Church Budget Preparation Part One: The Process


Documentation Is Important! Planning is the prerequisite and basis for great church budgeting. Most churches skip the planning process. They merely take the budget from the year before, add some percentage of increase in certain areas like personnel and facilities and all other programs stay the same. Some churches base their new budget on the total receipts from the year before as their “planning” a budget. Neither way is appropriate!   There must be itemized planning and coordination with a church budget. The planning should focus on development of over-all church goals and objectives to guide every action and activity.

Planning budgets with goals and objectives is a Kingdom Growth mindset. Know where you are going as a church. Know how you can reach that goal. Know when you have succeeded, be proactive rather than reactive! Without a kingdom planning process and the fruits of planning, a church can easily slide into a situation without focus and wander aimlessly, thus not achieving success and not motivating the congregation to give – because the challenge (goals and objectives) are not realistic or too easily obtainable – yes, too easy!

Failure to recognize and challenge the congregation with the importance of budgeting has caused many churches to experience sever financial distress. This failure has even contributed to the demise of some churches.

Richard Vargo in “Church Guide To Planning and Budgeting” lists ten reasons why budgeting is important for churches.

  • Formalizes planning – This budget process forces the congregation to study the future.

  • Reduces emotion-charged discussions – This keeps erratic spending to a minimum.

  • It’s a basis for performance evaluation – The meeting of the goals and objectives gives insight for success to future growth and development.

  • Is a basis for control- Such controls help the church keep on target towards original plans.

  • Assists in communication and coordination – Multiple Committees and Teams are represented in the budget process and not just a Finance Committee.

  • Gets members involved – The secret to success is involvement and a central focus on priorities.

  • Increases the commitment to giving – When congregations have participated in the planning of a budget there is a “buy-in” for giving results to occur.

  • Generates confidence in the church’s leadership – Long and short term goals and objectives are prepared and sound budgets are established for successful ministries.

  • Allows for continued operation when cash receipts and disbursements are mismatched – Helps any mismatched in-flows and out-flows of cash to maintain financial discipline.

  • Allows time to lead or borrow prudently – Budgets help to pinpoint how much money is needed and when.

Focus on Budget success based on goals and objectives!

Church Budget Preparation - Part Two



 
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