October is a busy time for church financial personnel. The church is heading into the most productive quarter of the year – October, November, and December. While the ministry teams are busy planning ways to reach new people and connect the church family, the financial teams (paid and volunteer) are busy wrapping up their long budget season if the church’s fiscal year runs October through September, or they are diligently working on the upcoming budget that starts in January. Whether your church attendance and giving trends are up and to the right or a long, tough road lies ahead, the budget is one of the tools to help navigate and refine a fruitful season of ministry.
Church Budget Essentials
Anyone who has put together a daybed from Ikea understands the importance of the instructions. The box contains hundreds of different-sized screws, dowels, planks, and trim that, when put together correctly, make a nice piece of furniture. However, not following the instructions closely and using the wrong screw in the wrong plank creates a myriad of issues during the construction process. The church budget is like the plan to construct the daybed. It accounts for every part necessary to fulfill the church’s mission. A budget makes it possible to know where to begin and how to get there. Here are the essentials of building a church budget.
- Define the Goal: Before opening a spreadsheet or putting pencil to paper, the church must define its goals for the upcoming fiscal year. These goals must be (SMART) specific, measurable, achievable, relevant, and time-bound and support the church’s mission and vision.
- Estimate the Income: It’s imperative to accurately project the amount of income (donations) for the upcoming fiscal year. Churches that stuff a number into the income column without performing the analysis are like putting the wrong screws into the wrong planks hoping the daybed doesn’t collapse. Spending the time and effort to pull at least 12 months of donor information and compare it to prior years helps identify trends and an accurate estimate of income for the budget.
- Estimate the Expenses: Once the church provides the ministry and operation teams with the goals for the upcoming year based on the mission and vision, it’s time for them to build the budgets for their areas. Creating the expenses is not an exercise in copying and pasting from last year. Expenses show how every dollar donated accomplishes the mission. While building the first cut of the budget, the church needs to be detailed and reveal how they arrived at the total, especially for complex budgets like compensation and facilities. Don’t create expenses in a vacuum. Use best practices and benchmark expense categories to determine the health of your church’s budget, especially in high-dollar categories like compensation and facilities.
- Analyze and Adjust: Once the first draft of expenses is completed and compiled, compare the overall total to the projected income. It’s normal to have several iterations of adjustments to the expenses. Think of it as a refining process to identify the church’s priorities. Continue adjusting the expenses based on goals, mission, and vision until the expenses match the income.
- Communicate: Now that the estimated income and expenses are aligned, it’s time to communicate the plan. For most churches, elements of the budget, like individual compensation and missionary support, should remain confidential, but the budget itself is not a secret. Create a communication strategy that starts with the stakeholders and works outward to the congregation.
Managing God’s resources well is a huge task for any church. It doesn’t matter if your church is growing at a healthy pace or navigating a difficult period. Having a budget ensures the church can demonstrate fiscal responsibility and gain trust in the congregation and community. Operating a church is far more complex and important than building a daybed; use the instructions (budget).
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