Church Finances during COVID-19 (part 3 of 5) – reducing expenses

During this time when church buildings are closed, the church can address its finances in a productive way. During the 2008-2010 Great Recession, I advised churches to reduce their budgets by 10%; the churches that did that survived without letting go any staff or even cutting their wages. The level of our impending economic crisis is dramatically different than the Great Recession so the ideas of the past may not serve us in the present but they can help. Here are some ideas for the present reality (these ideas are good for any time of the year, not just during a crisis).

Reduce Expenses

1. Personnel – this is 50% to 60% of a church’s budget so let’s start here
   1. Hiring freeze – do not hire anyone new to your staff. Stay focused on who you currently have and try to retain them. Some may leave and that’s okay but don’t replace them right away. Try to get by with a smaller staff. When your finances stabilize decide then if you can afford to hire new staff.
   2. Cutting staff – if you do need to cut staff, then first let go the staff that under-perform. It is always painful to terminate people (I’ve terminated over 50 in my career so I speak from experience) but this might be a time for you to terminate staff that have not performed well or are part of a ministry that isn’t in your core. That is harsh – I recognize that – but we’re talking about the continuance of your church and ministry. You can provide the terminated staff with benevolence money for groceries and rent/mortgage for a few months. Terminating staff will let the rest of the staff and the membership know how serious the situation is – it’s a reality check.
2. Building – this is the second largest expense area of a church’s budget, usually 15%-25% (depending on whether you have debt)
   1. Talk with your bank about refinancing. Banks are borrowing money from the Federal Reserve at 0% so they can afford to lower the rate they charge their customers. Have this conversation – the worst your banker can say is “no.”
   2. Change your thermostat settings: 60 or 65 when it calls for heating; 80 when it calls for air conditioning.
   3. Turn off lights and keep them off
   4. Reduce the number of trash pickups
   5. Look at every one of your contracts and put them out to bid in the next few weeks and months. This is low-hanging fruit through which you can save a LOT of money if you negotiate.
   6. You may not need to bid out every contract. If you’re particularly satisfied with a vendor, ask them to reduce their fee. In 2010 I asked and my lawn management company cut their fees by 30% so I kept them and they’re still there 10 years later.
3. Programming – this is the third area of church spending and it is the smallest, usually 15%-20% of which 5%-10% is missions. There’s not much you can do here but you can be creative.
   1. It appears now (April 2020) that mission trips for this summer will be cancelled. Use the money allocated for that to do creative missions:
      1. Send the money directly to your missions partners in the country or region where you were going and let them use the money however they want or need to.
      2. Use the money to do missions in your own city.
         1. Provide meals and snacks to your local hospital’s staff.
         2. Send gift cards to your banker who is working hard for you.
         3. Give gift cards to people whose income has been deeply affected by the economic shutdown: restaurant workers, hotel staff, retail employees, small businesses, etc. These are your friends and neighbors – take care of them. They’ll remember what you did.
         4. Create videos and have them sent to your nearby retirement communities. They are in lock down and they desperately need to know that you’ve not forgotten about them. Ask the retirement community to show the videos on their in-house TV network.
      3. Natural attrition
         1. You’ll have a natural reduction in some expenses such as flowers, candles, Sunday School materials, etc. Some of your printed materials may switch to online PDFs and they are cheaper.

Bottom line: take this opportunity to seriously look at your expenses and see what you can cut that won’t affect your ministry or that will protect your core ministry.

Lead On!

Steve

Listen to the podcast:
https://anchor.fm/cbf-va/episodes/Church-Finances-during-the-Pandemic-Navigating-the-Financial-Fallout–the-CARES-Act–and-Making-Tough-Decisions-ecfgm7