How to Establish a Vision-Centered Church Budget
Operating with a budget is a crucial element if you want to grow a healthy church. It is vital therefore to see it as more than just a financial tool for reporting and accounting.
Operating with a budget is a crucial element if you want to grow a healthy church.
It is vital, therefore, to see it as more than just a financial tool for reporting and accounting.
The budget is a vehicle to reinforce and enable vision fulfillment. It should reflect the key priorities of the church and be seen as an instrument of leadership.
First, let’s consider some good reasons to create a church budget.
6 Reasons to Develop a Church Budget
1. Clarity
The process of developing a church budget helps you clarify again your purpose for being on the planet.
As you work out how you are going to spend money on evangelism and discipleship, you refresh your purpose and call.
Your team is also helped by clarifying what you are seeking to achieve in the next 12 months.
2. Plan
God is a planner.
When Peter preaches on the day of Pentecost, he tells the crowd, “This man was handed over to you by God’s deliberate plan and foreknowledge.” (Acts 2:23)
Paul reiterates this concept in his letter to the Ephesian church, “In him we were also chosen, having been predestined according to the plan of him who works out everything in conformity with the purpose of his will.” (Ephesians 1:11–12)
God intentionally and deliberately planned that Christ would die on the cross for our redemption and ultimately for the fulfillment of His will.
It is in His nature to organize, strategise and formulate plans.
Likewise, we who are made in His image should be adept at planning and intentionally live out the purposes of God in our life.
Good financial planning will also help you avoid a fiasco in your cash flow.
3. Train your team
A third reason to have a church budget and establish a vision centered church budget is that it trains your team.
It trains them to think ahead, it trains them in financial management skills, it trains them in budgeting.
It’s quite possible that your key leaders don’t have a personal budget, which every leader should have.
They should know what they’re saving, what they’re spending, where their income comes from and learning how to use faith for income and wisdom with expenditure.
It’s vital that you have a budget for personal reasons but also using your church budget can train your team in the practical processes and the principles of budgeting.
It’s a little thing you may have not considered, but it’s a good reason to establish a church budget.
It certainly is a great way to disciple your team in finances.
4. Share the burden
A fourth reason to establish a church budget is that it shares the burden.
Every pastor carries the burden of the church finances and I think lead pastors or senior pastors carry it more than anybody else in the organization.
When income is down they worry.
I did.
When income was up they think wow, everything is healthy and there’s less pressure.
A really healthy budget process shares that burden across your team, your board, your business manager and your treasurer. Your team gets involved and can see where the money’s going in different areas and why we’re spending it this way. Suddenly it spreads the pressure.
I don’t think it alleviates the lead pastor from the primary pressure of being the key fundraiser.
The pastor is the primary lead person when it comes to raising money in the church, so I don’t think you ever escape that responsibility.
But I do believe that you can share the burden through a healthy budget process so you’re not carrying it by yourself.
As people focus in on a budget process, across your stewardship team and across the department heads, it increases prayer.
People begin to pray about this process and what they’re doing in establishing a vision-centered church budget.
5. Goal setting
Another key reason to establish a church budget is goal setting. Just as budgets clarify the church’s mission and assignment, seasonal goal setting is impacted by your church’s budget process.
You might decide that you’re going to reach out to local high school students and you ask, how many high school students do we want to reach? When are we going to reach them? How are we going to reach them? You develop goals around this mission.
Budgets will help you focus as you raise money for high school ministry. It helps you with your goals, it helps you focus on your goals and it creates cohesion in your team.
Yes, that’s right, goals create cohesion. When you get the team all heading in the same direction, a budget can influence those goals and help you in your goal setting.
6. Improved communication
The sixth and last reason is that the budgeting process improves and lifts communication.
Board members discover what department leaders are thinking.
Department leaders can discover what the pastor has on their heart.
Boards discover all the strategies that the pastor is focussed on at the moment.
People begin to understand the bigger picture and the needs of other departments in the church.
The youth leader discovers the needs of the kid’s church. The music department discovers that even our seniors have budget needs.
I know there’s toing and froing in all of that when you get a robust team who are chasing their part of the dollar, but it’s good for them to understand there are more needs than just those of their department.
As budgeting improves and as the pastor and the board and the department leaders get a better handle on the budget and the finances, they are actually able to improve communication to the church.
They can outline projections of what’s coming up in the next 12 months and the longer term.
When budgeting improves, pastors start to get more confident in preaching on money.
When you preach on money and disciple people in finances, it’s good to be able to say, we’ve got a vision-centered budget. We work off a budget and we have expenditure and income and we know where the money’s coming from, where it’s going and its impact.
When you disciple people with their personal finance you can show the church is a good steward.
My Vision-Centered Church Budget Process
I want to walk you through my vision-centered church budget process that I used for many years in pastoring and leading our church.
I want to give you the skeleton, the main process and structures and you can tweak this to suit your situation.
I love my friend Alex Cook from Wealth With a Purpose. He says every 3 years a church should do zero-base budgeting.
In other words, wipe everything out as it were and say if we were starting afresh and ask, how would we spend our money?
I think that’s a great thing to do every few years.
Here’s my process.
1. Establish a stewardship team
Instead of a finance committee, establish a stewardship team to manage the budget process.
A stewardship team would have the pastor on it and have a chairman/chairwoman chairing the meetings. The pastor shouldn’t be chairing this group.
It will include the treasurer and one or two people who are good with budget processes and with finance processes.
The stewardship team will do more than do the budget for the church.
I like to see them involved in fundraising and looking at ways of boosting the church’s giving and being wiser in expenditure.
A stewardship team of four or five people can set the church up for a healthy, vision-centered budget process.
2. Communicate primary vision and strategies to stewardship team
Once you’ve got your stewardship team, the pastor needs to communicate primary vision and strategies to the stewardship team and set out some priorities.
This year, we really want to boost our small groups, so I want money that we can pour into small group leaders. This year, we want to boost up the training of greeters, so I want some finances for that. This year, our website needs re-doing, we’re going to focus on some social media, and I’d like some money to spend on that.
A pastor will communicate primary vision and primary strategies to the stewardship team. Not down to nitty gritty details like, “I want this sort of website designed by this person for this amount of dollars.” Just the overall big picture.
Let your vision drive your budget process. Don’t let the resources, or lack thereof, drive the process.
3. Communicate primary vision and strategies to department leaders
Thirdly, the pastor communicates the primary vision and strategies to department leaders. These are the leaders bearing the operational burden of the church–Leaders of the children’s department, music department, media, youth, greeters, seniors, women, and men.
The pastor outlines the focus primarily for the year ahead. It might be on visitors or small groups. You’re going to tailor the things that you’re doing in your department so we can fulfill our primary goal.
This requires the pastor to establish primary focal points well ahead of time.
