We started taking our daughters camping and hiking when they were young. There is something about wandering through nature that speaks to our souls, allowing us to marvel at God’s creation. At first, our young girls did not need to bring water or snacks; it would have been a burden they could not carry, so I put enough for everyone in my backpack. Fast forward to 2017 when my oldest daughter graduated from college and wanted to hike to the top of Yosemite Falls. The elevation at the top of the falls is almost 4,000 ft. making Yosemite Falls one of the tallest waterfalls in North America. While only a 7.6-mile hike, the hike is listed as strenuous and takes approximately 8 hours to complete. As we prepared for the journey, we each had our load to carry that included snacks, first-aid, and, of course, water – a lot of water. It would have been a massive mistake to think I could carry all of the supplies we needed alone. It would have been prideful on my part to do so.
That hike makes an excellent analogy for crafting a church budget. From beginning to end, it is a long and strenuous journey. And, like trying to carry the provisions for my entire family by myself, bearing the burden of the church budget alone is prideful and could have disastrous consequences. Assembling a Financial Advisory Team helps remove both the pressure and pride. While not in the context of church budgets (or hiking), I think that the Apostle Paul says it best, “Bear one another’s burdens, and thereby fulfill the law of Christ. For if anyone thinks that he is something when he is nothing, he deceives himself. But each one must examine his own work, and then he will have reason for boasting, but to himself alone, and not to another. For each one will bear his own load.” Galatians 6:2-5(NASB).
The big-picture role of the Financial Advisory Team is primarily to provide financial oversight and assistance for the financial matters of the church or non-profit. Here are a few examples of roles for the team members:
- Develop budget assumptions – the process of determining the expected income and expenses for the budget period.
- Compare compensation – researching the local and regional cost of living and other competitive compensation-related issues.
- Develop stewardship – conceive ways to promote biblical stewardship in the church.
- Evaluate and compare benefit options – review employee health benefits to find the right balance of value for the church at a price point the employees can afford while providing acceptable coverage. The evaluation should include retirement plans, short- and long-term disability, and life insurance coverage.
- Evaluate and compare commercial insurance – including property, content, liability, crime, and protection for the leaders and the Board of Directors.
- Develop debt reduction strategies – reduce and eliminate any outstanding debt, including mortgage debt.
Budgeting and Financial Planning
The Financial Advisory Team assists in budget development and financial planning based on the church’s strategic plan, budget assumptions, and, of course, prayer. Here are some examples of how the team can assist with budgeting and planning:
- Provide guidance for the Lead Pastor and Executive Pastor(s) with fiscal responsibilities.
- Assist in the development of the annual operating budget with input from staff.
- Regularly review the church’s revenues and expenditures, balance sheet, and other matters related to church solvency.
- Set long-range financial goals along with funding strategies. These goals will include the oversight of the cash reserves fund and a sinking fund to maintain or replace equipment.
- Integrate strategic plan objectives and initiatives to maintain church-wide assets and investments. Seeking input from the staff, the team determines the financial implications of the strategic plan and how to support the implementation of the strategies.
Another function of the Financial Advisory Team is to help develop reports that communicate the financial cash position, how well the church is operating within the approved budget, and highlight how the church is accomplishing the mission in an easy-to-understand language. Here are a few examples of how the team can help:
- Assist in the development of functional and readable report formats.
- Develop a list of desired reports noting the level of detail, frequency, deadlines, and recipients of these reports per staff input.
- Assist the staff in understanding the implications of the reports.
- Provide financial reports to the Board. These reports need to aid the Board’s discussion about expected outcomes and potential strategies for overcoming setbacks or unexpected changes to the financial environment.
Internal Controls and Accountability Policies
The Financial Advisory Team ensures the church has documented and follows the appropriate internal controls. The Financial Advisory Team ensures the church meets legal and local, state, and federal governmental filing deadlines. For churches with a mortgage, the oversight includes compliance with bank covenants. Here are some examples of how this could look:
- Create, approve, and update (as necessary) policies that help ensure the church’s assets are protected.
- Document the policies and procedures for financial transactions in a manual. Annually review and update the policies and procedures, making updates as necessary.
- Ensure adherence to approved financial policies and procedures.
Other Risk Policies
The Financial Advisory Team ensures policies exist that protect the organization and minimize its risk exposure. Here are a few examples of policies to review:
- Long-term contracts or leases
- Loans or lines of credit
- Capital purchases
- Disposition of donated stock
- Record retention
I recommend that the Financial Advisory Team meets between 6 to 12 times per year. On occasion, it may be necessary, at the request of the Financial Team Chairperson, to hold special meetings during times of crisis or increased need.
Finance Team Members
A Financial Advisory Team should consist of 4 to 6 church members with experience in finance, accounting, business, executive leadership, and business ownership. I highly recommend an interview and application process to ensure competency, cohesion, and alignment to the mission, vision, and values.
Finance Team Chair
The role of the Financial Advisory Team Chair belongs to the Treasurer of the organization. As Chairperson of the Finance Advisory Team, the Treasurer provides oversight and direction to the team, promoting involvement and participation. Example duties of the Chairperson include:
- Team/Board Communications – is the primary communicator between the Financial Advisory Team and the Board.
- Executive Team Communications – collaborates with the Lead Pastor and Executive Team to set an agenda for each team meeting.
- Coordinate team meetings – schedule meetings, prepare the agendas and facilitate the gatherings.
There is an African proverb that says, “If you want to go fast, go alone. If you want to go far, go together”. I’m confident that my daughter could have reached the summit of Yosemite Falls much faster on her own. But, what fun is that? We love sharing the experience, standing in awe of all that God created. And, of course, laughing at and with each other along the way. Ecclesiastes 4:9-12 extols the virtues of partnership, giving reasons why we need each other. This practical wisdom needs to extend into the realm of church budgets and finance. Use the examples above to build a healthy and productive financial team to eliminate pride, provide protection, and enjoy the journey.