Church Budgets: Top 10 List (part 1 of 2)

Posted on February 18, 2014 Written by

This week I am posting #1-#5 of the Top 10 considerations regarding church budgets. Stay tuned for the remainder of the list next week.

 

1. Why do you need a budget?

A budget is a tool – nothing more.

  • It is a yardstick to measure your progress toward planned goals.
  • The planned goals are the most important aspect of the budget, not the financial numbers.
  • The financial numbers are ONE indicator of how well the church is doing toward achieving these goals, but it is not the ONLY measurement.

Budgets must be developed holistically

What do we want to accomplish in our youth ministry, worship area, building maintenance, staffing needs, etc.?

How are we going to reach these goals using our resources?

  • People: staff, volunteers, and paid vendors
  • Money: from all sources, not just budget
  • Time: when do we plan to achieve these goals

Ideally, budgets look forward over several years, not just the next few months. The Budget Committee should always be looking at how the church’s finances need to be structured over the next several years.

 

2. What is the timeline for developing a church budget?

There are several elements to the process and each one has its own timeline. Some churches use all these elements and some use only a few. Determine what works best in your specific church’s culture.

Theme development

  • Churches that use a theme typically have a team working on this 7-8 months before the beginning of the new fiscal year.
  • Some churches have themes centered on the core aspects of church (worship, fellowship, missions, member care, and education) and promote each one every five years. This helps guide theme development.
  • The committee usually selects a verse, logo, tag line, and music which will help focus the church during the budget emphasis. Churches with a fiscal calendar year often use October as the budget emphasis time, and theme development is in April and May.

Committee budget work

  • Committees need 2-3 months to find times to meet and come up with goals (numeric and intangible) for their ministry areas for the few years.
  • Committees should have a leader (staff or lay member) who can make a presentation, if necessary, to the Budget Team.
  • Committee work is done 4-6 months before the new fiscal year.

Budget Committee coordination

  • It is up to the Budget Committee (sometimes a subset of the Finance Committee) to gather the info from the various working committees and compile it into a comprehensive budget.
  • Some Budget Committees want representatives from the various teams to make presentations to the Budget Committee so that they’ll more fully understand the why behind each of the numbers. These presentations can help this Budget Committee to be the most fully informed group of lay leaders about the wide variety of work being done by the church.
  • Budget Committee work is done 3-4 months before the new fiscal year.

Church-wide presentations and vote

  • Some churches have a month-long budget or stewardship emphasis to help people understand what makes up all these figures and why each person in the church is important to make all of it happen. Many churches will use every form of communication possible to inform members and get them involved.
  • If the church is on the fiscal calendar year, then these presentations are in October with a vote by mid-November (before Thanksgiving) so as not  to encroach on Advent.
  • Typically, this work is done 2-3 months before the new fiscal year.

Follow up

This is a continuous process during the fiscal year. People need to be reminded of how their money is being used and the good that it is doing. Take advantage of Sunday morning offering times to tell the stories of how lives are being changed due to the generosity of church donors.

 

3. Who needs to be involved in the process?

Early stages

  • In the early development of a budget, you need the informed leadership working on the budget. This usually means the informed leadership in each budget area meets to plan their goals and determine the resources they need to achieve those plans.
  • The Budget Committee (or designated sub-committee of the Finance Committee) does not have jurisdiction over the goals in the various ministry areas because they are not as fully informed about those areas as the respective committees are.

Middle stages

  • At some point in the development process, the many ministry committees should invite feedback from the people invested in each area.
  • For example, the Missions Committee should tell people interested in missions what the plans are and then ask them for their ideas about what is needed on future endeavors. Committees must never create budgets in a vacuum – seek input first from the leadership and then from the followship. The “wisdom of the crowds” is valid and insightful.

Later stages

Finally, the different components of the budget will become public and that is when as many people as possible should be aware of the budget (at a minimum) and invested in it. The more people that are “buying into” the budget and what it wants to do, the more successful all the areas of the budget will be.

 

4. Should you use pledge cards?

Some churches have used pledge cards for decades and will continue to use them. Some churches stopped using them; some of those members regret that decision and others do not.