4. Department leader budgets
This leads me to my next point, which may be a bit of a shock for you.
Department leaders should submit a budget three months before the end of the financial year, as a minimum. In other words, get well ahead of the game.
The pastor needs to be further ahead of this three-month deadline and be considering the church’s primary focus for the year ahead.
He should talk to the board and team and clarify his focus, which he can communicate to his Department leaders and stewardship team.
You should never wait until the last minute to set up the next financial year.
Smaller churches are going to have more wiggle room on this timeline. However, as the church gets larger you need to utilize a good timeline and never leave it for the last minute.
The primary thing is to have a plan in place. You can always adjust a plan. If you have no plan, everyone’s flying by the seat of their pants and it just feels like you’re playing catch up all the time.
5. Prepare draft budget
At this stage, the pastor has shared vision and strategies with the stewardship team and department leaders.
The department leaders have worked out their priorities and submitted their budget items.
The stewardship team kicks into gear and prepares a draft budget with projected income and expenditure–all the operating costs of salaries, benefits, mortgage, rent, lease payments, insurances, repairs and maintenance, administration and utilities and all the income streams are incorporated into this draft budget.
It is also important to make provision for savings. Even if the savings regime is 1%, adopt a savings regime.
As I look back over the years of my pastoring, there’s one thing I would change around our budgeting process.
I would be far stronger at restricting salary growth and boosting savings growth. I believe this would have been more beneficial for the long-term health of our church.
Aim to move your savings level to 10% of income, both personally and with the church. Start as low as 1% and build towards that 10%.
6. Fine-tune the budget
Fine-tune the budget with the stewardship team until it’s balanced or until you come up with an agreed faith gap.
I had more than one church budget where we’ve gone through it as a stewardship team and board and we’ve all decided that we haven’t got a balanced budget, so we’ll believe the Lord to fill the faith gap.
You don’t want millions of dollars in your faith gap.
You don’t want to be stupid about income. You want to use faith for income, wisdom with expenditure.
However, I have seen the Lord provide for those faith gaps over the years.
At other times I’ve seen us tighten our expenditure to make the faith gap. You have to be smart about this as the year rolls on.
I personally don’t have a problem with having a faith gap in a budget. Leave space in your budget for a miracle. Don’t tighten it down so hard that you don’t give the Lord time and room to move.
Now some accountants will probably disagree with me on this, but I like to leave space for some faith.
7. Present the budget
The stewardship team should present the budget to the pastor and the board. At this stage, the budget should be both detailed and big picture.
If it needs to go to members for a vote, then so be it. Some churches take it to a vote, some don’t. There needs to be an approval of the budget in that process by a board that ultimately has legal responsibility for the church.
Then department leaders are informed about the what and why behind the budget decisions.
How much they’re going to get, how much they’re not going to get.
If they are well informed, kept in the process and can see the reasons for key decisions, then they will accept the board’s final decisions on the budget.
This process will help you develop current best practices in your church finances.
How Much Should We Spend On What?
This is a question that I often get asked and often talk about with pastors and boards.
Churches have different approaches to their expenditure and this infographic outlines the large range of expenditure items.
Here are my general answers when posed this question about how to spend the recurring income from Sunday offerings. Please note these percentages do not incorporate missions or buildings offerings.
Salaries: 40% – 50%
I recommend churches aim to spend 40 % - 45% of their regular income on salaries.
I think you can get up to 55% for short seasons, as long as you have very minimal debt or lease costs.
Preferably, I’d rather live at 45% than 55%. However, you can have seasons where you increase it for special projects or events. This also works if you have no debt or lease costs and you think you can afford to have more staff.
However, be aware of the challenge of removing staff.
Ministry Areas: 15% – 20%
15% to ministry budgets such as youth, children, worship and so on.
Facilities: 15% – 25%
Debt repayment, lease payments, utilities and repairs and maintenance. You may raise separate funds for debt demolishing. We did a big mortgage buster one-year with a one-off offering to reduce our mortgage in one big hit.
Savings: 10%
Saving 10% will enable you to build healthy cash reserves.
I think also once you’ve topped up your cash reserves through savings and your cash reserves are healthy, then you can look at what is ‘hot’ in your church and pour out of that 10% into what is already going well.
For instance, if your children’s program is going well then you can take part of that 10% and resource it at a higher level. Put petrol on the fire.
If your small groups are exploding then put some money into training leaders and developing a bigger and better small group program.
Willow Creek Community Church utilizes the following ratios to guide its budget process.
- No more than 50% to staffing (including benefits)
- 10% given away
- 10% for whatever God is blessing at Willow (or cash reserves)
- 15% to ministry budgets
- 15% for facilities, utilities, debt service, etc.
Given Willow Creek’s size and long tenure, you should only use these figures as a guide.
How Much Should We Give Away?
Church leaders wrestle with this question.
Should we be giving away a percentage of our income?
Some churches do it. They believe that they should give 10% of their income away.
I’m not a fan, although our church used to do it.
10% of our income went into missions and the thing I didn’t like about that was it was like secret giving. Many of our members didn’t realize 10% of their giving was going to our mission’s program.
People didn’t have a heart connection because they weren’t giving directly to it.
I stopped that and created a separate fundraising program for our Beyond ministries so people could give directly to the missions’ programs of our church, local and global. Our heart follows our money. Build a connection between giving and the end result.
You have to work out your own philosophy.
I recommend churches use the Vision Builders concept when raising money for buildings, missions and significant projects.
How Much Cash Should You Have In Reserve?
I think it’s important to think strongly and healthily about cash reserves.
You can stabilize your church’s finances by establishing a cash reserve.
Firstly, it enables a church to move smoothly through the normal seasonal variations in cash flow.
When you’ve got a cash reserve it allows you to move through seasons of pressure. If big givers leave, people lose some work or lose jobs, it allows you to cover that seasonal variation.
Secondly, it helps a church properly manage a crisis brought about by unexpected scenarios such as extensive building repairs, emergencies or economic recession.
I remember once when the wooden framework of our stage got infested with white ants. We had to demolish it and put in a metal stage. It cost thousands of dollars which we didn’t have budgeted.
We had cash reserves and were able to do it.
Thirdly, it helps unforeseen opportunities for ministry that require a cash injection.
If you’ve got cash reserves and a ministry opportunity arises, then you can access those reserves. Take $2,000, $5,000, $10,000, or $20,000 and take the opportunity.
Churches should hold a cash reserve of 60 to 90 days of operating expenses and preferably closer to 180 days.
What are you going to change in your church budget process?
Pastor, what's limiting the growth of your church?
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With 30 years of pastoral experience under his belt, John founded Grow a Healthy Church in 2012. Since then, he has conducted over 140 on-site and online church consults in 5 nations, helping churches improve their health, grow numerically, increase their volunteer numbers, develop stronger connections with visitors, raise more money and build leadership pipelines.
