5 Key Questions to Ask When Creating a Church Budget
Creating a church budget is a vital process that ensures the smooth operation and future growth of your congregation. A well-thought-out budget not only covers day-to-day expenses but also prepares for unforeseen circumstances and supports long-term goals.
But where should you start the church budget process? Here are the top five questions to ask when creating a church budget to help guide your planning.
5 Crucial Questions for a Healthy Church Budget
1. Which Expenses Are Essential?
Like any other organization, churches have a wide variety of expenses. That’s why it’s important to remember that not all expenses are equal! Understanding and prioritizing your essential expenses is the first step in creating a church budget. These include:
Salaries and wages for pastors and staff.
Utility bills such as electricity, water, and heating.
Maintenance costs for the church building and grounds.
Administrative costs like office supplies and software.
It’s important to identify these core expenses so you can ensure that your church’s basic needs are always met.
2. Where Do Our Funds Come From?
It’s easy to assume that a church’s funding comes from their congregation’s tithes and offerings. The truth is that churches can have a wide range of revenue sources. Being able to identify your main sources of income is crucial for accurate budgeting.
Common revenue streams for churches include:
Tithes and offerings: Regular contributions from the congregation.
Grants, endowments, and donations: One-time or periodic gifts from individuals or organizations.
Fundraising events: Income generated from special events like bake sales, concerts, or fairs.
Rental income and investments: Money earned from renting church facilities for events.
Take time to understand and list out these revenue sources. This will help in forecasting income and managing cash flow throughout the year.
3. What Are Our Financial Challenges?
Does your church struggle to control spending or make payments on time? Every church faces financial challenges, whether they are seasonal fluctuations in tithes, unexpected repairs, or economic downturns affecting donations.
To help establish a healthy budget, ask yourself:
Which periods of lower income do we experience each year?
Are there upcoming expenses that could strain our budget?
Do we have an emergency fund?
What limits on spending do we need to establish?
Asking these questions can be difficult, especially if nobody’s asked them before. However, by anticipating these challenges, you can create a more resilient budget that includes contingency plans and savings.
4. What Are Our Short- and Long-Term Goals?
Focusing exclusively on your current needs or long-term goals can leave your church’s finances in jeopardy. A church budget should reflect both immediate needs and future aspirations. For example, consider listing out your:
Short-term goals: Hosting community events, expanding outreach programs, or upgrading technology.
Long-term goals: Building renovations, supporting missions, expanding facilities, or launching new ministries.
You’ll find that incorporating these goals into your budget ensures that you allocate funds accordingly and track progress over time. (It also helps keep your congregation and leadership happy!)
5. How Will We Communicate and Implement the Budget?
Trust in institutions and organizations such as churches is at an all-time low. Without trust, people are much less likely to donate to your church.
This means that effective communication of church finances is key to a successful budget. This requires asking some strategic questions, such as:
How will we present the budget to the congregation?
What tools and software will we use to manage the budget?
Who will be responsible for monitoring and adjusting the budget?
What financial information is important to include for our eldership board?
By clearly communicating the budget and assigning responsibilities to the appropriate people, you can foster transparency and accountability within your church community.
Ready to Simplify Your Church’s Budget?
A well-managed budget not only covers daily operations but also paves the way for future success. Creating a church budget involves careful planning and consideration of various factors.
Fortunately your church can simplify managing your church finances and budget without breaking the bank. For less than the cost of hiring an accountant or bookkeeper, Finch Accounting provides you with a team of world-class accountants and analysts who manage your church’s bookkeeping, payroll, and budgeting for you.
Corey has 10 years of professional experience in financial planning and analysis. His previous areas of focus involved helping launch the Financial Services department of a large government contractor, where he developed the various reporting and budgeting systems.
Corey also actively manages Shorebird, a Registered Investment Advising firm that focuses on Financial Advising, Planning, and Investment Management for clients. He is also an adjunct finance professor at the University of California, Riverside for their graduate-level programs.
Corey received a B.A. in Business Administration at the California State University, San Bernardino; a Masters in Business Administration and a Masters in Finance from Indiana University’s Kelley School of Business.
Jonathan has more than 7 years of professional experience in corporate taxation and strategy with both public and private companies. His industry experience includes entertainment, church finances, medical device, and technology. Jonathan is also an adjunct professor at the University of California, Riverside (named a Best Business School by Princeton Review and named a Best Undergraduate Business School by Businessweek) and speaks at conferences on topics such as leadership and management.
Jonathan is a graduate of the University of California, Riverside and an MBA candidate at UCLA Anderson School of Management. He is a licensed Certified Public Accountant (CPA) in California.
Jonathan previously worked at PricewaterhouseCoopers, LLP where he specialized in corporate taxation.
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