Before I left my career as an IT professional for a large golf manufacturer to go into full-time vocational ministry, I joined the elder board of my church. Even though I underwent an extensive training program evaluating my fit with the church’s theology, biblical qualifications, and structure, I was unprepared for the task ahead. To complicate things, I’m an introvert by nature and prefer to sit back and observe when in new and unfamiliar situations. During my first official elder meeting, my plan was to hit the ground listening and see where my gifts best fit within the group. Things were going pretty well until it was time to review the church’s financial statements. The church’s business administrator, who was not a part of the board and therefore not in the meeting, provided standard reports like a Statement of Activity and a Statement of Financial Position generated by the accounting software for the meeting. It was clear to me that only two or three board members understood the reports and translated the results to the rest of the board. While the governing board is responsible for the financial stability and direction of the non-profit organization, it often needs better reports to understand its financial position and make prudent decisions.
Keep It Simple
As the new board member, I watched, learned, and tried to understand the process. But, when some of the board members started asking what the financial reports meant, there was an apparent disconnect. The reports met the requirements – they were accurate and timely, but they didn’t provide the necessary information in an easy-to-understand format. It wasn’t clear whether the church’s financial position was strong, weak, or somewhere between. The good news is that it’s not a requirement that internal financial reports be financial statements produced by accounting software. Boards often require something different, something more straightforward, allowing them to understand the church’s financial situation. After all, most board members are not accountants, and simple is almost always better.
What’s Necessary
Providing system-generated reports from the accounting system is easy. But to create custom reports that make sense to non-financial people takes work. Before spending a bunch of time creating charts and graphs to make the reports easier to follow, it’s best to understand what’s necessary for the church. Each church should define what the board needs to review to meet its financial responsibilities and make informed decisions. Here are a few suggestions for monthly reporting to the board:
A narrative summary page that includes:
- Offering vs. Budget (current month and YTD)
- Expenses vs. Budget (current month and YTD)
- Cash Flow
- All bank account balances
- Key expense data compared to the budget, such as compensation, facilities, and ministry.
- Attendance comparisons to the prior year.
Each page following the narrative summary should provide easy-to-understand details with graphs and charts that fill in the gaps from the narrative summary.
Other reports to consider:
- Loan balances and payment schedule
- Loan balance requirements
- Accounts payable
- Per Capita Giving
- Financial SWAT that clarifies financial strengths, weaknesses, opportunities, or threats.
Staying Engaged
When I joined the staff at my church, my time on the elder board provided a unique insight into what financial information the board required to make sound decisions. My goal was to revise the financial reporting to match what the board needed. It took months of going back and forth until we reached a consensus, but it was worth the effort. The easy-to-understand reports provide relevant data in a timely manner that meets the requirements and keeps the board engaged in the church’s financial matters.
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