Operating with a budget is a crucial element if you want to grow a healthy church.
It is vital, therefore, to see it as more than just a financial tool for reporting and accounting.
The budget is a vehicle to reinforce and enable vision fulfillment. It should reflect the key priorities of the church and be seen as an instrument of leadership.
First, let’s consider some good reasons to create a church budget.
6 Reasons to Develop a Church Budget
1. Clarity
The process of developing a church budget helps you clarify again your purpose for being on the planet.
As you work out how you are going to spend money on evangelism and discipleship, you refresh your purpose and call.
Your team is also helped by clarifying what you are seeking to achieve in the next 12 months.
2. Plan
God is a planner.
When Peter preaches on the day of Pentecost, he tells the crowd, “This man was handed over to you by God’s deliberate plan and foreknowledge.” (Acts 2:23)
Paul reiterates this concept in his letter to the Ephesian church, “In him we were also chosen, having been predestined according to the plan of him who works out everything in conformity with the purpose of his will.” (Ephesians 1:11–12)
God intentionally and deliberately planned that Christ would die on the cross for our redemption and ultimately for the fulfillment of His will.
It is in His nature to organize, strategise and formulate plans.
Likewise, we who are made in His image should be adept at planning and intentionally live out the purposes of God in our life.
Good financial planning will also help you avoid a fiasco in your cash flow.
3. Train your team
A third reason to have a church budget and establish a vision centered church budget is that it trains your team.
It trains them to think ahead, it trains them in financial management skills, it trains them in budgeting.
It’s quite possible that your key leaders don’t have a personal budget, which every leader should have.
They should know what they’re saving, what they’re spending, where their income comes from and learning how to use faith for income and wisdom with expenditure.
It’s vital that you have a budget for personal reasons but also using your church budget can train your team in the practical processes and the principles of budgeting.
It’s a little thing you may have not considered, but it’s a good reason to establish a church budget.
It certainly is a great way to disciple your team in finances.
4. Share the burden
A fourth reason to establish a church budget is that it shares the burden.
Every pastor carries the burden of the church finances and I think lead pastors or senior pastors carry it more than anybody else in the organization.
When income is down they worry.
I did.
When income was up they think wow, everything is healthy and there’s less pressure.
A really healthy budget process shares that burden across your team, your board, your business manager and your treasurer. Your team gets involved and can see where the money’s going in different areas and why we’re spending it this way. Suddenly it spreads the pressure.
I don’t think it alleviates the lead pastor from the primary pressure of being the key fundraiser.
The pastor is the primary lead person when it comes to raising money in the church, so I don’t think you ever escape that responsibility.
But I do believe that you can share the burden through a healthy budget process so you’re not carrying it by yourself.
As people focus in on a budget process, across your stewardship team and across the department heads, it increases prayer.
People begin to pray about this process and what they’re doing in establishing a vision-centered church budget.
5. Goal setting
Another key reason to establish a church budget is goal setting. Just as budgets clarify the church’s mission and assignment, seasonal goal setting is impacted by your church’s budget process.
You might decide that you’re going to reach out to local high school students and you ask, how many high school students do we want to reach? When are we going to reach them? How are we going to reach them? You develop goals around this mission.
Budgets will help you focus as you raise money for high school ministry. It helps you with your goals, it helps you focus on your goals and it creates cohesion in your team.
Yes, that’s right, goals create cohesion. When you get the team all heading in the same direction, a budget can influence those goals and help you in your goal setting.
6. Improved communication
The sixth and last reason is that the budgeting process improves and lifts communication.
Board members discover what department leaders are thinking.
Department leaders can discover what the pastor has on their heart.
Boards discover all the strategies that the pastor is focussed on at the moment.
People begin to understand the bigger picture and the needs of other departments in the church.
The youth leader discovers the needs of the kid’s church. The music department discovers that even our seniors have budget needs.
I know there’s toing and froing in all of that when you get a robust team who are chasing their part of the dollar, but it’s good for them to understand there are more needs than just those of their department.
As budgeting improves and as the pastor and the board and the department leaders get a better handle on the budget and the finances, they are actually able to improve communication to the church.
They can outline projections of what’s coming up in the next 12 months and the longer term.
When budgeting improves, pastors start to get more confident in preaching on money.
When you preach on money and disciple people in finances, it’s good to be able to say, we’ve got a vision-centered budget. We work off a budget and we have expenditure and income and we know where the money’s coming from, where it’s going and its impact.
When you disciple people with their personal finance you can show the church is a good steward.
My Vision-Centered Church Budget Process
I want to walk you through my vision-centered church budget process that I used for many years in pastoring and leading our church.
I want to give you the skeleton, the main process and structures and you can tweak this to suit your situation.
I love my friend Alex Cook from Wealth With a Purpose. He says every 3 years a church should do zero-base budgeting.
In other words, wipe everything out as it were and say if we were starting afresh and ask, how would we spend our money?
I think that’s a great thing to do every few years.
Here’s my process.
1. Establish a stewardship team
Instead of a finance committee, establish a stewardship team to manage the budget process.
A stewardship team would have the pastor on it and have a chairman/chairwoman chairing the meetings. The pastor shouldn’t be chairing this group.
It will include the treasurer and one or two people who are good with budget processes and with finance processes.
The stewardship team will do more than do the budget for the church.
I like to see them involved in fundraising and looking at ways of boosting the church’s giving and being wiser in expenditure.
A stewardship team of four or five people can set the church up for a healthy, vision-centered budget process.
2. Communicate primary vision and strategies to stewardship team
Once you’ve got your stewardship team, the pastor needs to communicate primary vision and strategies to the stewardship team and set out some priorities.
This year, we really want to boost our small groups, so I want money that we can pour into small group leaders. This year, we want to boost up the training of greeters, so I want some finances for that. This year, our website needs re-doing, we’re going to focus on some social media, and I’d like some money to spend on that.
A pastor will communicate primary vision and primary strategies to the stewardship team. Not down to nitty gritty details like, “I want this sort of website designed by this person for this amount of dollars.” Just the overall big picture.
Let your vision drive your budget process. Don’t let the resources, or lack thereof, drive the process.
3. Communicate primary vision and strategies to department leaders
Thirdly, the pastor communicates the primary vision and strategies to department leaders. These are the leaders bearing the operational burden of the church–Leaders of the children’s department, music department, media, youth, greeters, seniors, women, and men.
The pastor outlines the focus primarily for the year ahead. It might be on visitors or small groups. You’re going to tailor the things that you’re doing in your department so we can fulfill our primary goal.
This requires the pastor to establish primary focal points well ahead of time.
4. Department leader budgets
This leads me to my next point, which may be a bit of a shock for you.
