I worked for Callaway Golf, one of the world’s largest golf manufacturers, during its heyday in the early to mid-90s. It was so exciting to be a part of the explosive growth in the golf industry and how Callaway Golf leveraged the sudden interest in golf into a billion-dollar, world-class company. The organization’s size, scope, and complexity were overwhelming during my orientation as a new employee. There were at least eight buildings on the Carlsbad campus. As the Help Desk Supervisor, the scope of IT support included sales, customer service, distribution, manufacturing, R&D, and even the company store. It wasn’t easy supporting the AS/400 mainframe, Compaq PCs running Windows 95, and a variety of desktop software (web-based software wasn’t around yet) while converting to SAP.
Even with all of the complex things happening all at once, they kept the focus simple, reminding the employees that at Callaway, we make, sell, and ship golf clubs (I started before they expanded into so many other product lines like balls, apparel, etc.). Yes, all the complicated elements necessary to make, sell, and ship the product were essential, but I appreciate keeping the focus simple.
When I switched careers and went into full-time ministry, I wanted to integrate the best elements of what I learned in the corporate world and apply them. Even in something like the church budget, it’s easy to get lost in the details and over-complicate it. A church budget is a thoughtful, intentional plan to allocate financial resources to accomplish its mission for the upcoming fiscal year. While numerous elements are required to build an effective church budget, in an effort to keep it simple, here are the three simple steps to building a church budget.
Define the Goals
A church’s mission defines why it exists. Most Christian churches have some variation of Matthew 28:19 as the foundation of their mission. A church’s vision paints the picture of a future state; it’s the inspiration to accomplish the mission. With the mission and vision of your church in mind, define the specific goals for the upcoming year. What is God calling your church to accomplish? Churches often find that new ministries are necessary and others are not when taking the time to clarify the goals. Defining the goals for the upcoming year is the first and most crucial step when building a budget.
Project the Income
Determining the income for the upcoming year is a foundational piece of the budget. It should be rooted in data with a keen eye on trends. Churches that project their income for the upcoming fiscal year based on what they want to spend instead of what God is providing do so at the peril of a financial disaster. Invest the time necessary to create a realistic income projection based on two data points: attendance and giving. To find out how to create an income projection, check out the post: Church Budgeting 102 – Building the Projected Income.
Align Expenses
Once the church agrees on the goals for the upcoming year and projects the income, it’s time to allocate the financial resources. Since this can be an overwhelming task, I recommend breaking it up into three basic chunks:
- Compensation: Includes Typically consumes 45-55% of the entire budget and includes salaries, housing, and benefits.
- Operations: Includes rent, mortgage, utilities, IT, marketing, office supplies and equipment, etc.
- Ministry: Includes all ministry-related expenses like children’s ministry, student ministry, outreach, weekend experience, hospitality, etc.
Once the operational and ministry teams submit their budgets, compare the totals to the projected target and adjust. In most cases, the dreams and desires of the operations and ministry teams outpace the income. That’s a good thing – you want teams that dream of ways to accomplish the mission. When that happens, and strategic reductions are necessary, use the mission, vision, and goals for the upcoming as a guide.
Digging into the details of anything, like a church budget, can appear complex and overwhelming. When that happens, remember budgeting is as simple as setting goals, projecting income, and adjusting expenses.
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