Pledge cards have several purposes:

  • As a tool in setting the budget
  • As a way to challenge people to give more
  • To track how much people have given

Increasingly, younger generations do not want to commit to a figure they’ll give. They will give – and give generously – but they just don’t want to state how much they’ll give. There are so many variables in life (debts for school, home, car, credit card; kids; trips; business and home; etc.) that are hard to plan for.

If you use pledge cards, then have a clear, concise, consistent reason WHY you are using them.

  • Pledge cards should never be used as a tool to bully people into committing or giving – too often that is what pledge cards devolve to.
  • Like ALL aspects of church finances, pledge cards must be used in a positive way, such as encouraging people to be more generous (with their prayers, their time given to church activities, and their finances).

 

5. How do you estimate your annual income?

This is one of the hardest numbers to determine in financial budgeting.

Fiscal prudence suggests one or a combination of the following. A church should be able to do better in the future than it has in the past.

  • Use the past 12 months’ rolling figure of actual receipts
  • Use 90% of the past 12 months’ rolling figure of actual receipts
  • Use a spreadsheet formula to forecast the next 12 months’ income

These formulas are intentionally conservative. The church can use any “excess” for capital needs, additional staffing or programming needs, and/or to establish and replenish reserves.
Be financially conservative in your projections. You won’t regret it.

 

Filed Under: budget, church administration, church finances, church financial statements, leadership, wisdom Tagged: , , , , ,

Rocket Scientists

Posted on January 7, 2014 Written by

Years ago I heard a story about a pastor who was ready to quit after just a few months at his new church. Every decision he made, every item in business meetings, and every issue in church council meetings was being questioned in detail. The lay leaders wanted to know every answer before they gave their approval. And the pastor didn’t have every answer –he knew that some answers would only come “somewhere down the road” and that wasn’t good enough for many of his key leaders. He was frustrated to the point of quitting and he expressed this to the monthly gathering of local pastors, a group with whom he could share his feelings and problems.

Some of them laughed at him which he didn’t appreciate. They asked him where these lay leaders worked who were “causing this trouble.” “At NASA, of course, and they are all rocket scientists,” was his answer. This was a “company town” in that the major employer in the county was NASA and yes, the lay leaders of every church in that city were, quite literally, rocket scientists.

Rocket scientists are a special breed of engineers. Engineers study the heck out of everything – they want to know the answer to problem and potential problem before they embark on actually carrying it out. Rocket scientists take it one step further because they know that they never get a “do over.” If something breaks in a factory, the engineer can go in with a team, find a solution, and fix the problem. That is usually not an option for rocket scientists – they’ve got to know and prevent every single problem that might even remotely happen before they even build the rocket. That is a phenomenal amount of planning. These rocket scientists were merely taking their training to their church’s finance, personnel, deacons’, and church council meetings. And the new pastor didn’t understand the background of his leaders.

After his colleagues helped him understand the dynamics of working in that city, the pastor had a long tenure there. He helped the leaders understand that in church work, you don’t know all the problems before you embark on a project and you certainly don’t have to have all the answers ahead of time. The leaders helped to pastor to be more organized in planning and assessing the failure or success of an activity. In short, they helped each other as they were making decisions.

The lesson for leaders is to understand who they are working with and the backgrounds each one brings to the table. Everyone has different gifts and those can be a huge asset to the organization if they are used correctly (or damaging if used improperly). Get to know your people and use their skills for the Kingdom.

(FYI: I’ve heard this story is true and attributed to a specific church but without confirmation, I prefer to leave it more as a parable than fact.)

Lead On!

Steve

Filed Under: leadership, wisdom Tagged: ,

Rational Conversations on Emotional Subjects

Posted on December 31, 2013 Written by

I’ve noticed an interesting thing about most human conversations. Sometimes one person approaches the subject in a thoughtful manner while the other person, may have rational point of view and an emotional link to the subject. Occasionally, both sides have emotional connections to the topic. Infrequently both sides talk about a subject in a completely rational manner.