Department leaders should submit a budget three months before the end of the financial year, as a minimum. In other words, get well ahead of the game.
The pastor needs to be further ahead of this three-month deadline and be considering the church’s primary focus for the year ahead.
He should talk to the board and team and clarify his focus, which he can communicate to his Department leaders and stewardship team.
You should never wait until the last minute to set up the next financial year.
Smaller churches are going to have more wiggle room on this timeline. However, as the church gets larger you need to utilize a good timeline and never leave it for the last minute.
The primary thing is to have a plan in place. You can always adjust a plan. If you have no plan, everyone’s flying by the seat of their pants and it just feels like you’re playing catch up all the time.
5. Prepare draft budget
At this stage, the pastor has shared vision and strategies with the stewardship team and department leaders.
The department leaders have worked out their priorities and submitted their budget items.
The stewardship team kicks into gear and prepares a draft budget with projected income and expenditure–all the operating costs of salaries, benefits, mortgage, rent, lease payments, insurances, repairs and maintenance, administration and utilities and all the income streams are incorporated into this draft budget.
It is also important to make provision for savings. Even if the savings regime is 1%, adopt a savings regime.
As I look back over the years of my pastoring, there’s one thing I would change around our budgeting process.
I would be far stronger at restricting salary growth and boosting savings growth. I believe this would have been more beneficial for the long-term health of our church.
Aim to move your savings level to 10% of income, both personally and with the church. Start as low as 1% and build towards that 10%.
6. Fine-tune the budget
Fine-tune the budget with the stewardship team until it’s balanced or until you come up with an agreed faith gap.
I had more than one church budget where we’ve gone through it as a stewardship team and board and we’ve all decided that we haven’t got a balanced budget, so we’ll believe the Lord to fill the faith gap.
You don’t want millions of dollars in your faith gap.
You don’t want to be stupid about income. You want to use faith for income, wisdom with expenditure.
However, I have seen the Lord provide for those faith gaps over the years.
At other times I’ve seen us tighten our expenditure to make the faith gap. You have to be smart about this as the year rolls on.
I personally don’t have a problem with having a faith gap in a budget. Leave space in your budget for a miracle. Don’t tighten it down so hard that you don’t give the Lord time and room to move.
Now some accountants will probably disagree with me on this, but I like to leave space for some faith.
7. Present the budget
The stewardship team should present the budget to the pastor and the board. At this stage, the budget should be both detailed and big picture.
If it needs to go to members for a vote, then so be it. Some churches take it to a vote, some don’t. There needs to be an approval of the budget in that process by a board that ultimately has legal responsibility for the church.
Then department leaders are informed about the what and why behind the budget decisions.
How much they’re going to get, how much they’re not going to get.
If they are well informed, kept in the process and can see the reasons for key decisions, then they will accept the board’s final decisions on the budget.
This process will help you develop current best practices in your church finances.
How Much Should We Spend On What?
This is a question that I often get asked and often talk about with pastors and boards.
Churches have different approaches to their expenditure and this infographic outlines the large range of expenditure items.
Here are my general answers when posed this question about how to spend the recurring income from Sunday offerings. Please note these percentages do not incorporate missions or buildings offerings.
Salaries: 40% – 50%
I recommend churches aim to spend 40 % - 45% of their regular income on salaries.
I think you can get up to 55% for short seasons, as long as you have very minimal debt or lease costs.
Preferably, I’d rather live at 45% than 55%. However, you can have seasons where you increase it for special projects or events. This also works if you have no debt or lease costs and you think you can afford to have more staff.
However, be aware of the challenge of removing staff.
Ministry Areas: 15% – 20%
15% to ministry budgets such as youth, children, worship and so on.
Facilities: 15% – 25%
Debt repayment, lease payments, utilities and repairs and maintenance. You may raise separate funds for debt demolishing. We did a big mortgage buster one-year with a one-off offering to reduce our mortgage in one big hit.
Savings: 10%
Saving 10% will enable you to build healthy cash reserves.
I think also once you’ve topped up your cash reserves through savings and your cash reserves are healthy, then you can look at what is ‘hot’ in your church and pour out of that 10% into what is already going well.
For instance, if your children’s program is going well then you can take part of that 10% and resource it at a higher level. Put petrol on the fire.
If your small groups are exploding then put some money into training leaders and developing a bigger and better small group program.
Willow Creek Community Church utilizes the following ratios to guide its budget process.
- No more than 50% to staffing (including benefits)
- 10% given away
- 10% for whatever God is blessing at Willow (or cash reserves)
- 15% to ministry budgets
- 15% for facilities, utilities, debt service, etc.
Given Willow Creek’s size and long tenure, you should only use these figures as a guide.
How Much Should We Give Away?
Church leaders wrestle with this question.
Should we be giving away a percentage of our income?
Some churches do it. They believe that they should give 10% of their income away.
I’m not a fan, although our church used to do it.
10% of our income went into missions and the thing I didn’t like about that was it was like secret giving. Many of our members didn’t realize 10% of their giving was going to our mission’s program.
People didn’t have a heart connection because they weren’t giving directly to it.
I stopped that and created a separate fundraising program for our Beyond ministries so people could give directly to the missions’ programs of our church, local and global. Our heart follows our money. Build a connection between giving and the end result.
You have to work out your own philosophy.
I recommend churches use the Vision Builders concept when raising money for buildings, missions and significant projects.
How Much Cash Should You Have In Reserve?
I think it’s important to think strongly and healthily about cash reserves.
You can stabilize your church’s finances by establishing a cash reserve.
Firstly, it enables a church to move smoothly through the normal seasonal variations in cash flow.
When you’ve got a cash reserve it allows you to move through seasons of pressure. If big givers leave, people lose some work or lose jobs, it allows you to cover that seasonal variation.
Secondly, it helps a church properly manage a crisis brought about by unexpected scenarios such as extensive building repairs, emergencies or economic recession.
I remember once when the wooden framework of our stage got infested with white ants. We had to demolish it and put in a metal stage. It cost thousands of dollars which we didn’t have budgeted.
We had cash reserves and were able to do it.
Thirdly, it helps unforeseen opportunities for ministry that require a cash injection.
If you’ve got cash reserves and a ministry opportunity arises, then you can access those reserves. Take $2,000, $5,000, $10,000, or $20,000 and take the opportunity.
Churches should hold a cash reserve of 60 to 90 days of operating expenses and preferably closer to 180 days.
What are you going to change in your church budget process?
Pastor, what's limiting the growth of your church?
The free Grow a Healthy Church evaluation shows you how to position your church for growth.
Take the 3 min quiz today.
podcast transcript
With 30 years of pastoral experience under his belt, John founded Grow a Healthy Church in 2012. Since then, he has conducted over 140 on-site and online church consults in 5 nations, helping churches improve their health, grow numerically, increase their volunteer numbers, develop stronger connections with visitors, raise more money and build leadership pipelines.
