For those of you that are Dave Ramsey students, you probably appreciate the value of an Emergency Fund. This is useful when the car breaks down or you lose your job or if the furnace dies…in January. But what about those smaller emergencies that you haven’t planned for? When you have unexpected company and need to buy extra groceries or you finally run our of printer ink or the school fee you forgot about?
These aren’t exactly emergency-fund worthy so how do we care for them. Most churches just allow all their programming staff to pad their budgets to be prepared. Actually, if you’re the one program that fails to pad your budget, what do you do when the unexpected happens? I like Steve Stroope’s strategy of removing the padding and creating a simple process for when programs have an unexpected expense or opportunity. In this video, I illustrate the strategy:
I had been wringing my hands at how difficult the SBA made the first Paycheck Protection Program Loan (PPP) Forgiveness Application. It was like they had asked the IRS for advice. The EZ application cuts it down to only one page of numbers. Without a doubt, your bank will be asking you for more proof, but why would you make it so complicated to ask “How much of the loan did you spend?” That isn’t something that you need pages of worksheets to answer.
The vast majority of churches should qualify for the EZ application. I would also guess that the vast majority should choose the 24-week period instead of the 8-week to maximize forgiveness. Watch the video below for the walkthrough:
For many churches, the program committees and staff worry about running the programs while the treasurer and finance committee worry about the money spent to run the programs. There is a constant tension here that isn’t altogether negative. Where it turns negative is when programming ignores the concerns of finance or finance ignores ignores the concerns of programming.
“People support what they help to create.”
Randy Hedge, Pastor of Madison UMC
That quote by Randy is key. How do you include the program committees and staff in the budget process? What are some helpful tips to getting good budget requests from these groups?
After you calculate the bottom line…how much income your church can expect to receive, the next step is to tackle the fixed costs: Personnel, Property, and Denominational Dues. In a typical church, these costs account for 75-85% of the operating budget…so it makes sense to tackle them first.
One thing to keep in mind is that these costs are not necessarily set in stone. As the church’s strategy for ministry changes, this often affects the staffing and property needs. But, for the most part, these are pretty stable from year to year. The most difficult part of this section is the decision on giving raises to church staff. Are they being paid a competitive rate…or even a legal rate? If we can’t afford a large raise, is there anything else that churches can do to tangibly show their appreciation?
The most disheartening and discouraging thing a church can do is adopt an unrealistic budget because you are planning to fail. Why is it that churches tend to abandon all common sense and reason when it comes to budgeting? They budget $100,000 in income and expenses knowing full well that they never bring in more than $90,000 in income.
When you challenge them on this, the most common response is, “This is where you need to have faith.” Didn’t you have faith last year when you fell short? And the year before that? They’re obviously not talking about faith that the income will come in. Is it faith that the church board will once again approve a crappy budget? A realistic budget doesn’t start with knowing what you want to spend, but with knowing how much you money you can expect to receive.
For too many churches, the budget is just an annual chore that we have to go through. The treasurer and/or the finance committee take charge and plug in numbers. The church board then approves it which is then approved at the annual meeting. For too many churches, the budget is also the annual reminder that we’re failing financially, and we don’t have a plan to turn it around.
If you don’t have a clear vision/mission for your church, that’s the first priority. The vision needs to be clear enough to where you can see how it should affect you financially. The budget then becomes the plan or assignment for each dollar to move us one step closer towards realizing that vision. It’s no longer a chore. It’s a vital part of the work.
It’s sad when, what should be a great joy to a treasurer, turns out to be a burden. Treasurers usually love numbers. Numbers provide comfort and something solid in the squishy spiritual world of the church. When churches make financial decisions based on how much money is the bank, why bother with a budget?
Since treasurers are often not very confrontational, here are the words that are often left unsaid when it comes to the budget:
“Do you understand that a budget isn’t money in the bank? You can’t spend what we don’t have.”
“So…when we budget an unrealistic amount for the church, we call it faith, but then we criticize the pastor when she preaches on increasing our personal giving on faith. Hypocrites!”
“Can’t we just save some time and just turn in a budget that says, ‘Same as last year?’