When emotion enters into any conversation, it becomes difficult to talk in a balanced manner. Emotions usually trump reason; feelings are more powerful than thoughts and frequently control human actions.

As you have a conversation with a colleague, vendor, church member, volunteer, family member, or anyone, keep in mind your own emotions and how they are affecting your point of view and what you are saying. Likewise, recognize the feelings that the other person has and how those emotions affect the topic in ways that you don’t know or understand because they’ve had a different life-experience than you’ve had.

Emotions will always affect every decision that is made but emotions should not control the outcome of all decisions. Decision-making should be based on the best information available until more or different information is available. By definition, feelings will affect decisions – and that is a good thing. The key is to ensure that in the end, there is a well-thought out decision which is in the best interest of everyone involved.

Lead On!

Steve

Filed Under: leadership, strategy, wisdom Tagged: , ,

The 10-40 Window

Posted on December 24, 2013 Written by

The 10-40 Window refers to the area located between 10 and 40 degrees north of the equator that in 1990 was purported to have the highest level of socioeconomic challenges and least access to the Christian message and Christian resources on the planet. The 10/40 Window concept highlights these three elements: an area of the world with great poverty and low quality of life, combined with lack of access to Christian resources. The Window forms a band encompassing Saharan and Northern Africa, as well as almost all of Asia (West Asia, Central Asia, South Asia, East Asia and much of Southeast Asia). Roughly two-thirds of the world population lives in the 10/40 Window. The 10/40 Window is populated by people who are predominantly Muslim, Hindu, Buddhist, Animist, Jewish or Atheist. Many governments in the 10/40 Window are formally or informally opposed to Christian work of any kind within their borders. (Source: Wikipedia)

Go to your closet and pull out some clothes. Now look at the tags to see where your clothes are “Made In.” Odds are that the majority of your clothes are made in a country located in the 10-40 Window. The cheapest labor in the world is located in this geographical area and thus many, if not most, of the human sweatshops with underpaid women and children are found in this geographical band.

Think about it, the clothes on your back are made by some of the poorest people in the world. They have may have no understanding that what they made with their hands will end up in an average American home (which they would call a palace). To gain a fuller understanding of this dichotomy, go to www.globalrichlist.org and key in your annual salary – you will probably be in the top 1% of all wage earners on the planet while the person who fabricated your clothes is in the bottom 10% of all wage earners.

Here’s my challenge to you

  • Pray for the person who made your clothes. You will never ever know who made your clothes but God does. That person needs to know God in a personal way just like you do and is probably not a Christian nor even knows who Jesus is. Chances are that no one in the world is praying for that person. That person is, more than likely, a woman or child (under age 18), with limited education and financial means living in what we would call a hovel or shack and probably eats one or two meals a day. The clothes this person makes are probably better than what they are wearing. Pray for this person – they need your prayers.
  • Pray for the Christian nationals in that country. There are Christians in every nation and almost every people group in the world. That means the person who made your clothes may, at some point in her (or his) life hear about Jesus from a Christian from their own country. However, many of the countries in the 10-40 Window actively persecute Christians so they must be very careful about where and how they tell the story of Jesus. Pray for those Christians who live and work and worship in conditions which we cannot imagine.
  • Pray for missionaries working in that country. Almost every country has missionaries from another nation who have given up their “normal” life to go far away to live out God’s love and tell the story of Jesus. The person who made your clothes will probably never meet a Christian missionary but through circles of influence the missionary’s work may impact that person or her family.

Now, go to your closet (I’m pretty sure you didn’t do it the first time I asked). Get two or three items and pray. Hold those clothes in your hands and think about the person who first held your clothes. Imagine her (or his) life and her calloused hands; think about how she provides for her family and children; picture her each morning preparing breakfast for her family and then coming home each evening to fix the evening meal and take care of her children’s needs and finally her own before going to sleep to repeat it all again, day after day.

Hold your clothes in your hands and that laborer in your prayers.

Lead On!