Operating with a budget is a crucial element if you want to grow a healthy church.
It is vital, therefore, to see it as more than just a financial tool for reporting and accounting.
The budget is a vehicle to reinforce and enable vision fulfillment. It should reflect the key priorities of the church and be seen as an instrument of leadership.
First, let’s consider some good reasons to create a church budget.
6 Reasons to Develop a Church Budget
1. Clarity
The process of developing a church budget helps you clarify again your purpose for being on the planet.
As you work out how you are going to spend money on evangelism and discipleship, you refresh your purpose and call.
Your team is also helped by clarifying what you are seeking to achieve in the next 12 months.
2. Plan
God is a planner.
When Peter preaches on the day of Pentecost, he tells the crowd, “This man was handed over to you by God’s deliberate plan and foreknowledge.” (Acts 2:23)
Paul reiterates this concept in his letter to the Ephesian church, “In him we were also chosen, having been predestined according to the plan of him who works out everything in conformity with the purpose of his will.” (Ephesians 1:11–12)
God intentionally and deliberately planned that Christ would die on the cross for our redemption and ultimately for the fulfillment of His will.
It is in His nature to organize, strategise and formulate plans.
Likewise, we who are made in His image should be adept at planning and intentionally live out the purposes of God in our life.
Good financial planning will also help you avoid a fiasco in your cash flow.
3. Train your team
A third reason to have a church budget and establish a vision centered church budget is that it trains your team.
It trains them to think ahead, it trains them in financial management skills, it trains them in budgeting.
It’s quite possible that your key leaders don’t have a personal budget, which every leader should have.
They should know what they’re saving, what they’re spending, where their income comes from and learning how to use faith for income and wisdom with expenditure.
It’s vital that you have a budget for personal reasons but also using your church budget can train your team in the practical processes and the principles of budgeting.
It’s a little thing you may have not considered, but it’s a good reason to establish a church budget.
It certainly is a great way to disciple your team in finances.
4. Share the burden
A fourth reason to establish a church budget is that it shares the burden.
Every pastor carries the burden of the church finances and I think lead pastors or senior pastors carry it more than anybody else in the organization.
When income is down they worry.
I did.
When income was up they think wow, everything is healthy and there’s less pressure.
A really healthy budget process shares that burden across your team, your board, your business manager and your treasurer. Your team gets involved and can see where the money’s going in different areas and why we’re spending it this way. Suddenly it spreads the pressure.
I don’t think it alleviates the lead pastor from the primary pressure of being the key fundraiser.
The pastor is the primary lead person when it comes to raising money in the church, so I don’t think you ever escape that responsibility.
But I do believe that you can share the burden through a healthy budget process so you’re not carrying it by yourself.
As people focus in on a budget process, across your stewardship team and across the department heads, it increases prayer.
People begin to pray about this process and what they’re doing in establishing a vision-centered church budget.
5. Goal setting
Another key reason to establish a church budget is goal setting. Just as budgets clarify the church’s mission and assignment, seasonal goal setting is impacted by your church’s budget process.
You might decide that you’re going to reach out to local high school students and you ask, how many high school students do we want to reach? When are we going to reach them? How are we going to reach them? You develop goals around this mission.
Budgets will help you focus as you raise money for high school ministry. It helps you with your goals, it helps you focus on your goals and it creates cohesion in your team.
Yes, that’s right, goals create cohesion. When you get the team all heading in the same direction, a budget can influence those goals and help you in your goal setting.
6. Improved communication
The sixth and last reason is that the budgeting process improves and lifts communication.
Board members discover what department leaders are thinking.
Department leaders can discover what the pastor has on their heart.
Boards discover all the strategies that the pastor is focussed on at the moment.
People begin to understand the bigger picture and the needs of other departments in the church.
The youth leader discovers the needs of the kid’s church. The music department discovers that even our seniors have budget needs.
I know there’s toing and froing in all of that when you get a robust team who are chasing their part of the dollar, but it’s good for them to understand there are more needs than just those of their department.
As budgeting improves and as the pastor and the board and the department leaders get a better handle on the budget and the finances, they are actually able to improve communication to the church.
They can outline projections of what’s coming up in the next 12 months and the longer term.
When budgeting improves, pastors start to get more confident in preaching on money.
When you preach on money and disciple people in finances, it’s good to be able to say, we’ve got a vision-centered budget. We work off a budget and we have expenditure and income and we know where the money’s coming from, where it’s going and its impact.
When you disciple people with their personal finance you can show the church is a good steward.
My Vision-Centered Church Budget Process
I want to walk you through my vision-centered church budget process that I used for many years in pastoring and leading our church.
I want to give you the skeleton, the main process and structures and you can tweak this to suit your situation.
I love my friend Alex Cook from Wealth With a Purpose. He says every 3 years a church should do zero-base budgeting.
In other words, wipe everything out as it were and say if we were starting afresh and ask, how would we spend our money?
I think that’s a great thing to do every few years.
Here’s my process.
1. Establish a stewardship team
Instead of a finance committee, establish a stewardship team to manage the budget process.
A stewardship team would have the pastor on it and have a chairman/chairwoman chairing the meetings. The pastor shouldn’t be chairing this group.
It will include the treasurer and one or two people who are good with budget processes and with finance processes.
The stewardship team will do more than do the budget for the church.
I like to see them involved in fundraising and looking at ways of boosting the church’s giving and being wiser in expenditure.
A stewardship team of four or five people can set the church up for a healthy, vision-centered budget process.
2. Communicate primary vision and strategies to stewardship team
Once you’ve got your stewardship team, the pastor needs to communicate primary vision and strategies to the stewardship team and set out some priorities.
This year, we really want to boost our small groups, so I want money that we can pour into small group leaders. This year, we want to boost up the training of greeters, so I want some finances for that. This year, our website needs re-doing, we’re going to focus on some social media, and I’d like some money to spend on that.
A pastor will communicate primary vision and primary strategies to the stewardship team. Not down to nitty gritty details like, “I want this sort of website designed by this person for this amount of dollars.” Just the overall big picture.
Let your vision drive your budget process. Don’t let the resources, or lack thereof, drive the process.
3. Communicate primary vision and strategies to department leaders
Thirdly, the pastor communicates the primary vision and strategies to department leaders. These are the leaders bearing the operational burden of the church–Leaders of the children’s department, music department, media, youth, greeters, seniors, women, and men.
The pastor outlines the focus primarily for the year ahead. It might be on visitors or small groups. You’re going to tailor the things that you’re doing in your department so we can fulfill our primary goal.
This requires the pastor to establish primary focal points well ahead of time.
4. Department leader budgets
This leads me to my next point, which may be a bit of a shock for you.
