10 Financial Ratios (part 7 of 10)


Designated Funds

  1. Definition: The major ministry areas should have at least half their annual budget in a fund designated for their ministry. These major ministry areas are: Worship & Music, Care & Fellowship, Discipleship & Education, and Missions & Outreach.
  2. Results:
    1. Minimum: At least one-fourth of the annual budget for the major ministry areas
    2. Maximum: No more than the entire annual budget
  3. Consequences:
    1. Ministries should and must rely on their budget to accomplish the main tasks entrusted to them. If a church isn’t budgeting appropriately, then the church is setting the minister up for failure.
    2. Ministries should also have a designated fund from which they can use occasional funds to do things they didn’t budget for because they weren’t aware of these opportunities when the budget was requested.
    3. Ministers must never do aggressive fundraising for their designated funds because that can undermine gifts to the budget.

Now What? So What?

  • Compare your church’s financial ratios to the optimum range for each ratio.
  • Develop a 2-3 year plan to bring your ratios in line with best financial practices.


Lead On!