When I was in high school, we had a course in driver education, including bookwork, simulators, and behind-the-wheel training. That means four students and the instructor piled into the car and learned to navigate a vehicle, many for the first time. Sure, some students were a little better than others, but we were all learning something new, so we were not good at driving yet. Building a church budget is a lot like learning to drive, don’t expect to be good at it immediately; it takes time, training, and experience. Here are a few basics if you’re trying to differentiate the gas from the brake pedal of your church budget.
Building a church budget takes time – a lot of time. Avoid the mistake of trying to slap something together in a week. Regardless of a church’s size or complexity, allocate about five months to plan appropriately for the upcoming fiscal year.
Start From Scratch
Each year brings new initiatives, new needs, and new costs. Refrain from assuming everything will stay the same each year. Instead, use a zero-based budget for your church. Zero-based budgets force each area of ministry and operations to plan for the upcoming year because each year is different.
Your church should have a clear mission and compelling vision. The mission answers the question, “why does your church exist,” most churches use the Great Commission. The vision provides a glimpse into the future state of what it looks like as your church accomplishes its mission. Each year, cast a vision that captures the specific initiatives to accomplish with the funds from the budget.
Provide Historical Spending Data
Even when using a zero-based budget for your church, you want to base the upcoming year’s projections on accurate historical data. For example, when forecasting utility bills, use at least 12 months of data to account for seasonal increases due to temperature extremes or annual special events. Providing this essential data to each leader enables better forecasting.
Project a Realistic Target
A budget target forecasts the income for the upcoming fiscal year. Creating an accurate projection is the key to a successful budget. If the income projection is set too high, overspending is the likely outcome and could impact the church’s financial viability. Set too low, and it limits the potential impact of the church. Use a simple model to project the income by taking at least 12 months of attendance to determine your church’s growth or reduction factor. Multiply that factor against 12 months of giving data. Finally, add or subtract that amount from the 12-month total to calculate the target. Helpful Hint: If your church is growing or retracting at a rate that the trend does not show, adjust the factor to fit the situation.
Ministry rarely runs along a linear line because areas frequently overlap. For example, many states require background checks like LiveScan for anyone serving with children. But who budgets for it? And what if a volunteer helps in multiple areas? Collaborating in overlapping areas can save money and frustration.
A great way to build trust in the area of finances within your church is to share the budget. That doesn’t mean exposing private information like the salaries or benefits of individuals to the congregation, but it does mean a level of transparency that promotes accountability and trust.
As with anything we do for the first time, we’re not going to be good at it; we simply don’t have the experience yet. But, with training, patience, and planning, just like learning to drive, creating a church budget gets easier every time you get behind the wheel. Enjoy the journey.