Department leaders should submit a budget three months before the end of the financial year, as a minimum. In other words, get well ahead of the game.
The pastor needs to be further ahead of this three-month deadline and be considering the church’s primary focus for the year ahead.
He should talk to the board and team and clarify his focus, which he can communicate to his Department leaders and stewardship team.
You should never wait until the last minute to set up the next financial year.
Smaller churches are going to have more wiggle room on this timeline. However, as the church gets larger you need to utilize a good timeline and never leave it for the last minute.
The primary thing is to have a plan in place. You can always adjust a plan. If you have no plan, everyone’s flying by the seat of their pants and it just feels like you’re playing catch up all the time.
5. Prepare draft budget
At this stage, the pastor has shared vision and strategies with the stewardship team and department leaders.
The department leaders have worked out their priorities and submitted their budget items.
The stewardship team kicks into gear and prepares a draft budget with projected income and expenditure–all the operating costs of salaries, benefits, mortgage, rent, lease payments, insurances, repairs and maintenance, administration and utilities and all the income streams are incorporated into this draft budget.
It is also important to make provision for savings. Even if the savings regime is 1%, adopt a savings regime.
As I look back over the years of my pastoring, there’s one thing I would change around our budgeting process.
I would be far stronger at restricting salary growth and boosting savings growth. I believe this would have been more beneficial for the long-term health of our church.
Aim to move your savings level to 10% of income, both personally and with the church. Start as low as 1% and build towards that 10%.
6. Fine-tune the budget
Fine-tune the budget with the stewardship team until it’s balanced or until you come up with an agreed faith gap.
I had more than one church budget where we’ve gone through it as a stewardship team and board and we’ve all decided that we haven’t got a balanced budget, so we’ll believe the Lord to fill the faith gap.
You don’t want millions of dollars in your faith gap.
You don’t want to be stupid about income. You want to use faith for income, wisdom with expenditure.
However, I have seen the Lord provide for those faith gaps over the years.
At other times I’ve seen us tighten our expenditure to make the faith gap. You have to be smart about this as the year rolls on.
I personally don’t have a problem with having a faith gap in a budget. Leave space in your budget for a miracle. Don’t tighten it down so hard that you don’t give the Lord time and room to move.
Now some accountants will probably disagree with me on this, but I like to leave space for some faith.
7. Present the budget
The stewardship team should present the budget to the pastor and the board. At this stage, the budget should be both detailed and big picture.
If it needs to go to members for a vote, then so be it. Some churches take it to a vote, some don’t. There needs to be an approval of the budget in that process by a board that ultimately has legal responsibility for the church.
Then department leaders are informed about the what and why behind the budget decisions.
How much they’re going to get, how much they’re not going to get.
If they are well informed, kept in the process and can see the reasons for key decisions, then they will accept the board’s final decisions on the budget.
This process will help you develop current best practices in your church finances.
How Much Should We Spend On What?
This is a question that I often get asked and often talk about with pastors and boards.
Churches have different approaches to their expenditure and this infographic outlines the large range of expenditure items.
Here are my general answers when posed this question about how to spend the recurring income from Sunday offerings. Please note these percentages do not incorporate missions or buildings offerings.
Salaries: 40% – 50%
I recommend churches aim to spend 40 % - 45% of their regular income on salaries.
I think you can get up to 55% for short seasons, as long as you have very minimal debt or lease costs.
Preferably, I’d rather live at 45% than 55%. However, you can have seasons where you increase it for special projects or events. This also works if you have no debt or lease costs and you think you can afford to have more staff.
However, be aware of the challenge of removing staff.
Ministry Areas: 15% – 20%
15% to ministry budgets such as youth, children, worship and so on.
Facilities: 15% – 25%
Debt repayment, lease payments, utilities and repairs and maintenance. You may raise separate funds for debt demolishing. We did a big mortgage buster one-year with a one-off offering to reduce our mortgage in one big hit.
Savings: 10%
Saving 10% will enable you to build healthy cash reserves.
I think also once you’ve topped up your cash reserves through savings and your cash reserves are healthy, then you can look at what is ‘hot’ in your church and pour out of that 10% into what is already going well.
For instance, if your children’s program is going well then you can take part of that 10% and resource it at a higher level. Put petrol on the fire.
If your small groups are exploding then put some money into training leaders and developing a bigger and better small group program.
Willow Creek Community Church utilizes the following ratios to guide its budget process.
- No more than 50% to staffing (including benefits)
- 10% given away
- 10% for whatever God is blessing at Willow (or cash reserves)
- 15% to ministry budgets
- 15% for facilities, utilities, debt service, etc.
Given Willow Creek’s size and long tenure, you should only use these figures as a guide.
How Much Should We Give Away?
Church leaders wrestle with this question.
Should we be giving away a percentage of our income?
Some churches do it. They believe that they should give 10% of their income away.
I’m not a fan, although our church used to do it.
10% of our income went into missions and the thing I didn’t like about that was it was like secret giving. Many of our members didn’t realize 10% of their giving was going to our mission’s program.
People didn’t have a heart connection because they weren’t giving directly to it.
I stopped that and created a separate fundraising program for our Beyond ministries so people could give directly to the missions’ programs of our church, local and global. Our heart follows our money. Build a connection between giving and the end result.
You have to work out your own philosophy.
I recommend churches use the Vision Builders concept when raising money for buildings, missions and significant projects.
How Much Cash Should You Have In Reserve?
I think it’s important to think strongly and healthily about cash reserves.
You can stabilize your church’s finances by establishing a cash reserve.
Firstly, it enables a church to move smoothly through the normal seasonal variations in cash flow.
When you’ve got a cash reserve it allows you to move through seasons of pressure. If big givers leave, people lose some work or lose jobs, it allows you to cover that seasonal variation.
Secondly, it helps a church properly manage a crisis brought about by unexpected scenarios such as extensive building repairs, emergencies or economic recession.
I remember once when the wooden framework of our stage got infested with white ants. We had to demolish it and put in a metal stage. It cost thousands of dollars which we didn’t have budgeted.
We had cash reserves and were able to do it.
Thirdly, it helps unforeseen opportunities for ministry that require a cash injection.
If you’ve got cash reserves and a ministry opportunity arises, then you can access those reserves. Take $2,000, $5,000, $10,000, or $20,000 and take the opportunity.
Churches should hold a cash reserve of 60 to 90 days of operating expenses and preferably closer to 180 days.
What are you going to change in your church budget process?
Pastor, what's limiting the growth of your church?
The free Grow a Healthy Church evaluation shows you how to position your church for growth.
Take the 3 min quiz today.
VIDEO transcript
Operating with a budget is a crucial element if you want to grow a healthy church.
It is vital, therefore, to see it as more than just a financial tool for reporting and accounting.
