Six Quick Tips for Church Budget Season
Some church leaders love to swim in a sea of spreadsheets. If you are among them, then October is likely your favorite month. The vast majority of churches budget on a calendar year, which means the spreadsheets come out in full force about the same time as pumpkin spice lattes.
Creating a church budget is a laborious—and somewhat thankless—task. At West Bradenton, our stewardship committee is hard at work refining the 2020 budget. It takes several weeks to finalize our annual budget.
Every line item matters. God brought this point to my mind at our last meeting. As we poured over pages of documents, a mundane expense stood out to me: $1,500 for Bibles. It’s a small amount in our overall budget, easily overlooked. Then I thought about all the stories tied to that budget line item.
We give away Bibles every week. We ask our members to take Bibles and give them to others. I’ve heard countless stories from my church about these Bibles. Stories of people coming to Christ. Stories of people weeping over receiving a copy of God’s Word. Stories of family members, coworkers, and friends who were reached simply because someone took them a Bible. God works miracles in the ordinary. Every line in the budget matters because every person matters to Jesus.
The process of creating the church budget is important. In many ways, it’s a ministry road map for the upcoming year. As you walk through this budget season, here are six quick tips to consider.
1. Start by projecting revenue first. Too many churches start by projecting expenses. It’s an understandable mistake because expenses represent how funds are spent on ministry. The problem is you can’t spend the funds unless they are first given. Dreaming about big-ticket ministry efforts may be fun, but it’s not wise to dream up a budget. When you start with what you expect to take in, then you can better prioritize your expenses.
2. Include deferred maintenance in your operating budget. Deferred maintenance is what happens when you postpone needed repairs in order to save money. The problem with deferring these repairs is they tend to become more expensive the longer you delay them. Repairing a leaky roof doesn’t get any cheaper with time. Put a deferred maintenance line item in your budget to take care of delayed repairs. Some churches have decades worth of deferred maintenance projects. Start working on them this year.
3. Include a contingency fund in your operating budget. Many churches do not have a contingency fund for unforeseen expenses. A church should have about three months of expenses set aside for emergencies. Start building this fund through your operating budget. In essence, you pay yourself with this tactic. As funds come into the operating budget, a portion is set aside for the contingency fund.
4. Keep personnel costs between 45% and 55% of the total budget. Personnel costs include the salaries and benefits of all employees, part-time and full-time. A church with limited debt or no debt can be on the higher end of this range. A church with substantial debt will need to be on the lower end of this range, if not lower.
5. Create a priority list for any year-end surplus ahead of time. Whatever group makes the financial decisions for the church should have a good idea of how any surpluses will be allocated. Don’t wait until the surplus exists. It’s more difficult to prioritize projects after a surplus exists than before a surplus exists. People tend to fight harder for their own agenda when money is in the bank. Negotiate ahead of time and save yourself a headache.
6. Pray through every line item. We have a prayer team that takes the budget and prays specifically for God to work through each part of the budget. Every line receives focused prayer. We should not expect God to work through the budget unless it receives special attention through prayer.
Crafting a budget is not the most exciting ministry, but it’s critically important to the health of the church. A carefully planned budget will facilitate more efficient ministry and encourage generous people to give. God rewards a church that honors Him through good financial practices.