
Build it
When you start to craft the budget, start with the big items that are known and work your way to smaller items. We would ask things like:
- Do you own or rent property? Do you have insurance?
- What is your staff size? Are you needing to hire to fill roles?
- Do you have a community gathering or are you just starting your church/organization?
Established organizations will have financial history and bank statements that will make this fact finding journey relatively easy. Newer organizations will need to plan more for the immediate future with eye toward a fund-raising strategy to help fuel the work.
As the big items are known and accounted for in a budget plan, you then turn your eyes to the smaller (though not less critical) items to refine your total picture for period the budget pertains to.
The final piece here is to have an advisory board or other leadership team review, ask questions, and ultimately approve the budget.
Live into it
A budget is only good if it is used.
This goes back to buy in but it also address a reality that often occurs in theoretically buying in to a budget, but then when it comes down to being accountable to operating within the constraints of a budget the water can get a little murky. This can be challenging but accountability on results is necessary if the ultimate goals of the organization are to have a chance of being realized. A monthly review of actuals to budget among the staff and oversight teams is helpful in reinforcing this as well as making the numbers visible to everyone involved for transparency.
To engage further on church finance best practices, click here