The budget is a vehicle to reinforce and enable vision fulfillment. It should reflect the key priorities of the church and be seen as an instrument of leadership.
First, let’s consider some good reasons to create a church budget.
6 Reasons to Develop a Church Budget
1. Clarity
The process of developing a church budget helps you clarify again your purpose for being on the planet.
As you work out how you are going to spend money on evangelism and discipleship, you refresh your purpose and call.
Your team is also helped by clarifying what you are seeking to achieve in the next 12 months.
2. Plan
God is a planner.
When Peter preaches on the day of Pentecost, he tells the crowd, “This man was handed over to you by God’s deliberate plan and foreknowledge.” (Acts 2:23)
Paul reiterates this concept in his letter to the Ephesian church, “In him we were also chosen, having been predestined according to the plan of him who works out everything in conformity with the purpose of his will.” (Ephesians 1:11–12)
God intentionally and deliberately planned that Christ would die on the cross for our redemption and ultimately for the fulfillment of His will.
It is in His nature to organize, strategise and formulate plans.
Likewise, we who are made in His image should be adept at planning and intentionally live out the purposes of God in our life.
Good financial planning will also help you avoid a fiasco in your cash flow.
3. Train your team
A third reason to have a church budget and establish a vision centered church budget is that it trains your team.
It trains them to think ahead, it trains them in financial management skills, it trains them in budgeting.
It’s quite possible that your key leaders don’t have a personal budget, which every leader should have.
They should know what they’re saving, what they’re spending, where their income comes from and learning how to use faith for income and wisdom with expenditure.
It’s vital that you have a budget for personal reasons but also using your church budget can train your team in the practical processes and the principles of budgeting.
It’s a little thing you may have not considered, but it’s a good reason to establish a church budget.
It certainly is a great way to disciple your team in finances.
4. Share the burden
A fourth reason to establish a church budget is that it shares the burden.
Every pastor carries the burden of the church finances and I think lead pastors or senior pastors carry it more than anybody else in the organization.
When income is down they worry.
I did.
When income was up they think wow, everything is healthy and there’s less pressure.
A really healthy budget process shares that burden across your team, your board, your business manager and your treasurer. Your team gets involved and can see where the money’s going in different areas and why we’re spending it this way. Suddenly it spreads the pressure.
I don’t think it alleviates the lead pastor from the primary pressure of being the key fundraiser.
The pastor is the primary lead person when it comes to raising money in the church, so I don’t think you ever escape that responsibility.
But I do believe that you can share the burden through a healthy budget process so you’re not carrying it by yourself.
As people focus in on a budget process, across your stewardship team and across the department heads, it increases prayer.
People begin to pray about this process and what they’re doing in establishing a vision-centered church budget.
5. Goal setting
Another key reason to establish a church budget is goal setting. Just as budgets clarify the church’s mission and assignment, seasonal goal setting is impacted by your church’s budget process.
You might decide that you’re going to reach out to local high school students and you ask, how many high school students do we want to reach? When are we going to reach them? How are we going to reach them? You develop goals around this mission.
Budgets will help you focus as you raise money for high school ministry. It helps you with your goals, it helps you focus on your goals and it creates cohesion in your team.
Yes, that’s right, goals create cohesion. When you get the team all heading in the same direction, a budget can influence those goals and help you in your goal setting.
6. Improved communication
The sixth and last reason is that the budgeting process improves and lifts communication.
Board members discover what department leaders are thinking.
Department leaders can discover what the pastor has on their heart.
Boards discover all the strategies that the pastor is focussed on at the moment.
People begin to understand the bigger picture and the needs of other departments in the church.
The youth leader discovers the needs of the kid’s church. The music department discovers that even our seniors have budget needs.
I know there’s toing and froing in all of that when you get a robust team who are chasing their part of the dollar, but it’s good for them to understand there are more needs than just those of their department.
As budgeting improves and as the pastor and the board and the department leaders get a better handle on the budget and the finances, they are actually able to improve communication to the church.
They can outline projections of what’s coming up in the next 12 months and the longer term.
When budgeting improves, pastors start to get more confident in preaching on money.
When you preach on money and disciple people in finances, it’s good to be able to say, we’ve got a vision-centered budget. We work off a budget and we have expenditure and income and we know where the money’s coming from, where it’s going and its impact.
When you disciple people with their personal finance you can show the church is a good steward.
My Vision-Centered Church Budget Process
I want to walk you through my vision-centered church budget process that I used for many years in pastoring and leading our church.
I want to give you the skeleton, the main process and structures and you can tweak this to suit your situation.
I love my friend Alex Cook from Wealth With a Purpose. He says every 3 years a church should do zero-base budgeting.
In other words, wipe everything out as it were and say if we were starting afresh and ask, how would we spend our money?
I think that’s a great thing to do every few years.
Here’s my process.
1. Establish a stewardship team
Instead of a finance committee, establish a stewardship team to manage the budget process.
A stewardship team would have the pastor on it and have a chairman/chairwoman chairing the meetings. The pastor shouldn’t be chairing this group.
It will include the treasurer and one or two people who are good with budget processes and with finance processes.
The stewardship team will do more than do the budget for the church.
I like to see them involved in fundraising and looking at ways of boosting the church’s giving and being wiser in expenditure.
A stewardship team of four or five people can set the church up for a healthy, vision-centered budget process.
2. Communicate primary vision and strategies to stewardship team
Once you’ve got your stewardship team, the pastor needs to communicate primary vision and strategies to the stewardship team and set out some priorities.
This year, we really want to boost our small groups, so I want money that we can pour into small group leaders. This year, we want to boost up the training of greeters, so I want some finances for that. This year, our website needs re-doing, we’re going to focus on some social media, and I’d like some money to spend on that.
A pastor will communicate primary vision and primary strategies to the stewardship team. Not down to nitty gritty details like, “I want this sort of website designed by this person for this amount of dollars.” Just the overall big picture.
Let your vision drive your budget process. Don’t let the resources, or lack thereof, drive the process.
3. Communicate primary vision and strategies to department leaders
Thirdly, the pastor communicates the primary vision and strategies to department leaders. These are the leaders bearing the operational burden of the church–Leaders of the children’s department, music department, media, youth, greeters, seniors, women, and men.
The pastor outlines the focus primarily for the year ahead. It might be on visitors or small groups. You’re going to tailor the things that you’re doing in your department so we can fulfill our primary goal.
This requires the pastor to establish primary focal points well ahead of time.
4. Department leader budgets
This leads me to my next point, which may be a bit of a shock for you.
Department leaders should submit a budget three months before the end of the financial year, as a minimum. In other words, get well ahead of the game.
The pastor needs to be further ahead of this three-month deadline and be considering the church’s primary focus for the year ahead.
He should talk to the board and team and clarify his focus, which he can communicate to his Department leaders and stewardship team.
