Before being called into full-time ministry in 2006, I was part of the first wave of computer tech support. In those days, tech support needed to cover hardware basics, like setting the dip switches on a modem (can you hear the screeching sound of a successful connection?). And answering software basics like how to send an email with an attachment and other basic software questions. During those formative years of tech support, I learned the efficiency of using keystrokes to perform routine tasks, like how to copy (Ctrl + C) and paste (Ctrl + V). Sometimes, when creating a budget, we confuse efficiency for effectiveness. Using Ctrl + C from last year’s budget and Ctrl + V for this year’s budget may seem efficient, but it is not very effective. That’s why organizations like the Evangelical Council for Financial Accountability (ECFA) recommend using a zero-based budget. It is the most effective way to create a church budget.
What is a Zero-Based Budget
If a budget is a financial roadmap for your church to get from point A to point B, then a zero-based budget makes sure you always start at the beginning. It assumes nothing. Instead of copying and pasting last year’s budget and making a few tweaks to account for an increase or decrease in giving, a zero-based budget begins with a blank spreadsheet. If that sounds like a lot of hard work, then you get it. A zero-based budget forces each area to plan for the upcoming year because each year is different. Then, through collaboration and prayer, a budget is created that defines the compensation, operational, and ministry needs for the upcoming year. Warning: This process will likely reveal your plans outpace the budget’s target leading to a few rounds of adjustments. That is a healthy way to build a budget. The goal of a budget is to identify the plans for the upcoming fiscal year and then allocate the financial resources. Using a zero-based budget is the most effective way to get there.
Benefits of a Zero-Based Budget
Starting each budget at zero instead of copying and pasting last year’s budget and making adjustments has the following added benefits:
- Annual Evaluation – Starting each year at zero ensures each ministry evaluates and plans for each year specifically. Just because last year’s budget had outdoor worship nights does not mean those events will or should continue. Conversely, it could mean adding more funding to outdoor worship nights because of the impact on the community inside and outside the church. Evaluate everything.
- Reduces Lazy Budgeting – In addition to the efficiency associated with the copy and paste method, it can create lazy budgeting practices. If attendance is up by 18% over last year and giving is up 6% over last year, don’t just add 3% to all ministry and call it good. Take the time to plan each event, find the right curriculum, evaluate staff performance for increases, account for utility increases, determine the scope and funding required for upcoming capital expenses. Do the work.
- Demonstrates Strong Leadership – Zero-based budgeting provides opportunities for the leaders in the church to equip their teams to plan and gain ownership in their ministry areas. It builds trust with the church members showing accountability and transparency that comes with multiple people crafting the budget. Lead them well.
Knowing how to copy and paste using shortcut keys may be efficient when using software, but it is not the most effective way to create a budget. The mission of the Church is far too important not to take the time each year to build the budget from scratch. A zero-based budget is the most efficient way to ensure the annual evaluation of each area. It helps to determine what should get more funding and what should get less. Zero-based budgeting reduces lazy budgeting habits by just increasing or decreasing the current budget by a percentage. And zero-based budgeting gives the leaders in the church to demonstrate their leadership abilities, ultimately showing accountability and stewardship to the church.