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, last week focused on goal setting within your budget. and this week we discuss Incoming Revenue.
For more LATC podcasts devoted to the topic of Budgeting, start here.
Future Planning Starts With the Past
First, let’s start with prayer and see what God has for us. Then we can look at predictions. Most money is from tithes and offerings and is not a given. So, when projecting the upcoming year’s revenue, we suggest looking at trends for the past 3 to 5 years to help give you an idea of where you might be going. You will also want to consider the growth of your church. New believers might not be big givers, or not used to giving at all. Significant leadership changes can also have an effect on your incoming giving as well.
Second, know that each individual brings something to the table – maybe it’s faith, maybe it’s future and advancement, or maybe it’s groundedness. But each piece is a necessary piece at the budgeting table.
Lastly, have some goals of where you want the church to go in these meetings. A few different ideas might be setting aside some money that if funds allow you can move forward with. Or if funds are tight, that is the first place to redirect money so ministries aren’t effected. Another option is have some stretch goals, if more money came in than expected.
For Stacey’s church, all their staff is volunteer. When they are looking to make the upcoming year’s budget, the finance people and pastor would sit down and look over the prior year and the year before with each line item to review the budget.
Their church really didn’t look at the incoming revenue, they looked at each budget line and decided what they wanted to do. Then, they would come before their congregants and say here is what we want to do, this is how many giving units we have, so here is what we are asking from you. Each year the congregants would always come through. They were very transparent and have very generous givers.
Rely on Visuals
One thing that their congregation really appreciated was when Stacey produced a simple chart each month. It included the budget with actual revenue and actual expenses in a bar chart. It was very obvious for people to see if they were behind or ahead and people would respond to where they were.
Fill the Reserve
Once the church was able to pay off their buidling, they decided to set aside that same amount of money into a reserve, or building fund. It was important for them to have six months of operating expenses set aside in case anything happens. But then they were able to save and plan for those bigger purchases that were on their wish list or in case of some emergency.
It wasn’t a fight of safety vs. new tech, creatives vs. finance people. Although there can sometimes be uncomfortable discussions. It became a balance of reality of what was actually available and a plan for how to move forward. Not just getting shut down when a request came about, but how to work together to make things happen for the church.
Is the Budget Aligned with the Mission?
If there was an influx of money they weren’t expecting, they were able to spend more in the community. So even if they went over in that ministries budget line, it’s okay! That’s what actually happened to the money, and in this case, was exactly what they should be doing with their money. It aligned with their mission of reaching people with the gospel.
Budgets are just a tool, just a guideline. When you don’t match the budget, it actually gives you really valuable information.Stacey Keenan
Since these budget meetings aren’t always fund for everyone, Stacey always created a proposal before the meeting. That would include a detailed list of the items that go under the line items. It was a really helpful for the leadership (like the bar chart was to the congregants). She also provided cookies. 🙂 According to our guest, anything you can provide or do ahead of time to help level the playing field so those non-numbers people can feel that they can provide valuable information to the conversation is going to help in the end.
The main thing the pastor needs to know is to look at the current year-to-date information to make accurate decisions. The finance team should look back at your mission and your big things you want to happen and make suggestions to provide better ministry opportunities. Helping the pastor understand the numbers is a valuable ministry that the finance team can provide. Poorly managed churches can close, so we can come in to provide stability, as much as possible.
Spend time and prayer and spend time around numbers people who can help explain what you don’t know.
Join us next week as we conclude our budgeting basics with MM staff, discussing expenses with Patrice Doyle.
Special thanks to our guest, Stacey Keenan, and our masters of all things Podcasting, Chris and Lauren Miller, for this third episode in our Budget Basics series.