You should never wait until the last minute to set up the next financial year.
Smaller churches are going to have more wiggle room on this timeline. However, as the church gets larger you need to utilize a good timeline and never leave it for the last minute.
The primary thing is to have a plan in place. You can always adjust a plan. If you have no plan, everyone’s flying by the seat of their pants and it just feels like you’re playing catch up all the time.
5. Prepare draft budget
At this stage, the pastor has shared vision and strategies with the stewardship team and department leaders.
The department leaders have worked out their priorities and submitted their budget items.
The stewardship team kicks into gear and prepares a draft budget with projected income and expenditure–all the operating costs of salaries, benefits, mortgage, rent, lease payments, insurances, repairs and maintenance, administration and utilities and all the income streams are incorporated into this draft budget.
It is also important to make provision for savings. Even if the savings regime is 1%, adopt a savings regime.
As I look back over the years of my pastoring, there’s one thing I would change around our budgeting process.
I would be far stronger at restricting salary growth and boosting savings growth. I believe this would have been more beneficial for the long-term health of our church.
Aim to move your savings level to 10% of income, both personally and with the church. Start as low as 1% and build towards that 10%.
6. Fine-tune the budget
Fine-tune the budget with the stewardship team until it’s balanced or until you come up with an agreed faith gap.
I had more than one church budget where we’ve gone through it as a stewardship team and board and we’ve all decided that we haven’t got a balanced budget, so we’ll believe the Lord to fill the faith gap.
You don’t want millions of dollars in your faith gap.
You don’t want to be stupid about income. You want to use faith for income, wisdom with expenditure.
However, I have seen the Lord provide for those faith gaps over the years.
At other times I’ve seen us tighten our expenditure to make the faith gap. You have to be smart about this as the year rolls on.
I personally don’t have a problem with having a faith gap in a budget. Leave space in your budget for a miracle. Don’t tighten it down so hard that you don’t give the Lord time and room to move.
Now some accountants will probably disagree with me on this, but I like to leave space for some faith.
7. Present the budget
The stewardship team should present the budget to the pastor and the board. At this stage, the budget should be both detailed and big picture.
If it needs to go to members for a vote, then so be it. Some churches take it to a vote, some don’t. There needs to be an approval of the budget in that process by a board that ultimately has legal responsibility for the church.
Then department leaders are informed about the what and why behind the budget decisions.
How much they’re going to get, how much they’re not going to get.
If they are well informed, kept in the process and can see the reasons for key decisions, then they will accept the board’s final decisions on the budget.
This process will help you develop current best practices in your church finances.
How Much Should We Spend On What?
This is a question that I often get asked and often talk about with pastors and boards.
Churches have different approaches to their expenditure and this infographic outlines the large range of expenditure items.
Here are my general answers when posed this question about how to spend the recurring income from Sunday offerings. Please note these percentages do not incorporate missions or buildings offerings.
Salaries: 40% – 50%
I recommend churches aim to spend 40 % - 45% of their regular income on salaries.
I think you can get up to 55% for short seasons, as long as you have very minimal debt or lease costs.
Preferably, I’d rather live at 45% than 55%. However, you can have seasons where you increase it for special projects or events. This also works if you have no debt or lease costs and you think you can afford to have more staff.
However, be aware of the challenge of removing staff.
Ministry Areas: 15% – 20%
15% to ministry budgets such as youth, children, worship and so on.
Facilities: 15% – 25%
Debt repayment, lease payments, utilities and repairs and maintenance. You may raise separate funds for debt demolishing. We did a big mortgage buster one-year with a one-off offering to reduce our mortgage in one big hit.
Savings: 10%
Saving 10% will enable you to build healthy cash reserves.
I think also once you’ve topped up your cash reserves through savings and your cash reserves are healthy, then you can look at what is ‘hot’ in your church and pour out of that 10% into what is already going well.
For instance, if your children’s program is going well then you can take part of that 10% and resource it at a higher level. Put petrol on the fire.
If your small groups are exploding then put some money into training leaders and developing a bigger and better small group program.
Willow Creek Community Church utilizes the following ratios to guide its budget process.
- No more than 50% to staffing (including benefits)
- 10% given away
- 10% for whatever God is blessing at Willow (or cash reserves)
- 15% to ministry budgets
- 15% for facilities, utilities, debt service, etc.
Given Willow Creek’s size and long tenure, you should only use these figures as a guide.
How Much Should We Give Away?
Church leaders wrestle with this question.
Should we be giving away a percentage of our income?
Some churches do it. They believe that they should give 10% of their income away.
I’m not a fan, although our church used to do it.
10% of our income went into missions and the thing I didn’t like about that was it was like secret giving. Many of our members didn’t realize 10% of their giving was going to our mission’s program.
People didn’t have a heart connection because they weren’t giving directly to it.
I stopped that and created a separate fundraising program for our Beyond ministries so people could give directly to the missions’ programs of our church, local and global. Our heart follows our money. Build a connection between giving and the end result.
You have to work out your own philosophy.
I recommend churches use the Vision Builders concept when raising money for buildings, missions and significant projects.
How Much Cash Should You Have In Reserve?
I think it’s important to think strongly and healthily about cash reserves.
You can stabilize your church’s finances by establishing a cash reserve.
Firstly, it enables a church to move smoothly through the normal seasonal variations in cash flow.
When you’ve got a cash reserve it allows you to move through seasons of pressure. If big givers leave, people lose some work or lose jobs, it allows you to cover that seasonal variation.
Secondly, it helps a church properly manage a crisis brought about by unexpected scenarios such as extensive building repairs, emergencies or economic recession.
I remember once when the wooden framework of our stage got infested with white ants. We had to demolish it and put in a metal stage. It cost thousands of dollars which we didn’t have budgeted.
We had cash reserves and were able to do it.
Thirdly, it helps unforeseen opportunities for ministry that require a cash injection.
If you’ve got cash reserves and a ministry opportunity arises, then you can access those reserves. Take $2,000, $5,000, $10,000, or $20,000 and take the opportunity.
Churches should hold a cash reserve of 60 to 90 days of operating expenses and preferably closer to 180 days.
What are you going to change in your church budget process?
Pastor, what's limiting the growth of your church?
The free Grow a Healthy Church evaluation shows you how to position your church for growth.
Take the 3 min quiz today.
Sign Up for Product Updates
With 30 years of pastoral experience under his belt, John founded Grow a Healthy Church in 2012. Since then, he has conducted over 140 on-site and online church consults in 5 nations, helping churches improve their health, grow numerically, increase their volunteer numbers, develop stronger connections with visitors, raise more money and build leadership pipelines.
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From increasing giving, managing your congregation, and engaging your church, our collection of resources will keep you up-to-date on the latest church and ministry trends.
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