Creating an effective church budget can seem daunting, especially for those who do not find the administrative side of ministry easy. As a friend once lamented, “This is not the fun part of ministry!”
However, it’s no accident that the Bible contains more Scriptures dealing with money and possessions than most other subjects, including prayer and evangelism. One of Jesus’s temptations in the wilderness involved material possessions. God knows the temptations of possessions and money and the power they represent, as well as the problems they can cause.
The church is not exempt from this struggle. Satan has won some victories on this battlefield, but the church can prevail by properly stewarding what God has given. This article provides an overview of four essentials for building your church’s budget.
1. Embrace a Theology of Stewardship
Navigating financial management and fiscal responsibility requires relying on the Lord through a theology of stewardship. While we may understand this concept, it is crucial to exhibit an unwavering commitment to it as we manage the church’s finances. A theology of stewardship involves ownership, responsibility, accountability, and reward.
- Ownership: God owns everything, as Scripture clearly states. The earth is the LORD’s and all it contains, the world and those who dwell in it (Ps 24:1).
- Responsibility: Because God owns everything, we must feel the weight of managing what has been entrusted to us. From the time of creation, we have been given the responsibility to care for and cultivate all God has created and given (Gen 1:28; Ps 8:1). And while we, individually, do not control the entire world, we are responsible for those things and people whom God has placed under our care.
- Accountability: We will be accountable to God for how we steward time, people, material possessions, and finances. Like the stewards in the parable of the talents, we will be called to give an account. (Matthew 25:14-30)
- Reward: There will be a reward for the faithful steward, not just on earth but a Kingdom reward of glorifying God, accomplishing His mission, and the privilege of entering into the joy of your master. (Matthew 25:21)
2. Understand Your Church’s Budget Type
There are three types of budgets typically used today, each with variations.
- Zero-Based Budget: This approach starts the budget at zero each year. Every item or expense must be evaluated and justified before being included in the upcoming budget. While time-consuming, the zero-based budget works best for churches creating new budgets.
- Ministry or Program-Focused Budget: This narrative form of the budget explains, rationalizes, and justifies budget items. Ministry-related items are grouped together, such as all student ministry expenses, including personnel in one ministry budget. This helps the church see its ministry focus and the investment in various ministry areas.
- Traditional or Line-Item Budget: This common model adjusts the historical budget to account for growth, changes, or new needs. Expenses are grouped by type (e.g., personnel line, insurance line, music ministry line items).
3. Grasp the Budgeting Process: Analyzing, Forecasting, Prioritizing, and Monitoring
- Analyzing: Start by assessing the church’s financial health. Is your church in a good, stable, and healthy financial position? After that, identify your baseline budget. To determine your baseline budget, there is a two-step formula using annual income and expenses.
- Total Income – Total Expenses = Net
- Total Income + Net = Baseline Budget
Note that the “Net” can be a negative or a positive number. This is your starting point for creating the next year’s budget.
- Forecasting: Use your baseline budget to predict income and expenses. Account for fixed expenses like utilities and insurance and anticipate potential income changes due to church growth, and other mitigating factors.
- Prioritizing: Control expenses by distinguishing needs from wants. Filter decisions through the church’s mission to identify non-negotiables and priorities.
- Monitoring: A budget is a guide, not a guarantee. Once the budget has been set, continuous monitoring of income and expenses needs to be intentional. Whether that is weekly, monthly, or quarterly, regular monitoring can allow you to adjust as needed. It can also help you celebrate when you reach financial and ministry goals throughout the year.
4. Foster Transparency, Accountability, and a Culture of Stewardship
- Involve People: Transparency and accountability protect the church’s integrity. Involving stakeholders such as ministry staff, elders, key committees, and other leaders in fiscal management and budget decisions can be the most effective way of guaranteeing transparency and accountability.
- Utilize Tools: Use church accounting and budgeting tools to enhance transparency and accountability. This has been a growing market and there is not a one-size-fits-all accounting and budgeting program. Research and choose tools that fit your church’s needs.
- Develop a Culture of Stewardship: As your congregation understands how the resources the church has been given are being used to accomplish the mission of the church, you will build buy-in and trust. When being transparent, don’t just focus on the numbers, focus on the outcomes. If the church spent a certain amount of money on Vacation Bible School this summer, don’t just report how much was spent, report how many lives were touched and how many souls were saved.
Building an effective church budget is a critical yet often challenging aspect of ministry. By embracing a theology of stewardship, understanding the type of budget that best suits your church, mastering the budgeting process, and fostering a culture of transparency and accountability, you can navigate this essential task with confidence. Remember that a well-managed budget is not just about balancing numbers; it is a powerful tool for accomplishing God’s mission and glorifying Him through responsible stewardship. As your church commits to these principles, you will see a culture of stewardship develop, grow, and flourish, enabling your ministry to thrive and make a greater impact in your community.
