As I approach a tee box, I start by looking for a flat spot with few divots. You’d be surprised how many tee boxes slant. I tee my ball up to the appropriate height, depending on the club I’m going to use, then I stand directly behind the ball, imagining my ball flight and where I want the ball to land. I follow that imaginary line from the landing place back to my teed-up ball and select a spot on the ground just a few feet away as a guide. Learning this pre-shot routine helped me gain confidence that, in theory, I’m aiming in the right direction. For the golfers reading this post and doing a facepalm thinking about slow play, this routine takes no more than a few seconds. If you are not a golfer, think about something you enjoy doing. I bet bakers have practices they follow before mixing the ingredients or pre-heating the oven to create the perfect cake or cookies. Crafting a church budget is no different. Investing time up front to prepare can make a big difference in the success of the budget. While it may be tempting to haphazardly put numbers on a spreadsheet, casting vision, analyzing trends in your church, and creating a realistic income estimate can provide the financial plan your church needs to thrive in the upcoming year.
Cast Vision
Every church should know its mission and vision. The mission and vision of your church should drive everything line item in the budget. Specifically, what is the focus driving the initiatives for this budget season that accomplishes the mission and gets your church one step closer to realizing its vision? The leaders in the church need to prayerfully establish and share the focus with the rest of the staff, unleashing them to dream about how God will use your church this year. Defining a unified direction based on the mission and vision of your church is the first step in creating a church budget.
Analyze Trends
When I read the Bible, I see structure, order, and accountability. Starting with the Jethro principle in Exodus 18, through the accurate account of the feeding of the 5,000 in Mark 14, to the church’s explosive growth in Acts 1, and on through Paul’s letters, getting good metrics is necessary. To create a church budget, you need to know what’s growing and producing fruit and what isn’t. At a minimum, a church should track attendance, giving, and expenses.
- Attendance – separate adults from youth and children when making headcounts; keep track of services separately and weekday gatherings vs. weekend services. Is Sunday attendance trending up or down? How does that compare to weekday gatherings? Answering these questions may help determine where to focus budget money for the upcoming fiscal year.
- Giving – generate reports to determine the average giving per giving person by dividing the offering amount by the number of adults in the service. In 2013, Tony Morgan shared how he measures the average giving per person and the healthy range. According to Tony, the average should be between $37-$40 per person. What’s the trend in your church? Is it going up or down? Do you know why? Of course, tracking the overall direction of donations is essential when crafting a church budget. Is it going up or down? If attendance is up but giving is down, how do you budget for that? Businesses can create new or improved products, raise prices, or focus on sales. Churches need to be strategic in utilizing their limited resources to accomplish their mission. According to The National Study of Congregations’ Economic Practices (NSCEP), published by the Lilly Family School of Philanthropy, churches that teach about giving and generosity grow faster. What can your church change in the budget to increase giving and growth?
- Expenses – I highly recommend that each church generate monthly reports to track their spending. Is it on track with the budget? Even more importantly, is it in alignment with the current giving? How is inflation impacting the church’s utility bills? Having this kind of essential data will help build a more accurate budget.
Create a Realistic Income Target
Armed with a unified focus for the year and the relevant attendance and donation data, churches can use this information to put the target together. Start by compiling the last 12 months worth of attendance data. Next, collect the previous 12 months’ worth of giving data. Calculate the attendance growth or reduction rate. Important: You must have at least 12 months of data due to the fluctuation in months at your church. To find the growth or reduction factor, use the monthly attendance data, calculate the difference between the prior month and average the percentages. Now it’s time to create the target. Use the sum of the giving data from the last twelve months, multiply it by the growth or reduction factor and add or subtract that number from the twelve-month offering total.
Whether preparing to hit the perfect tee shot, bake the perfect cookies, or plan the next church budget, following a routine to better prepare increases the probability of success. I found that developing a unified focus based on the mission and vision of your church for the upcoming fiscal year, analyzing key trends, and creating a realistic income target is a great way to kick off the budget process. Fore!
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