Afraid of the ‘B’ word?
OCTOBER 22, 2016
Are you afraid of the ‘B’ word? You should not be. It should be in every vocabulary. Budgets are absolutely necessary to have a healthy Church. Let me share some thoughts on budgets.
First, the basis for developing a budget is not simply faith. That is a lazy approach. Some of the items in the budget will be based in faith but the budget for the faith venture should be based in good stewardship, sound financial processes and principles, and strategic planning as well as the ability to inspire and motivate. Good budgets apply good stewardship to real faith.
There is nothing that inspires giving more then good outcomes. Success creates buy-in. Creating a budget and sticking with it produces trust in the givers. When a church is constantly running near empty and having to curtail events or expenditures or when the Church is constantly asking for more money out of need rather than vision, people lose trust in financial integrity. No amount of words will motivate them when the evidence is demotivating them.
I was at a board meeting trying to help a church create a budget when someone said; “there is no point in doing all the work of creating a budget, it changes at our pastor’s next good idea or after-the-fact excuse”. Though most board members are more diplomatic, the comment shows the lack of trust and ingrained frustration many board members can feel. Some Pastors express worry about a board’s lack of faith but it is often more a lack of trust due to past fiscal failures.
Budgets should follow the vision, ideally be closely balanced in ministry, facility, and staffing needs, allow for a margin in each area for truly unforeseen needs or opportunities, have a savings component for future credit rating, be easy to understand but all encompassing, have a year-to-date reporting mechanism to allow for awareness and adjustments, not include department or allocated funds so that robbing Peter to pay Paul does not occur, and such other principles as can be found in many available church budgeting tools found on the web.
I have found that a church that is struggling out of a bad financial position can be helped by creating a three tier budget and sticking to. First tier – the absolute essentials to exist and pay all debts; Second Tier – the ability to pay down outstanding debts and develop more ministry capacity; Third Tier – the place where saving can occur and expansionary ideas can be funded. Knowing the quarterly tier income and living within it will help to alleviate angst, keep discipline and move things forward.
One mistake that many churches make in budgeting is to take the past year’s income and project an increase for the next year. Most of the time that doesn’t happen or if it does, the budget is still maxed out. A better approach is to keep next year’s budget the same or even create a 5-10% lesser expenditure margin like ps Chris Hodges of Church of the Highlands espouses. Check out https://www.stewardshipcentral.org/posts/3-ways-to-create-more-margin-in-your-life.
My encouragement to you is to find someone who understands Church budgets and buy them a coffee.