There has been a lot of discussion in the church world about church budget percentages lately. Questions arise like: Are we paying the staff too much? Do we have too many people on staff? Are we investing enough in local and global outreach? Is the rent or mortgage payment too high for our church size? What about operating costs? Is it taking away from the ministry?
These worthy questions require open and honest conversations because most churches want to maximize every dollar donated to their church to accomplish their mission. By the way, a church budget is the tool used to allocate every dollar to do that. Since coming out of the pandemic, many churches realize their budget is getting squeezed from all sides – inflation, lower attendance, fewer volunteers, and decreased giving. While trends are favorable compared to early post-pandemic numbers, many churches have not achieved pre-pandemic totals. And when passion runs high, sometimes emotions run hot. Adding the tension of money into the mix of any conversation and frustration is bound to overflow.
Church Budget Percentages
Because managing God’s resources well is paramount when operating a church, savvy churches use church budget percentages to measure key budget categories against healthy standards. In a world increasingly filled with people looking for confirmation bias, comparing your church’s numbers against healthy standards provides a perspective that can quickly and easily answer many of the burning questions churches face. Here are a few examples:
Compensation: Typically, compensation is the largest and most scrutinized church budget category. The news loves to highlight church scandals, and unfortunately, there have been enough pastors who fall in this area to keep suspicions high regarding clergy pay. But the truth is that most people in ministry are underpaid, especially by secular standards. According to the U.S. Bureau of Labor Statistics, the mean wages for clergy are $56,640 annually. Evaluating church compensation costs often becomes a double-edged sword of keeping the budget aligned with donations and compensating the church staff appropriately. Church financial teams, elder boards, and concerned donors alike want to know if their church is in a healthy range and what to do if it’s not. Having a benchmark to use for comparison is wise. Since all churches are in different stages of growth and locations, there are legitimate reasons and seasons when compensation percentages fall out of the healthy range. Slashing salaries or eliminating staff too hastily may not be in the church’s best interest. If your church falls outside the healthy range, invest the time to understand why before making any changes.
Operations: Operational costs are right behind compensation when evaluating church budget expenses. Like compensation costs, several variables can inflate or deflate the total percentage of operational costs in a church budget. For example, location makes a big difference in the price of rent or mortgage. Churches located in California or New York will probably be on the high end of the spectrum. Owning a facility, or facilities, also comes with higher repair and maintenance costs. Again, if your church falls outside healthy ranges, it’s imperative to understand why before making cuts that could restrict safety.
Ministry: While we can argue that everything the church does is ministry, for the sake of budget comparisons, ministry costs are the non-operational and non-compensation costs. Without a baseline, it’s difficult to know if the church is over or under-spending on ministry costs.
Comparison Tool
If your church wants to see how its key budget categories stack up against healthy church percentages and what to do when those categories are out of alignment, there is a church budget assessment eBook that can help walk church teams through the process. It’s a great place to start the analysis process and provides tips when budget categories are out of alignment.
Asking questions about the budget is healthy and normal. Instead of feeling defensive, engage in honest conversations and evaluate your church to ensure it’s making every effort to manage God’s resources well.
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