When it comes to indoor plants, it seems that I have a brown thumb. I’m not proud of this, but every single plant in my office has died. The poor things never make it more than six months. When I moved into my new office, a coworker helped me and purchased a fiddle-leaf fig plant. It looked so good – for about three months. Then, slowly, more and more of these lush green leaves began to drop off. I would be working and then hear a leaf fall; it was so sad. I needed a manual or some guidelines to show me how to care for a fiddle-leaf fig. It can be the same with church budgets. We need some guidelines to help determine what should be in or not in the budget. Regardless of the trajectory of your church’s attendance and giving, every church needs to identify what to include and avoid when it comes to budgeting.
What to Include
In the same way that a fiddle-leaf fig requires a specific level of humidity, the right amount of water, and is sensitive to the type of light it receives, a church budget has particular needs too. The following list should provide a good start on what to include:
- A Realistic Budget Target – Developing a target for the church budget is essential. The target is the projection of the income for the upcoming year. It serves as the basis for the total amount to allocate via the budget.
- Compensation Costs – Compensation is typically the largest piece of the budget pie for churches. Take time to calculate the amount your church spends on total compensation costs. Knowing if your church is within the healthy percentile for compensation is a good indicator for the rest of the budget.
- Sufficient Funds for Operational Costs – Maintaining a church facility is expensive. But, the alternative is an unsafe, unclean, unwelcoming place to worship. But think beyond just the facility, consider all of the other operational costs like printing, phones, IT equipment, software and support, service charges, and the list goes on. A comprehensive budget includes all of these basic costs.
- Sinking Funds – A sinking fund is a way of paying for big-ticket items to be replaced before they expire. Using sinking funds to replace necessary equipment like a sound system or HVAC unit avoids emergency decision-making later.
- Collaboration – Involve all of the ministry and operational teams when crafting the budget. Cast the vision and let the leaders determine their needs to accomplish their goals for the upcoming year.
What to Avoid
I learned the hard way that the fiddle-leaf fig did not require as much water as I was giving it. Knowing what to avoid is just as important as what to include.
- Overspending – This may seem obvious, but let it sink in. Overspending can be subtle and often unintentional. For example, adding just one unbudgeted event could increase costs in materials, utilities, and labor. One unplanned event may not bust the budget, but the lack of planning and discipline might. An increase in a utility tier, raising the minimum wage, or a workers comp audit result put an unintentional increase in the budget. And the problem of overspending will not go away on its own. Be proactive by running monthly reports and making adjustments when necessary – but a word of caution, don’t overreact.
- Anything not tied to the mission of the church – Every church should have more dreams than dollars in its budget. Casting the vision during the early stages of the budgeting process is a great way to avoid funding good things, but it keeps you from resourcing great things.
Approaches to Consider
As you get ready to prepare your church budget, there are a couple of other items to consider:
- Use a Zero-Based Budget – Start each budgeting season with a blank slate. Because each year is different, every area needs to plan for the upcoming year based on what will happen, not what previously happened. Using a zero-based budget helps to ensure the church stays on mission.
- Determine healthy percentages for your church – Comparing can often lead to pride or insecurity. However, comparing can also reveal insights to help avoid disaster. It’s like comparing your blood pressure to the normal range. Finding how your church budget percentages compare to healthy churches may reveal areas to improve.
Whether it’s taking care of a fiddle-leaf fig plant or putting together a church budget, guidelines are a helpful tool. Using these guidelines will help to determine what to include and avoid when creating a church budget. And increase the likelihood of producing healthy growth.