Steve

Filed Under: faith Tagged:

You Can’t Do It All

Posted on December 17, 2013 Written by

One day Peter and John were going up to the temple at the time of prayer—at three in the afternoon. Now a man who was lame from birth was being carried to the temple gate called Beautiful, where he was put every day to beg from those going into the temple courts. When he saw Peter and John about to enter, he asked them for money. Peter looked straight at him, as did John. Then Peter said, “Look at us!” So the man gave them his attention, expecting to get something from them. Then Peter said, “Silver or gold I do not have, but what I do have I give you. In the name of Jesus Christ of Nazareth, walk.” Taking him by the right hand, he helped him up, and instantly the man’s feet and ankles became strong. He jumped to his feet and began to walk. Then he went with them into the temple courts, walking and jumping, and praising God.

Acts 3:1-8

Many ministers feel they have to do everything they possibly can to take care of the needs of the people in their church. It is a mindset that frequently leads to ministry burnout. It also leads, falsely, to members thinking that every problem they have should be dealt with by their pastor.

In Acts 3, Peter and John enter the Temple in Jerusalem and encounter a man who has been lame for several decades. He positioned himself in the best location possible to ply on the emotions of people so they’d give him some money. The best place to do that was the Temple – so those coming to seek God’s favor could demonstrate to everyone including God how good they are.

Jesus went to the Temple a lot; like all good Jews, he was at the Temple every Passover and he most certainly passed by this lame guy. But Jesus never healed him. Wait a minute! Jesus didn’t take the initiative to heal this guy and take care of this need? Why?

We don’t know for sure: some will say that Jesus was “leaving it for Peter” or that the guy never expressed an interest in being healed or some other reason. The interesting thing to me is that not even Jesus got around to doing every single thing that he was capable of doing – he didn’t feel every hungry person, he didn’t heal every sick person, he didn’t remove every demon, etc. Jesus left many, many things undone.

And if Jesus with all of his God-power didn’t do everything while he was on earth, then who are we, mere humans, to think that we can do everything? We can’t and we shouldn’t think we can. We’re going to leave a lot undone, and that is just fine. Ministers should never feel guilty about not doing everything; instead, ministers should do the most important things in front of them.

Just as Jesus prioritized the critical things he needed to accomplish, ministers must do the same. The things that a minister cannot do should be left for others or even left undone. Focus on what is most important, just like Jesus did.

Lead On!

Steve

Filed Under: church staff, leadership, wisdom Tagged: , ,

Olive Trees

Posted on December 10, 2013 Written by

Olive trees are rather amazing. I’ve never worked in an olive grove, but I did grow up in Spain, which has about 40 million olive trees. I couldn’t help but learn about olive trees as I drove across the country and saw olive trees from one horizon to the other.

There is a saying that when a farmer plants an olive seedling, he is planting it for his children. Olive trees mature slowly; an olive tree is 25 years old before it bears fruit. Not many farmers today can wait 25 years for a crop to come in.

But the olive tree is also amazing for its longevity. An olive tree will live about 1, 000 years, and some are even 2, 000 years old. So once an olive tree is 25 years old and begins to produce olives, it will continue to do so for the next 1,000 years if it is cared for properly.

Olives are harvested in a rather harsh fashion. Cloths are spread out under the tree and the branches are beaten with long poles. A hail of olives falls on the cloths. The cloths are gathered, and the olives are poured into buckets. These olives are used for food, pressed to make olive oil, or planted for another generation’s benefit. The olive tree doesn’t grow tall; it is smallish. Its trunk is not straight, so its wood is not good for construction. The olive tree is a humble tree that in maturity gives results for centuries to come.

It may be a stretch, but I’d like to compare church buildings to the olive tree. Typically they are not grandiose architectural masterpieces but are functional. They take many years to plan and build, but they will be with us for generations to come. Every generation or so, churches add a structure—knowing the primary beneficiaries will be their children and grandchildren. And, at some point in the unknown future, a decision will be made to tear down the building that the current generation labored so hard to construct.

