Fixed Assets

I take these off every balance sheet I possibly can. There is no reason for a church (or any other non-profit) to track their fixed assets (land, buildings, and furnishings). CPAs will tell you these must be included on a balance sheet and that is simply not necessary for a non-profit.

Fixed assets are usually listed on a balance sheet for the price they cost. If a building costs $1 million, that is the figure it is listed on the balance sheet. Same for furnishings, building improvements, etc. This figure is what it cost at the time of purchase and that is my hang up. Church pews that cost $100 each 50 years ago now have a replacement price of $2,500 or whatever. Yet, on the balance sheet it is listed as $100 less a full-depreciation of $100. That doesn’t mean anything to the average church member reading a balance sheet. Fixed assets never reflect the current amount of money you need to replace that tangible asset and that is the short-coming a fixed asset and depreciation policy and why it can actually harm a church. People will presume it costs $1 million to replace the church’s fixed assets (which were bought 18 years ago) when the true cost is closer to $5 million.


Instead, do this. Remove all fixed assets from your balance sheet. Then, when you do your annual audit or present the annual financial report to the church, have a footnote in the document in which you list the insured value of the physical plant and the furnishings and add in the tax value of the property (land/soil is not insurable because it can’t be destroyed). This footnote tells the reader the current value of what you own (presuming you keep your insurance value updated).

Finally, take a camera (such as your phone) and record every room, every cabinet, every drawer, and every space in your building. It is so easy to do with modern smartphones. Two people can do an entire church in a morning (or a day if it is a very large church). Then, store that recording in different locations or in the cloud so it can be used if need for insurance purposes. Keep multiple years’ recordings, too – don’t discard one after you get a new one.

Please keep your balance sheet simple – no fixed assets, cash only, and keep restricted funds to as few as possible. Thanks!

Lead On!


Cash Balance Sheet

Cash is King. Especially in non-profits. I’ve spent too many hours trying to get CPAs to understand that in non-profit accounting, there is no need for the balance sheet to list fixed assets, pre-paid expenses, depreciation (in any of its myriad forms), and other forms of for-profit accounting. Sometimes the CPAs get it and follow my lead. Other times they are so entrenched in their methods that they can’t think outside the AICPA lines.


A cash balance sheet means that the only thing on the asset side is your cash and where it is located (E.g., “Main Checking-1st National Bank….$47,738.83”). This is known has “how much money do you actually have available to you as of the date of the balance sheet.


And, please, please, please include ALL your accounts at ALL your financial institutions. I’ve worked with too many churches who tell me they’ve listed everything only to learn later that there is a discretionary fund, an endowment fund, a benevolence fund, etc. that someone doesn’t want others to know about. That is being dishonest – plain and simple. You’re not revealing the whole truth because someone doesn’t trust others. That is wrong.


The other side of the balance sheet is divided in two:

  • How much of the cash you have is encumbered for others?
    • What are your payroll liabilities (money you’ve withheld from employees which you’re going to send to the Federal and State tax authorities, to the employees’ retirement, health or life insurance, or other benefits. That money isn’t yours; you’re just holding it for a little while.
    • The other “liability” is commonly known as restricted funds. Again, this money isn’t yours, you’re just holding it until it is used for the purpose that the donor gave it for. That may be for the music program, for a building campaign, or for benevolence. Whatever it is for, you MUST use it for that purpose and nothing else unless the donor gives you written permission.
  • How much of the cash you have is “left over?”
    • That leftover is known as retained earnings or net assets. That money is truly under the full authority and control of the governing body of the church whether that is elders or the congregation.

A cash balance is simple and that’s the way it should be for churches. You want a document that is clear enough so that a non-accountant can understand it after a 5-10 minute explanation. If you have to go longer, then people are going to think you’re hiding something – and you just might be. Keeping it simple keeps it honest.

Lead On!


Columbarium – Part 6: Moving?

One of the serious considerations that each church faced was moving the columbarium should the church ever relocate and the property be sold. As cities and suburbs change, churches wax and wane; some are closed for good and some move to a new … [Continue reading]

Columbarium – Part 5: Extra Info

I kept 2-3 urns in my office for quick access and so I didn’t have to get one right away when someone died. Don’t let families go buy their own urns – they may not fit. I also had 3-5 niche face plates in my office. When someone died, I took the … [Continue reading]

Columbarium – Part 4: Where to Put It

I’ve led in the construction of two columbaria, one at a Baptist church and another at a Presbyterian church. There was no denominational difference. Our respective goal was to honor the saints and provide a place of sanctuary for people visiting … [Continue reading]

Columbarium – Part 3: How to Pay for a Columbarium

Here are two ways to build and fund a columbarium that I used. The columbarium was built in phases due to the construction costs. Phase I cost $60,000. The pastor asked three families to each give $20,000 in exchange for a tax-deductible … [Continue reading]

Columbarium – Part 2: Funeral Costs and a Columbarium Niche Sales

Cremation is the safest and cheapest way to bury a person. A casket funeral can cost upwards of $15,000 (for the casket, the funeral home, the lot and concrete vault, etc.). That is money that is literally poured into a hole in the ground. Inurning … [Continue reading]

Columbarium – Part 1: What is It and Why?

A columbarium is a place where the cremated remains of a person are kept. It comes from the Latin word for dove (columba) because doves build their nests in niches in a wall and cremains are frequently placed in niches. Burning a body has been a … [Continue reading]