Our church has a very low staff turnover rate. Over the past 17 years, we’ve only had three bookkeepers, each serving at least five years. Our current bookkeeper is terrific and is preparing to take a two-week vacation. While she built a team of volunteers to take care of many of the tasks in her absence, payroll is something sensitive enough that a staff person (me) needs to take on that task. Honestly, it’s been several years since I’ve had to run payroll, so I asked our bookkeeper to train me. Instinctively, I began creating checklists to ensure I listed every step. After all, it’s best to get it right the first time when dealing with people’s paychecks. I took the time to write down the payroll checklist and tested it (twice) to verify it because I know checklists work. I recently read a Forbes article explaining why checklists are so powerful. The article quotes American surgeon and writer Atul Gawande saying, “Checklists…remind us of the minimum necessary steps and make them explicit. They not only offer the possibility of verification but also instill a kind of discipline of higher performance.”
The church budget carries with it the type of weight that requires checklists to bring about discipline and high performance. Just like my list to run payroll, it’s filled with action items. And, like my payroll list, certain basics span most businesses regardless of size, industry, or software solutions. But, many of the details, like logging into the payroll portal or the timeclock software used, are so specific that it would only help some. With that in mind, use the following church budget checklist as a starting point. It contains essential tasks that will span most churches but will need modification to match your church.
- Budget Type: There are three basic budget types churches use: Incremental (also known as line item), Value Proposition, and Zero-Based. Select the church budget type that best fits your church.
- Define the Focus: The purpose of the budget is to create a plan that directs the allocation of every donation dollar to support the church’s mission, vision, and values. In addition, each year may have a specific focus that aligns with the mission, vision, and values. Church leadership needs to spend time prayerfully considering the goals (ministry, financial, etc.) for the upcoming fiscal year.
- Reports: Generate relevant reports that allow the various budgeting teams to project income and expenses. At a minimum, review attendance, giving, statement of cash flow, and statement of financial activity.
- Project Income: Accurately projecting the income target is critical to the success of the church budget. Creating an unrealistic high projection could quickly lead to overspending, putting the church in a vulnerable financial position. Conversely, projecting too low could rob the church of reaching the potential to accomplish the mission.
- First Draft of Expenses: Now that the budget team has the goals and essential historical reports, it’s time for the ministry and operational leaders to use the data to build the first draft of their budget. Pro Tip: Break this down into several checklist items, such as compensation, facilities, outreach, worship, etc.
- Compare and Adjust: Compare the projected income to the projected expenses. Ministry and operational teams should have dreams and desires bigger than the projected income. However, deficit spending is not an act of faith; it’s bad stewardship. This task is to get the projected revenue and spending into alignment.
- Finalize: Once the projected income and expenses are aligned, and the budget supports the church’s mission, vision, values, and goals for the upcoming year, it’s time to enter this data into the accounting software and provide the key stakeholders with reports.
- Communicate: It’s time to celebrate, not just that the tasks were complete, but what they represent. Share the budget with the church through emails, meetings, and Sunday mornings. Sharing the budget shows transparency and accountability and will excite the congregation about what God is doing in and through your church.
When building a church budget, avoid costly missteps, and create a customized checklist. Along the way, it may add the benefit of building discipline, confidence, and higher performance.