Church buildings should be seen as investments:

  • First is the money that is raised to pay for the land and the building itself. It usually takes years to raise the money and pay off the principal and interest on the construction debt. If the generation doesn’t pay off the debt, then we saddle the next generation with debt plus the expense of maintaining the facility.
  • The second and greatest investment we make in our new building is people, especially our children. The building is a tool, not the goal; the measuring stick is how many lives the building affects for the Kingdom. We must ensure that the classrooms have the best teachers and leaders and they have all the training and resources they need to do the volunteer job they’ve been asked to do. The result will be people who leave the structures each day to go into the world knowing and sharing the love of God with each and every person they meet.

As we invest our money and our lives in church buildings, only God knows the fruit it will bear over the next several generations, because we planted a seed.

Lead On!

Steve

Filed Under: church administration, church finances, future, strategy Tagged: , , ,

Christian Advent

Posted on December 3, 2013 Written by

(Reposted from 2009.)

This blog is not financial in nature – just spiritual.

Advent is the time of the Christian calendar that is a time of mental and spiritual preparation (“waiting”) for Christmas – the anniversary of the birth of Jesus the Christ. Many churches have the practice of lighting candles during the four Sundays before Christmas and then, on Christmas Eve, lighting a fifth candle at the center of the wreath holding the other four. The fifth candle is always the Christ candle.

As I sat in worship yesterday and watched a couple light the first Advent Candle, I commented to my daughter, age 10, about the different symbolisms Christian worship has attached to these four candles. The most popular are the Christian Concepts:

  • Hope
  • Joy
  • Peace
  • Love

But we also have the people associated with Christmas:

  • Shepherds
  • Wise men
  • Angels
  • Mary and Joseph

Another version is for the animals present on Christmas Day:

  • Sheep
  • Donkeys
  • Cattle
  • Camels

Yesterday I thought of a variation I’d never heard before – the cities in the Christmas narrative:

  • Nazareth – where Mary & Joseph were living
  • Bethlehem – where Jesus was born
  • Jerusalem – where Mary, Joseph, and the Magi passed through
  • Babylon – where the Magi came from

The church has five main functions:

  • education (see in teaching the Christian concepts),
  • worship (seen in the actions of the people at the nativity),
  • service (seen in the humble but important work by the animals),
  • evangelism and fellowship (seen in the cities where so many people live).

Here is a direct link from the purpose of the church directly to the Christmas story. But too many times we focus only on one aspect when the story is so rich with other details. As Christians we need to dig deeper into this story – God’s incredible story – to see the phenomenal nuances.

Lead On!
Steve

Filed Under: faith Tagged:

High-capacity donors

Posted on November 26, 2013 Written by

High-capacity donors are people who are just that: individuals with the ability to give generously and in large amounts of money. They can be very generous when they want to and to whom they want. They are very judicious in who is the recipient of their largess. They know that money is essentially a magnifying glass – money gives a person the ability to be either more generous or stingier.

My experience with wealthy people is that almost all of them are generous with causes which appeal to them and which they feel will make a difference. They don’t give money out to bleeding hearts; they do their research to ensure that their gifts really will be leveraged to improve the quality of life of people and their community.

I’ve known quite a few high-capacity donors and all of them have one thing in common: they have wealth. Some earned their wealth, while others inherited it. Some have come into sudden money and others had it from the day they were born and thus don’t know anything different. Almost all of them have parents or grandparents (the originators of the family fortune) who want their offspring to learn generosity. They don’t want stingy family members. The elder generation knows the value of sharing money and the joy it brings to the donors and to the recipients.

The church in general is not “developing” these donors. In its haste to ensure that the church treats all people the same, many churches unintentionally do things that push away high-capacity donors. Some donors have rare skills which the church could use but for fear of elevating them, the church does not use their talents.

I challenge the church to find ways to cultivate all high-capacity donors. These individuals and families truly want to give back. Churches become poorer (in many ways) by not accepting the gifts (both monetary and talents) of high-net-worth individuals. The Body of Christ is made up of different people with different skills, and the Body of Christ needs ALL members doing what makes them unique—so that TOGETHER we can all excel in doing what God requires of us.

Lead On!

Steve

 

Filed Under: church finances, generosity Tagged: ,
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