Does this add value?

Posted on May 12, 2015 Written by

It’s a simple question but it’s an important one. When making a decision, ask yourself that question:

  • Does this add value to my organization?
  • Does this add value to my staff?
  • Does this add value to our goals and mission?
  • Does this add value to the conversation?

 

This is a key question which I ask when I’m in meetings. I want to know if what we’re talking about helps the organization and its missions. Too many times I (and probably you) have been in meetings where an idea is presented and it is received without question because it sounds good, it comes from a person of influence, or there is some money available to do it.

 

I challenge you to not accept ideas just because of their source. Instead, when a concept is presented, determine if it is worth doing and one of the questions to ask is, “Does this add value?” However, don’t get into the cycle of “analysis paralysis.” Make a decision based on the current information and when you have new info, evaluate the prior decision, and then keep the decision or make a new decision. But in every case, ask if this action will add value to the org’s mission.

 

Lead On!

Steve

Filed Under: budget, generosity, leadership, strategy Tagged: , , ,

Consolidation of Preachers

Posted on April 28, 2015 Written by

As a strategic thinker, I’ve got a prediction about a specific aspect of church life that will happen in the next 15-20 years. First, some context: consolidation of business is a historical reality in the US. We used to have scores of auto manufacturers and today there are a handful of US-owned car makers. The same is true of phone companies, office supply stores, department stores, and so on. For one reason or another, businesses merge till there are only a few. Call it survival of the fittest, or best, or biggest.

 

I predict some consolidation in churches. Technology allows me to watch via podcasts preachers from around the US. Technology allows my multisite church to have one preacher whose message is viewed in a variety of unique campuses. My prediction is that small and mid-sized churches will select one or more excellent preachers to deliver the weekly message while their on-site pastor focuses on pastoral duties. We are entering an age when there will be fewer but more excellent preachers and they will be on screens in worship venues.

 

Currently there are several outstanding preachers (Andy Stanley, Perry Noble, Bill Hybels, Rick Warren, etc., etc.) whose messages are regularly above your average sermon. They also have large local churches but also national and international followings and even church presences around the world. These are global preachers who, through technology, can preach almost anywhere in the world.

 

A well-developed and delivered sermon requires about 15-20 hours of work. That is time that the pastor of a church cannot spend on other requirements of his or her job. What if churches allowed their pastor to preach less and focus more on being a pastor. The pastor would still preach periodically during the year so the church hears the vision and direction of the church.

 

But most of the year, sermons will be delivered on-screen by a selection of outstanding sermon-givers. That allows pastors & churches to focus on worshipping, caring, mission-doing, teaching, and fellowshipping (the main functions of the church). This gives the pastor 15-20 hours a week to meet people, train leaders, and give direction to the church. This helps the pastor have more family time and less weekly pressure “to produce.”

 

I know there will always be pastors who want to preach and that is fine – there will always be churches who want a “live preacher.” However, technology has the capability of letting churches hear more excellent preachers and help local pastors focus on doing what only they can do – be the local pastor.

 

Lead On!

Steve

 

Filed Under: budget, church staff, leadership, strategy Tagged: , , ,

Monthly Financial Statements

Posted on March 31, 2015 Written by

My “Intro to Accounting” professor taught me some basic concepts which have guided me ever since. They are simple principles but vitally important to any and every organization.

 

  1. Always release a complete balance sheet and revenue & expense statement
    • These are the two basic financial statements. At a minimum these should always be released. There are a multitude of other financial reports but these are the minimums. These statements measure different things:
      • A balance sheet is a financial picture of the organization at a specific date. It shows all cash, debts, and restricted funds of a church.
      • A revenue & expense statement is shows how the organization is doing this fiscal year. It should have columns for the total annual budget; the monthly actual & budget figures; and the year-to-date actual & budget figures. Collectively these numbers indicate your current year’s financial status
  1. Never hide or not-release financial figures, even if they will elicit lots of questions
    • Never, ever, NEVER hide anything, period (.).
    • All numbers will come out. You need to be in control of bad AND good news. Hiding numbers only makes you look like you’re hiding things. That will always hurt you.
    • The numbers may look bad but the numbers are not about you but about the organization. Sharing everything allows you to keep your integrity. If the finance office has lost its integrity, it needs new staff.
  2. Release the data by the 15th of the subsequent month. To delay longer than that is to release “stale-data.”
    • There is no reason to delay releasing monthly financial data. Bank statements are available online so the bank reconciliation can even be done on the 1st of each month. There are going to be journal entries and maybe some backdated checks, but frankly, the financial office should be so update that closing each month is fast and routine.
    • Releasing financial data 30 days or later communicates that the finance office does not know what it is doing and/or that things in the financial area are unnecessarily complicated and needs help.

