Management & Leadershipin Ministry Church Budgeting Process
The Church BudgetA church budget is a reflection of the plans and ministriesof the local church. By stating the ministries of the churchand assigning dollars to the ministry areas, a churchbudget serves as a means to help the church achieve itsgoals. A good church budget: - helps the church implement & prioritize current programs/ ministries - provides a way for church members to work together - gives guidance in distributing available funds - encourages a good accounting of funds - challenges members to provide funds to carry out ministries of the church - authorizes church leadership to act within guidelines.
The Church Budget (cont‟d)Although the church budget functions as a guide, anauthorization and a control, it is only a tool that reflects thevision and goals of the church. It should not run the churchbut rather be a yardstick or a measurement of the churchsmovement towards the vision. Cdn. Southern Baptist web site
Four ways Church Finances are typically spent.1) The church & ministry leaders spend money in reaction to needs & situations, as they arise.2) Ministry leaders duplicate their spending habits from the previous year.3) The Finance committee (or treasurer) independently exercises great power over who spends money in the church (solely determines: who, when, how much, what for).4) Ministry leaders annually create a ministry plan (events, programs, etc.) and a budget, based upon the values & mission of the church and then spend in accordance with the approved budget.
4 ways to determine the Church Budget1) Line item budgeting: the Finance Committee estimates how much money ought to be allocated to broadly defined „Expense Categories‟ in the budget, with no input from the ministry leaders. ie: Photocopying=$350 Outreach = $2,400 Advertising = $650 Guest speakers = $890 Teaching Supplies = $1,0502) Ministry based budgeting: Each Ministry is allocated a budget … but there is no break-down, thought or direction given to determine „what or how‟ they will spend their money. ie: Youth ministry = $5,600/yr. Men’s ministry = $900/yr. Children’s ministry = $3,500/yr.
4 ways to determine the Church Budget3) Incremental Budgeting: Ministry leaders are given a standardized ‘raise’ in their budget, based on last year’s expenses (i.e. All ministries get a 5% increase).4) Mission/Ministry Prioritization Budgeting: Ministry leaders are empowered/expected to estimate & submit a request, outlining the budget they need to successfully operate their ministries for the upcoming year. This budget request is based upon the ministry leaders developing specific programs / plans/ events for their ministries, which are aligned with the overall direction/vision of the church.
The following slides outline asuggested process for preparing a “General Operating Budget”
The 2 Big Guiding Principles• A budget is intentionally created that enables the advancing of the church’s vision/mission AND in alignment with the core values of the church.• A budget is created with SIGNIFICANT input from the ministry leaders who are on the front-line of actually ‘doing & leading’ the ministries.
Preparing the Church Budget1) Church Leaders annually recommend a yearly emphasis i.e. small groups, kids, outreach, women, evangelism, teens, singl es, poor, etc. - Determined by the senior pastor in consultation with informed church leaders & the pastor‟s prayer time away from the church. - What area/ministry of the church needs to be strengthened, in order to significantly move our church ahead?
Preparing the Church Budget2) Finance committee begins to project anticipated MONTHLY income (not just annual) - Usually based on previous years monthly giving trends - Anticipated „mood‟ of church & community factors (unemployment) - Excludes any „unusually‟ large or small donations from the previous year
Preparing the Church Budget3) About 3 months before the end of the current fiscal year, the Senior pastor meets with the Staff & Ministry Leaders & shares with them a motivational, high level vision casting session (a recommended ‘emphasis’ for the upcoming fiscal year) & the Finance committee distributes a ‘Budget Request Form’ (See next 2 PowerPoint slide)
In addition the Finance Committee also begins to prepare a Budget Recommendation concerning Salaries AND an estimate for MONTHLY „income‟ for the upcoming year. Health Life Position Base Housing Pension Insurance Insurance Travel Other Senior $35,000 $14,500 $5,800 $12,000 $3,500 $750 $1200 Pastor Youth $28,000 $12,000 $4,500 $9,000 $3,500 $650 $750 PastorOffice Sect. $22,000 0 0 $5,000 $1,200 0 0 Janitor $12,000 0 0 0 0 0 0 Book- $6,000 0 0 0 0 0 0 keeper TOTALS 103,000 26,500 10,300 26,000 8,200 1,400 1,950
Preparing the Church Budget4) Ministry Leaders work with ‘Fractal’ team of leaders (the leadership team of their individual ministries)to prepare their ministry plan (events, programs for the upcoming year) AND a budget request consistent with the church’s high level objectives for the upcoming yr.5) About 3 weeks later, Ministry leaders, Administrators & the office/ pastoral staff turn in the first drafts of their ‘budget requests’ to the Finance Committee. It is very helpful if each ministry leader, highlights which of their expenses are „negotiable‟
Preparing the Church Budget6) Finance committee compiles all budget requests (from the ministry leaders) and compares the total budget requests, against the anticipated total income.7) If the budget requests exceed anticipated income, the Finance committee, in consultation with Ministry Leaders, remove the ‘negotiable’ budget requests & then compares the new total, against the ‘anticipated income’
Preparing the Church Budget8) Finance committee returns the ‘Budget Request Forms’ to the Ministry Leaders, and asks all ministry leaders to make a final adjustment to their budget (i.e.: please reduce your budget request by 10%)9) Ministry Leaders re-submit their final amended Budget Request Forms to the Finance Committee.
