In June of 2006, I began my journey in full-time vocational ministry. It was a tumultuous time in our church’s history. We had just started the process of navigating uncharted waters as our church fractured and split. Without going into the details, the primary disagreement was over the purpose of Sunday morning. As the new staff member, I was overwhelmed trying to learn my new role and find stability while the ground kept shifting. Key people on the board, staff, and volunteers were leaving. There were endless meetings and discussions on how to move forward.
On top of that, there were only three months until the fiscal year ended in September, which meant we needed to create a new budget. I wish that were the most challenging budget I’ve ever worked on, but it wasn’t. However, the next few years proved to be very formative in my approach to budgeting. I created processes to project the income target based on attendance and giving trends. I standardized the way leaders submitted their budget requests for the upcoming year. I discovered and used metrics from healthy churches to guide our process. Even today, despite my experience and desire to improve the process, we always overlook items that need to be in the budget.
It doesn’t matter if it’s your first time crafting a church budget or fifty-first; there’s a good chance you overlooked at least one expense. As your church prepares its next budget, I’ve summarized three commonly overlooked items that may help to create a more accurate look at costs.
Inflation
The first area commonly overlooked is inflation. Since 2020, we’ve all felt the impact of historically high inflation rates. In our personal finances, many of us feel the pinch in staple products we need, like groceries, gasoline, and utilities. The most recent posting (January 11, 2024) from the Legislative Analyst’s Office shows that in California, prices have grown by 19 percent overall since 2020, with energy prices the most volatile. And these increases impact churches as well. When budgeting, check the latest inflation trends and calculate the increase in impacted areas like utilities, insurance, camps, etc.
Administration
The next large grouping of items falls into administration, which covers a large range of expense items. Specifically, churches seem to forget to budget for the costs of tracking and administrative software like CVLI, CCLI, and others. For example, in California, AB 506 requires screening, training, and policies for all board members, staff, and volunteers working with children. The costs to comply with this law include Live Scan background checks, approved mandated reporter training, and a way to track it. Local, State, and Federal governments pass laws and requirements each year, ultimately increasing the church’s administrative costs. Overlooking these required components of operating a church in 2024 could prove costly.
Expansion
This final group of overlooked budget items is related to growth. Healthy, growing churches need to expand their reach, campus, and even staff. Sometimes, growth is sudden, making it hard to foresee the needs. In those cases, a budget revision is necessary. However, the church often sees the trend but overlooks budgeting the costs. For example, if a church sees growth in a ministry area and needs to turn a part-time position into a full-time position, the budget needs to reflect the increase in hours and benefits. If it’s a new hire, there are costs associated with the search process, like online postings and advertising. Expansion can also mean expanding the church’s reach through advertising, online services, new ministries, improved online presence, etc. In the excitement and chaos that often accompanies growth, it’s easy to overlook adding these essential costs to the budget.
Developing and maintaining a process is important as your church begins the budget season. Here’s a simple formula:
- Cast vision for the upcoming year that fulfills the church’s mission.
- Project the income based on attendance and giving trends.
- Allow the ministry and operation leaders to build their budget based on goals. Keep an eye out for overlooked expenses.
- Compare the projected income to the expenses. Refine the expenses to match the income using the mission to guide decisions.
- Finalize and share the budget.
A church budget is a plan that demonstrates how the church allocates every dollar donated. It should reflect the mission, vision, and values of the church. And even the most carefully and prayerfully created budgets have overlooked expenses. Once the church discovers the overlooked items, the budget must adjusted accordingly.
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