 

The bottom line, release financial data accurately and timely.

 

Lead On!

Steve

Filed Under: accounting, budget, church financial statements Tagged: , ,

Cost Accounting – Pros & Cons

Posted on March 24, 2015 Written by

Cost accounting is the practice of determining how to divide an expense between various budget line accounts. There are some expenses which are easy to cost account because it can be tracked without much effort:

  • Postage
  • Photocopies
  • Special Office Supplies

There are some that are not easy because the calculations are quite difficult and often require a judgment call:

  • Electricity
  • Building Maintenance

The main question is, What Added Value is there to Cost Accounting?

In most instances in church accounting, there is almost no value added to do cost accounting. When asked to do cost accounting, my question is “Why? What are you going to do with the info?” For small to mid-sized churches, cost accounting is rarely recommended. If a ministry has a large mailing or printing a lot for an event, that can be guesstimated and charged to that account if necessary. For larger churches, I recommend having an office expense account for most items (supplies, printing, etc.) and then keep track of special event expenses so the finance office can charge them appropriately.

Doing a lot of cost accounting only occasionally helps a church with its financial decision-making but usually it is not worth the day-in and day-out effort. In my opinion, it detracts from the routine ministry of the church. The ONLY exception is for special events and activities which you do need to track the expenses to know if this was financially worth it, if it should be done again, and if it should be done differently next time.

 

Before you enact across the board cost accounting in your church, please ask yourself if there is significant value added to doing it for everything, every day.

 

Lead On!

Steve

Filed Under: accounting, budget Tagged: ,

Outreach

Posted on January 27, 2015 Written by

Churches are struggling to attract young people. I’ve seen dozens of churches look at this and most of them throw up their hands and do nothing because they don’t know what to do. There are two sides to this, kind of a “chicken and egg” scenario.

First: you need to find the people who you are targeting. I can’t emphasize enough that the target audience for every church should be young families, aged 20s, 30s, and 40s. Those families have young children and teenagers. Those families become the future of the church, especially if they are brought into leadership of the church. Now, where to find them? Frankly, everywhere. These families are millennials and reports I’ve seen say that they do not respond at all to door knocks (like Mormons and Jehovah’s Witnesses) – in fact, they are very much turned off by them. However, it is easy to find them because every Saturday they are at a ball field with their kids. What if your church had a pop-up tent/canopy that went to these events and had a table with free water and snacks for the families and kids. That would say that “we’re here and we’re a family-oriented church.” It gives the volunteers the opportunity to speak to the moms and dads in a relaxed atmosphere. The same could be done at a local farmers’ markets or other community activities – some type of presence where your name is visible to a younger crowd.

Second: this is much, much, much harder. Once you attract families and they actually show up at church, do you have programming that is excellent and of such great quality that the kids AND parents want to come back. You need to have programming that is so outstanding that you get a reputation for being excellent. Excellence will attract people, especially a younger generation.

Here is the conundrum: you need an excellent program (that implies substantial number of kids and young people) so that when you go out to solicit, they’ll have already heard about it and be eager to come. The answer: work on both sides of the opportunity – recruiting people to come and developing an excellent program – so that they support each other and you develop synergy.

 

Lead On!

Steve

Filed Under: budget, generosity, strategy, young adults Tagged: , , ,

Church Cuts

Posted on January 20, 2015 Written by

Churches spend money on three things

  • Staffing: church personnel form the heart and brains in leading the work of the church
    • If you cut staff, you may need to replace with untrained volunteers
  • Buildings are the skin and skeleton of the church that holds everything in place and in its place
    • If you cut buildings, you save on infrastructure but it is expensive to tear down and re-build
  • Programming is the blood and muscle of a church; this is what gives the church energy and motion and dynamism
    • If you cut programming, you end up with staff sitting in their offices and nothing to attract people and give the church a mission

 

Where does a church cut its budget when it desperately needs to cut?

 

My first answer is, nowhere. Instead of cutting, the very first thing you do is to raise income. Do all you can to encourage generosity among your members, show them the results of what they’ve done in the past, help them experience the joy of giving, and let them see the people who have been helped by their tithes and offerings.

 

My second answer is, everywhere. IF you absolutely must cut AND you have really tried to raise funds, then you are at a critical point in your church’s future.

  • It may be time to close the church down. Seriously – if people are not willing to give more to help the ministry of the church, then perhaps it is time for the church to close its doors. Think about it – actually, you probably already have thought about closing down the church.
  • The other option in the “everywhere category” is to cut a staff person, and the programs overseen by that person, and shutter the rooms used by that ministry area (lights, AC, heat, cleaning, etc.). This is an “All of the above” strategy.

