I’m under the weather. The ball is in your court. Sit tight. They’re pulling your leg. The writing is on the wall. I’m sure you have used or heard someone say something like this. These idioms are phrases where the meaning is not directly related to the words used, like “It’s written in stone.” This idiom describes something unchangeable. After all, it’s nearly impossible to erase words carved into stone. When I hear that idiom, my mind instantly goes to the 10 Commandments given to Moses on Mount Siani. These commandments are not just from the voice of God but are actually written into stone by God’s finger (see Exodus 31:18). I’d say that makes these laws permanent and unchanging.
When I finish working on something like a home improvement project, I want it to be so good that additional changes are unnecessary. But very few things, other than the Word of God, fall into that category. Even when a church creates a well-planned budget, executes to perfection, supports its mission, and funds the goals for the upcoming year, it often requires periodic evaluation and modification. In that regard, a church budget is far more a living document than a stone tablet.
Key Reports
Sometimes it’s easy to tell when something needs evaluation and adjustments. When I noticed a dead spot on my lawn, it revealed something was amiss with my do-it-yourself irrigation project. Like a brown patch of grass, there are indicators churches can use to evaluate the health of the church budget, and running financial reports is the way to find them. Every church needs to run financial reports to track the actual donations (income) and spending compared to the church budget. Here are two essential financial reports churches should use:
- Statement of Financial Activities (SOA): Where for-profit organizations use an Income Statement (Profit & Loss), non-profits, like churches, use a Statement of Financial Activities. The SOA report focuses on donations (revenue), expenses (ministry and operations), and net assets.
- Statement of Cash Flow: This report reveals how the church managed the inflow and outflow of cash, showing the church’s financial activity over a period of time. This report provides a clear picture of the church’s liquidity.
Frequency
Too Frequent
Operating a church is not for the faint of heart. Attendance and donations fluctuate wildly from week to week, and every church’s giving rhythm differs. For example, many churches find that Sundays that fall close to the 1st and 15th of the month have higher donations. While recording attendance and giving for each week is essential, the up-and-down nature of week-to-week variances can cause undue stress or short-term elation. Making decisions week to week is too short-sighted.
Not Frequent Enough
While annual or quarterly reporting is often the minimum requirement for many businesses to report their financials, for a church, it may be too late to make the necessary adjustment. Churches that overestimate the donations for their annual budget without adjusting spending can find themselves in a dangerous cash flow situation when left unchecked for too long.
Just Right
Accounting experts recommend running financial reports every month. Monthly reporting reveals trends without the stress of the ebb and flow of weekly donations against monthly spending. While it’s critical to report and evaluate monthly, it’s also essential to know your church’s top and worst quarters. Understanding how each month fits into the year’s overall strategy can help avoid overspending or overcorrecting.
A church budget is essential when managing God’s money. It sets the course for the upcoming fiscal year, demonstrates transparency to the congregation, and shows accountability. Producing a church budget takes time, planning, cooperation, and unity. But, unlike receiving the 10 Commandments written by God’s finger, the budget is not written in stone; it’s a living document that may require change when projections in donations or spending are no longer on track. Using the right reports at the right time provides the information necessary to adjust, allowing the church to pursue its mission.
