FINANCES: How to Budget with Care

The basic rule of church financial health is that you can't spend more money than you take in. But this simple principle can get very cloudy in the rough and tumble process of annual budget negotiations. This planning process alone is tricky, but when you add in the "living by faith" principle, Christian leaders are sometimes tempted to make unwise choices in their financial planning.

Everybody seems to insist that their ministry just can't go on unless they receive a budget increase. And so it goes... By the time all the numbers and needs are in, most budgets are larger than is fiscally prudent. Many churches budget with a 'best case scenario' in mind, rather than a 'worst case'. That is, they assume that everything will go perfectly in terms of giving and expenses. And if everything goes perfectly, then they can make budget for the year. But if anything goes wrong they are in trouble. So is it better to think positively, or 'realistically'? Is one more Christian than another? Some will argue for faith as the guiding principle of budget preparation, while others will remind us that Jesus told us to count the cost and used the example of someone building a tower and not having enough money to finish it.

So, how do you put together the budget on an annual basis in such a way to meet needs, but not get into trouble?

There are several parts to this answer:
1st -- You Can't!
No one but God can predict the future. Every budget is an educated guess at best, and a shot it the dark at worst.

2nd -- Expectations must be managed.
You need to help your people face the fact that there will always be more opportunities (that is, more ways to spend money), than there will be money. This needs to be said at the outset to all involved in the ministry budgeting process.

3rd -- The most important part of the budget process is the Bottom Line.
There are many parts to a healthy budget; and most ministry leaders believe that their ministry budget line item is the most important part, and therefore they will all lobby hard to have their portion of the budget increased. But there must be one person on your budget planning team who has no allegiance or loyalty to any one ministry; his/her allegiance should only be to the bottom line. That is, you need to give one person permission to 'hold the line'. You have to let them be 'the bad guy', the person who says 'no', the person who draws the line and says "Here and no further!" Who in your church is responsible for the Bottom Line?

Next question: So how do you determine an effective Bottom Line? And by "Bottom Line", I mean this, the final figure that represents the total budget increase; the maximum amount of new dollars which you can expect from God's people in the new year. How do you determine that?

There are a number of 'rules of thumb' to guide this process:
1. $1,000 per capita
To determine the total number of dollars you can expect in the new year (not just new dollars), you can simply take the total attendance of your church (babies and visitors included; just count everybody who comes on a weekend), and multiply that average by $1,000. There's your budget. Now in some areas, this will be too high, and in others too low. And of course, if you have done church for more than one year, you have the benefit of history to compare giving and attendance in the past to determine the expected per capita giving for your particular congregation. (These numbers will be somewhat askew if you have a small congregation, and/or a congregation with a particularly big giver.) But over the years, as I have used this guideline, it has been surprisingly helpful. For example, while serving in a large suburban congregation, it actually averaged out to about $1,100 per person, while serving in a less well off congregation, it came out to about $875 per capita. Find your norm, and use it as a guide.

2. For the new year, when you expect attendance growth, use this:
Determine your Per Capita and multiply by attendance plus add in the per capita giving x the expected increase in attendance for the new year, divided by two. So the formula looks like this: (P/C x ATT) + (P/C x ATTgr / 2) = BL.

P/C = per capita giving
ATT = average annual attendance
ATTgr = expected attendance growth for the year
BL = Bottom Line

You need to divide your expected growth by two given the fact that your increasing attendance will spread out throughout the whole year. You also need to recognize that newcomers may not start giving for about a year! so don't put a lot of hopes on their giving prospects, unless you can quickly get them into membership as a church. (Remember, giving is the last to arrive and the first to go, in a family's church-going lifestyle.)

So there you have it; some rough guidelines to get on top of the numbers.
But most important: you need to pray, and seek God's leading, not only for expected giving, but for how you should spend the Lord's money.

Blessing in Christ,
Dr. Bill

Simple Church & REVEAL

Willowcreek has just released an awesome new book which "reveals" some important discoveries they have made about how people grow spiritually, and what is the role of the church in helping them to grow. It is going to be blockbuster dynamite which will alter the way churches do ministry for years to come. They just released it, and talked about it at the Leadership Summit this year. You need to read it. It is available directly from Willowcreek.

But one of the interesting aspects of this book is how closely it is tied in to "Simple Church" by Eric Geiger and Thom Rainer. In the most recent edition of the "Willow" magazine, from Summer of 2007 there is a quotation by Greg Hawkins, the Executive Pastor of Willowcreek. Here is what he says,
"We had a long-standing belief that the more involved with church activities people were, the more they'd be growing spiritually. We found that wasn't the case."

Where have you heard that before? That was totally the thesis of "Simple Church", (which you can buy from the books section of HighPowerResources.com). So the "Simple Church" message is being spread and gaining major credibility with the likes of Willowcreek coming on board.

So take a look at their new book "Reveal"; it will rock your world!

For Christ and His Church,
Dr. Bill