 

Often churches cut everything by 10% or 20%. That won’t resolve the crisis because you keep doing the same ministry and programs with the same staff in the same rooms but now you’re trying to do it on the cheap. Ministry on the cheap results in cheap ministry. That is no way to do ministry. Death by inches is what people do when they are afraid to lead.

 

When gangrene sets in and antibiotics don’t stop it, sometimes the only option is amputation. It is dramatic, traumatic, painful, and requires learning a new set of skills. But you can get a prosthetic limb. It won’t be as good as the original but it will give you much (not all) of the same functionality you had before. Churches need to be willing to sever some staff & programs (and close down building wings). Cutting one or two of the three isn’t enough. Decide what is the main focus of the church and provide staffing, buildings, and programming money for that. Anything that isn’t a part of the Main Thing is removed. It might be replaced later but if it is not needed now, it is done away with.

 

Before you cut, raise money. But if you cut, cut strategically and not indiscriminately.

 

Lead On!

Steve

Filed Under: budget, church finances, church staff, leadership, strategy Tagged: , , , ,

1.5% Rule for Building Maintenance Budgets

Posted on December 23, 2014 Written by

Maintaining church buildings is expensive. And every year presents known and unknown expenses. Here’s a rule of thumb for determining how much to budget: put into the annual budget 1.5% of the replacement value of your buildings. If your buildings are valued at $5 million, your budget should be $75,000; if $10 million, then $150,000. That amount allows you to keep up with the ever-expanding needs of a church building and maybe tackle some long-term projects in phases.

 

This is in addition to the cost of labor, utilities, insurance, routine contracts (like fire and burglar alarm monitoring or pest control), or other building expenses within your control. This 1.5% is for those building maintenance items which pop up from year to year (sometimes from day-to-day) and for on-going minor building improvements (i.e., replacing ceiling tiles, painting rooms, small carpet or limited asbestos abatement projects, etc.).

 

Here’s a comparison: if your home is valued at $200,000 then you should set aside $3,000 each year (1.5% of $200K). Some years you’ll only replace a carpet or a toilet but every so often you’ll replace the roof or the A/C unit. Over time, you’ll spend $3,000 each year on your home. The same is true for church buildings. To budget less than 1.5% means an increasing list of deferred maintenance items which always costs more than routine maintenance.

 

Use this blog to educate your Stewardship or Finance Committee/Team about how much they should budget for the building. Though they may think 1.5% is too high, when you apply this to their own home, they’ll immediately get the analogy. Finding that money from one year to the next may be tough, but over a period of a few years the Finance Committee can steadily increase the maintenance budget till it is the necessary 1.5%.

 

Lead On!

Steve

Filed Under: budget, buildings, facilities Tagged: , ,

Church Business Meetings (part 2 of 3)

Posted on October 7, 2014 Written by

This the second part on church business meetings and how they should change. The reason for the change is so the members and guests see the church as dynamic, not as static and boring. I believe that business must be engaging and not merely a recitation of fact and figures. Business meetings should consist of stories of people and how the church is helping them. My first post focused on the membership report. This post will focus on the programming reports.

Reports: the church is about the business of helping people see how much God loves them. The most common way churches do this is through their programming and activities. But if you’re not involved in one of those areas, you probably don’t know what is going on. Why not use the church business meeting to share with the entire church all of the successes (and failures) of the past and the exciting things that are planned for the future?

When the church’s financial report is given, the treasurer interviews ministry leaders saying, “The church has given you X dollars; can you tell us how you’ve used that money?” Then, the ministry leader talks about what they did with the money using pictures, music, children and youth, other adults, and any resource he or she has. The treasurer presents financial information about each ministry area and uses that a lead-in to ask what is going on with that money.

By the end of the business meeting, attendees have seen and heard what their church is doing, who is involved, how much money has been spent and for what, and what is going to happen in the next few weeks and months. Everyone leaves the meetings having been informed about events outside their areas of interest.

At every meeting, the reports from the main ministry areas are a must: missions, age-level programming (adults, young adults, youth, and children), pastoral care, administration, fellowship, and worship (the five purposes of the church). Then, reports can be given by other ministry areas as there is need and time.

One caveat: all reports must be engaging and the treasurer/interviewer must be energetic in asking questions and encouraging the presenter to be enthusiastic. Reading dry reports should not be permitted; the church must be an exciting place to be and the reports must reflect that.

Next post: decision-making!

 

Lead On!

Steve

Filed Under: budget, church administration, church finances, church financial statements, leadership, strategy Tagged: , , , , ,
« Previous Page
Next Page »