One of the many hats I get to wear as the Executive Pastor of Operations is to oversee the benevolence fund. It’s a designated fund, meaning it’s separate from our operating account, and its sole purpose is to offer one-time assistance to those experiencing financial hardship. Even though it often requires complex dialogs about very personal issues like income, debt, and spending. I love being a conduit of God’s love, grace, and mercy when people find themselves in a challenging position.
Earlier this week, I received a call from a young family that found themselves in a tough financial spot. Per our policy, I met with them and let them share their story to understand better how they got there and how we, the church, can best help. Over the years, I’ve learned that giving money isn’t always the solution; sometimes, people need counsel and a plan. As with many young people I counsel, this family needed training in managing money in addition to financial help. Two issues became apparent to me. First, because they didn’t know how to budget, they lived beyond their means and accumulated a lot of debt. Second, they needed an emergency fund.
An Emergency Fund is Not a Lack of Faith
In some ways, church finances are not that different than personal finances. They both require a plan (the budget) to not spend beyond the income and go into debt. And churches need an emergency fund because emergencies happen – even to churches. Solomon, the wisest man who ever lived, wrote, “The wise have a generous supply of fine food and oil in their homes, but fools are wasteful, consuming every last drop.” ~Proverbs 21:20 (The Voice). You don’t need a Master’s degree in finance to see that fools spend up to or beyond their income (the need for a budget) while wise people have a generous supply (the need for an emergency fund). No, I’m not saying to replace the peace, security, and comfort of knowing and trusting Christ by storing money. An emergency fund is not a lack of faith; it’s wisdom and good stewardship. And we are all called to steward (manage) God’s resources well.
What is an Appropriate Amount?
While there are some parallels between personal and church finances, like building a budget and an emergency fund, the amount of the emergency differs for a church. Most personal finance experts like Dave Ramsey recommend that individuals have a robust emergency fund of three to six months’ worth of expenses. While there is no one-size-fits-all solution to this vital question, it may not be very strategic for a church to set aside that much money for an emergency fund. It could unnecessarily limit the church’s ability to fulfill its mission. In a 2017 post, Sarah Thompson at CapinCrouse provided a solid recommendation for creating an emergency fund of 40 to 80 days’ worth of expenses. For example, if the church’s average monthly expenses total $120,000, that works out to about $4,000 per day. Multiply that by the number of days: a 20-day emergency fund of $80,000 is considered dangerous. A 40-day emergency fund of $160,000 is safe, while an 80-day emergency fund of $320,000 is ideal.
It’s important to note that emergency funds cover unexpected, sudden expenses. Sinking funds take care of known future costs, like replacing the roof.
Building the Emergency Fund
The writer of Hebrews eloquently captured the idea of building an emergency fund when he wrote, “ No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it.” Building an emergency fund requires the discipline to add the line time to the budget. Start by establishing the emergency fund amount. If your church is comfortable with a 40-day emergency fund, calculate the amount and determine a pathway to get there. Using the example above, it’s unlikely that a church with average monthly expenses of $120,000 can save $160,000 in a year; that would require saving over $13,000 per month. Then, determine the length of time to achieve the goal. When building an emergency fund, being realistic and disciplined is essential.
Much like the young family I met with, unforeseen, sudden events occur that require an injection of financial resources. Churches must take the time to understand the amount necessary to survive these events and find the discipline to build the emergency fund. Emergencies happen, even in churches.short url: