Crafting a church budget is a complex, time-consuming, emotional, and critical process for every church, regardless of size. In the post-pandemic world, where many churches are experiencing reduced attendance and giving, it’s more critical than ever to produce a budget that accurately reflects the church’s mission, vision, and values. Churches must calculate a budget that reflects a realistic income projection, demonstrates sound financial management, and moves the church toward health. Not an easy task, even for those with years of experience.
Many churches find themselves downsizing (or rightsizing) paid staff to bring their compensation costs back into a healthy alignment, leaving some churches without budget expertise. Churches in that position should use this simple example to build their budget categories, or Chart of Accounts (COA), for the upcoming fiscal year.
This example is not exhaustive, nor is it meant to be. Each church is unique, and the budget should reflect the particular mission, vision, values, and focus for the upcoming year. Not all churches will need a detailed level of categorization, while others may want to run detailed reports to zero in on specific spending patterns. Use this example as a guide and compare it to previous budgets used by your church to create a comprehensive and functional budget.
Income
Offering/donations
This scaled-down version of church budget categories uses only donations and offerings as income. Many churches have other streams of revenue such as a bookstore, coffee house, rental agreements, etc. If your church has other regular income streams, include those in the income line, but remember to list those related expenses.
Expenses
Compensation
Compensation is typically one of the most significant expenses for churches. Healthy churches spend about 45%-55% of their total budget on compensation. Be as detailed as possible when calculating this budget category.
- Salaries (exempt, non-exempt, housing, etc.)
- Taxes (FICA)
- Benefits (employer portion of medical, dental, vision, group life, etc.)
- Retirement (employer portion)
- Disability
Operations
The Operations category is an area where the level of detail depends upon the size of the church. In some scenarios, telecom fits better under IT or communications than just a utility bill. The church’s website is another one of those categories that may work better in another COA. Remember, the important thing is to capture the expenses and categorize them in a way that fits your church.
- Office (copiers, printing, office supplies, etc.)
- Communications (website, church app, social media, stock images, marketing, etc.)
- Finance (bank charges, professional fees, tax, sinking fund, etc.)
- IT (hardware equipment, software, etc.)
Facilities
As with the Operations category, Facilities can vary depending upon your church’s situation. Many churches meet in rented facilities, and there is nothing wrong with that, and they have much smaller facility budget needs. Other churches have multiple campuses and require a robust facilities budget. Healthy churches typically spend about 20%-40% on their facility.
- Custodial/Janitorial supplies (includes sanitary and health products)
- Landscape
- HVAC
- Safety
- Repair and Maintenance
Property Expenses
- Mortgage (principle and interest budgeted separately)
- Utilities (electric, gas, water, telephone, etc.)
- Property Taxes and Assessments
- Monitoring (fire, security, etc.)
- Capital Improvement Fund Designation
- Liability Insurance
- Furniture and small improvements
Weekend Experience
- First Impressions (hospitality, welcome events. etc.)
- Worship Arts (Copyright/Admin for music and video, software specifically for the weekend experience, etc.)
- Worship Tech (purchases, repairs, end-of-life replacement, consumables, etc.)
- Services (message-specific promotions, visual aides, etc.)
Adult Ministry
The Adult Ministry categories are generic on purpose because of the uniqueness of how each church runs its ministries. Use your COA for ministries if they better fit your church’s structure; this is only a guide.
- Men’s (studies, retreats, events, etc.)
- Women’s (studies, retreats, events, etc.)
- Groups (events, materials, etc.)
- Care (events, studies, materials, training, etc.)
Young Adult (events, studies, materials, training, etc.)
Students & Kids
Remember, the suggested categories may not fit your church size, structure, and ministry strategy. Smaller churches may combine High School and Middle School into one Youth Ministry.
- High School (events, camps, curriculum, materials, training, etc.)
- Middle School (events, camps, curriculum, materials, training, etc.)
- Children (events, camps, curriculum, materials, training, etc.)
Outreach
Outreach is always a bit controversial. So much so that there is an entire post dedicated to Outreach categories. Again, use this as a guide, but let your budget reflect your church’s heart when budgeting for Outreach.
- Local (events, community support, etc.)
- Global (missionary support, short-term trips, supplies, etc.)
Governing Board (training, consultants, meetings, etc.)
As you begin your budget journey, this list of categories provides a great starting point to ensure your church’s mission, vision, values, and focus for the year are represented through allocating donations to your church.
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