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 receipts/contributions can be placed in one of two business plan categories: 1) Undesignated and 2) Designated. A business plan is a distinctive means of budget distribution that challenges giving towards the general church budget and controls giving toward designations or non-budget items.

The church treasurer is usually the church officer with the authority for disbursement of church funds based on the proposed and adopted business plan. This means, that special authority is needed by the church business plan to pay non-budgeted or designated items. Often, treasurers and finance committees have to make tough choices if monthly receipts are insufficient. When churches face insufficient funding needs for regular general fund expenditures there is usually several causes.

The goals and objectives for the church’s mission were unclear or unobtainable by the congregation. When this happens a church is faced with amending a budget mid-year. It is better to amend a budget than to deceitfully administer a budget with resources that were not authorized by the congregation. Care should always be taken to allow congregational decision about the general operational budget. If the budget is not being supported by the congregation specific action should be taken to rectify the problem.

Most churches that have problems fulfilling their general fund budget are also creating an additional problem by allowing tom many designated offerings. Yes, “allowing” designations! The church business plan not only helps create a workable general budget it also limits the designations that will be accepted throughout the year.

The designation limits in a business plan are usually: Building Fund, Seasonal Foreign, National, and State Mission Offerings, Summer Mission Projects. Others are possible, but the emphasis is on pre-determining which designation will be accepted that match the goals and objective of the church long-term. This writer is aware of churches with 20-30 designated offerings received during a budget year which has taken moneys away from the general operations budget and allows “pet projects” to be generated by a gift that does not meet the business plan or the goals and objectives of the church. When this happens the general funds budget gets out of control and the goals are not reached. Program and Personnel frustrations become paramount and Kingdom work is minimized.

The number one church budget problem this writer has witnessed over the last five years is a lack of control of designated offerings by church leadership/congregations. If you “fix” this problem with a business plan that is realistic, well administered and focused on church goals and objectives a church will be healthier and more Kingdom focused.