So often, when the church financial team uses the term “budget,” the staff recoils in horror. The idea of a budget feels like a straightjacket, with chains and locks just for good measure, confining their every movement. The team sees the church budget as a restriction, preventing the teams from accomplishing their mission, an obstacle to overcome. While many see the church budget as a limit to their ability to spend, the truth is the church budget is simply a tool that allocates how the church plans to spend every dollar.
Can I Spend Money On …
When a ministry leader asks the church financial team, “Can I spend money on …” it’s a bit of a double-edged sword. On the one hand, it shows the ministry leader is trying to be fiscally responsible, and that’s great. However, it also indicates that the ministry leader is either afraid to spend money or is completely unaware of their budget situation. For example, the multipurpose room needs a new computer to run the audio-visual tech. The Youth ministry leader informs the person overseeing the IT department of the need and desire to upgrade the equipment. And that’s where paralysis often sets in. Is it in the budget, and which budget pays for the computer? Here’s a breakdown of how to answer this critical question.
The Church Budget
First, it’s essential to define the church budget. The church budget is a well-crafted and thoughtful plan that projects the church’s income (donations) and how the church plans to spend the money to accomplish the mission. If that sounded more complicated than needed, John Maxwell’s definition should help, “A budget is a plan to tell your money where to go instead of wondering where it went.” Every church needs to take the time to build a budget for the next fiscal year. It’s not a fast or easy process, but a necessary one for churches to stay focused on their mission. (Churches unsure where to begin can read the church budgeting series that breaks down each step.)
When building the church budget, part of the process is forecasting the needs for the upcoming fiscal year. Since each church varies in size and structure, it’s important to identify areas of budgetary oversight. In the example above, the church must determine the responsibility for updating tech equipment. Does that fall under the IT department (if your church has one), or is it the function of the primary users of the room to know when their equipment is aging out? It is the person with the budgetary oversight of equipment for the multipurpose room to include purchases in the budget.
When the budget for the upcoming fiscal year receives the final approval through the church’s process, if the final budget includes the amount for new equipment, then the church should feel free to make the budgeted purchase. It sounds easy, but there are some precautions.
Not So Fast
Budgets are only a plan, and plans change. Sometimes, things happen within the church that can dictate the reallocation of money to something unrecognizable during the budget process. Sometimes, things happen outside the church, like a pandemic, that impact attendance and giving. Even when a church crafts a realistic budget based on attendance and giving trends and approves the line item for new tech in the multipurpose room, that doesn’t always mean the funds are available to make the purchase. That brings us back to the original question, “Can I spend money on …”
Communication
Church financial teams need to provide periodic reports that are clear and easy to read so each ministry leader understands their financial situation. At a minimum, these reports need to show a monthly breakdown of their approved budget, the amount spent, and a year-to-date total for each. These reports provide a critical piece of the puzzle by comparing spending in this area to the approved budget. But it’s not the only piece. It’s also vital for the church’s financial team to communicate when income is not keeping pace with the budget, especially if it impacts spending approved budget items. A word of caution to the church financial team: don’t make major budgetary decisions based on one month. Church donations fluctuate throughout the year, which means December’s donations exceeding the budget by 50% isn’t likely a trend. January and February are typically difficult financial months for churches, offsetting the significant gains of December. The point is to make prudent spending decisions based on a quarterly approach to monitoring the giving, not monthly.
The church budget is a tool to plan for the expenses for the upcoming fiscal year. As long as donations keep pace with the budget income projections, then each ministry leader should feel the freedom to spend up to their approved budget for things like a new computer to run the tech in the multipurpose room. However, in the event of an economic downturn, the church’s financial team needs to guide the leaders on spending to avoid financial shortages.
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