September is all about cooler weather, pumpkin everything, and budget planning! Wait, what was that last one? Yep, you heard us correctly, for fiscal year-end clients, fall is the time to start setting those budgets for the upcoming calendar year. The first week, we talked about aligning your budget to your Mission & Vision, then focused on goal setting within your budget, the next week discussed Incoming Revenue, and today is assigning the dollars to the plan.
For more LATC podcasts devoted to the topic of Budgeting, start here.
Have a Plan
If there is no plan, people will come up with their our priorities. That’s why we started where we did with the mission and vision, overall goals, setting up the budget, and then looking at the money coming in. Generally, our host says, 50% should go to salaries. Then he like to have the Physical Plant under 18% and Administration under 7%. Which leaves the last 25% to ministries. The first 75% are pretty much set as they are standard expenses.
Then we put dollar amounts towards those ministerial goals. See where we are heading, is the ministry grown or shrunk, and then give your “yes’s” “and no’s” to each line item.
How did Patrice’s church allocate funds? First, they looked at history, what was working and what wasn’t. Then, they put money towards those line items of what they wanted to achieve. There was a little ebb and flow because they wanted room for dreaming. Sometimes there would be a process of finding whose line item goes under what bucket.
Overtime they figured out who should be invited to the table, it really was a trial and error approach. If a project was completely run by volunteers, then they needed to be at the meeting. Because things change from year to year, they needed to evaluate project by project, or line item by line item.
This way took several months, and eventually the leaders saw the value in these meetings. The ministry leaders would take ownership and portray their importance and passion, and that was contagious. Implementing training on how this process goes was necessary, both for new folks coming in and for veterans of the process.
What happens when you are half way through the year and realize that you are going to be overbudget? There was re-training involved in the part of picking the right account each time. It’s more important to truly see what things costs than to go “overbudget” on one of your line items. The finance team needs the full picture.
A Note for Pastors
The most common issue our guest handled was when a project was over budget. The Pastor realized that the team didn’t properly budget for this project. And now are wondering why they can’t we just take money from another location? And it especially got interested when it is a restricted account. Restricted funds can be tricky, but they absolutely cannot be used for anything else than what they were allocated for. So, use the funds for those projects. Those donors gave to those accounts because they had a passion, let’s honor that with our purchases.
Miller Management has a blog post to help clarify those funds, how you record them, and what to do when those donor want their funds back.
Administration vs. Ministry
When support staff started getting included in these budget meeting, Patrice noticed that there became a greater sense of community. Not an us vs. them mentality. More of a commradery. So when you can, include your whole staff – especially on the vision piece of the budget.
When you have too many good ministry ideas
Sometimes things get cut or pushed off until next year. And sometimes that can be challenging for the person who is told “no” or “wait.” But a good budget really does help the church. When you have a vision to accomplish with a breathing, moving document to aid you and keep you accountable, you have a great tool to utilize.
When dealing with budgets, there are two mindsets you can have. One, the budget is holding us back! Or two, it’s aiding us in accomplishing our mission! With the second mindset, it becomes a resource and a joy.
Budgeting isn’t simple or easy, but it is necessary. And a team of people is really helpful to come up with the budget, and then you have a team of people on your side to help further the mission of the organization.
Join us next week as we start a new series on how to lead the church with finances, from different denominational background guests.
Special thanks to our guest, Patrice Doyle, and our masters of all things Podcasting, Chris and Lauren Miller, for this final episode in our Budget Basics series.