I was just a kid, but I remember when the first astronauts landed on the moon and how much I wanted to be an astronaut. I was around in the 1970s to see the gas shortage and waiting in line to get gas, but that’s okay because there was some fantastic music back then. I recall the rise of the Personal Computer and couldn’t have imagined the impact it would have on everything. I remember when John Hinkley shot President Regan and being shocked someone would do that. Then, I watched in complete awe when the Berlin wall came down. I remember the tragedy of the space shuttle Challenger. I also remember watching the age of the internet, the rise of social media, the terrorist attack of 9/11, and most recently, the COVID-19 pandemic. Based on my personal experience with historical events, it’s easy to see why in March of 2020, I was naive to think that after two weeks of flattening the curve, life would return to normal – whatever normal was. I was spectacularly wrong. More than two years later, in a post-Christian, politically polarized world, I am still wondering what normal will look like, especially for churches. Yet, seeing how the churches adapted, innovated, and pivoted during the pandemic was such an encouragement. We all learned so much and endured so much. Prior to COVID-19, our church did not have a live streaming option to watch our services. But, on March 15, 2020, we went live and have continued to improve the production quality to make it a better experience. I can assure you that I had never heard of Zoom before the lock-down, and now we are all so familiar with Zoom that a new term emerged to define how tired we are of using it, Zoom-fatigue. In addition, churches and small businesses alike learned how to navigate the complex and ever-changing landscape of government loans and grants in an effort to keep staff employed and the organization financially afloat. Now, most churches are fully open for on-campus services without restrictions, only to discover that attendance has not returned to pre-pandemic numbers, leading many church leaders to wonder when, or if, the people who left will return. This uncertainty makes budgeting even more complex and critical than before. Thinking through the challenges that lie ahead for churches, I want to share five areas of consideration when crafting the upcoming budget.
Build an Emergency Fund
It doesn’t matter if it is personal finances or running a business; an emergency fund is necessary. An emergency fund is so important that those familiar with Dave Ramsey’s Financial Peace University (FPU) know that Baby Step 1 is to build a $1,000 emergency fund. And Baby Step 3 is to have a fully-funded emergency fund that can cover expenses for up to 3-6 months. Having an emergency fund is vital to the financial health of a church because, as we’ve seen, emergencies happen. However enticing it is, resist the temptation to dip into the emergency fund for non-emergencies. In the pre-pandemic world, borrowing from your emergency fund may have had little consequence, but we now see the importance of this fund. If your church does not have an emergency fund or has a depleted emergency fund, add a line item to the budget to build or replenish this fund now. An emergency fund that can withstand a crisis for at least 40 to 80 days is not a lack of faith; it’s being a good steward.
Carrying debt is always a burden, especially for churches. Most churches have more dreams of accomplishing their mission than money to fund them. Dreaming about how God can use your church is not only normal but healthy. But, going into debt to fund ministry dreams actual hurts the church. Dedicating any portion of donations to paying off debt robs your church of those dreams. Think about how much money your church could budget for compensation or ministry if debt was not part of the equation. On top of that, as I mentioned above, many small businesses and churches took advantage of the numerous COVID loans available. While some, like the PPP (Paycheck Protection Program), were forgivable up to 100%, not all were. Avoid getting stuck paying on these loans for years and the interest that comes with the loans. Make it part of the budget plan to get out of debt and stay out of debt.
In the same way that you are reading this post because you know your church needs a budget, your church also needs to have metrics. At the very least, a church should know its on-campus attendance (adults, volunteers, children, etc.) and its online attendance. In addition to attendance, a church should monitor giving. It is not unspiritual to track progress; it is strategic and impacts your budget. For example, in the early days of the pandemic, creating a quality online live stream of the church service moved from the nice-to-have category to a must-have instantly. But what does that mean in the post-pandemic world? Do you invest more in making the online experience better? Do you abandon live-streaming altogether? Without good data, it’s impossible to answer that question. Your live stream may have more reach, attendance, and impact than your on-campus service. Analyze trends to determine the best way to allocate budget money.
Set a Realistic Target (and stick to it)
Creating the annual budget target requires analyzing the data – at least 12 months of attendance and giving data. The reality for many churches is that attendance has not returned to a pre-pandemic state. An article in the Wall Street Journal shows that in-person attendance has dropped 30%-50% compared to pre-pandemic attendance. While it may be tempting to budget as if attendance and giving will return to pre-pandemic numbers, invest the time and analyze your church’s reality. Overestimating the budget target could have catastrophic results for your church.
Improve Processes to Reduce Operational Costs
When I worked as a software developer, I remember being so excited when I wrote a program that automated extracting sales data from the company store’s Point of Sale system and created sales orders in SAP. If you don’t know what any of that means, it’s okay. The point is that the software I wrote saved about four work hours a day in data entry. Churches need to think like that. Knowing that compensation typically consumes 45-55% of the entire budget, ask, are there places to automate to save or reallocate staff hours? Our church implemented a VoIP (Voice over IP) Phone System, which allowed us to create a call tree to automate the routing of calls and eliminate the need to have someone sitting at a desk answering the phone. Churches need to think lean and look for opportunities to improve and streamline processes. It can have a significant impact on your budget.
I know firsthand the exhaustion level many in ministry (like so many other areas of business, education, etc.) continue to face, and budgeting in this trying season may seem overwhelming. As you build your church budget, consider what it would look like with an adequate emergency fund and a plan to get out of debt. Take the time to discover emerging trends, set a realistic budget target, and look for ways to streamline processes. Using these tips may put your church in the financial position to continue pursuing its mission.