Preparing the Church Budget10)Finance Committee forwards a recommended budget (Income & Expenses) to the Church Board (elders) and the Senior Pastor’s recommendation for a ‘ministry emphasis’ for the upcoming year. The Church Board reviews and ultimately forwards a Budget recommendation to the congregation for congregational approval (Annual Business meeting).11)Church family votes: For OR Against; OR modifies the 2 recommends: - ministry emphasis for upcoming year - budgeted income/expenses.
Budget Approval Processa) Make sure the annual Business Meeting is duly called & adequately announced /promoted.b) Ensure that the Church Board has a specific budget number & a ministry emphasis to recommend to the church family. i.e. The church board recommends that: - 2013 Church strongly emphasize children‟s outreach ministries this yr. - 2013 Operating Budget be: $144,300.c) 3 weeks in advance of the church‟s annual business meeting, hand-out to the church family a „high level‟ over view of the budget (not line- by-line) and a statement about ministry emphasis for the upcoming year.
One of the keys to helping the Budget approval process move along smoothly and quickly, is toprovide the church family with „highlevel‟ budget numbers, not line-by- line expense items.
2013 General Operating Budget Recommendation 2013 Budget 2012 Actual 2011 Actual Income $145,500 *$141,347 $138,203 Expenses $144,300 $141,057 $138,309 Difference: +1,200 +290 -106Expenses 2013 Anticipated 2012 Actual Church Ministries (children, men, youth, women) = $22,200 20,124 Outreach = $7,500 6,600 Missions Support = $10,000 9,000 Salaries = $65,000 61,750 Office Admin = $ 5,800 7,126 Facilities (Mortgage, Utilities, maintenance) = $33,800 36,457 TOTAL $144,300 $141,057(See Special Notes on next slide)
2013 General Operating Budget RecommendationSpecial Notes:The proposed 2013 Budget anticipates a 3% increase in giving.Salaries have increased by 5%, due to adding our new youth pastor, plus salary increases.Missions contributions are increased by $1,000 over last year.Congregational approval of the budget includes granting permission for the church board to spend up to 10% more than the budget, before needing congregational permission. 2013 Emphasis on „Children‟s outreach ministries‟.*Income excludes any income for one time, special projects
Budget Approval Processd) Include a written statement to the congregation: “A detailed break down of the budget is available from the treasurer. Contact: Fred Smith at 555-5436”e) 1 wk. before Business meeting, hold an information mtg. to allow anyone an opportunity to ask detailed financial questions to the chairperson of the finance committee and the senior pastor.f) At annual business mtg. present the overall budget numbers (income & expenses) for congregational approval. Don‟t ask for line- by- line approval.
Budget Insights:1) As a rule of thumb: Income is approx. $1000 / person connected with the church. Thus: a church constituency of 125 = $125,000 /yr. Income with av. attendance of 100 = $165,000 *2) Zero based budgeting is considered a normal procedure. All ministries start with needing to justify all their expenses for the upcoming year. Start with $ 0.00 budget and work up … rather than each ministry getting an ‘increase’ over last year. * Barna.org „Report examines the state of Mainline Protestant churches‟ Dec. 7, 2009
Budget Insights:3) As a Rule of Thumb: 15 to 20% of budget = Underwrite ministries & Missions expenses 40 to 60% of budget = Salaries 20 to 45% of budget = General Admin. & Building management Year Church Ministries Salaries Gen. Admin.Budget Constituency2006 KWC = 14.4% + 48% + 37.6% = $1.1 m 13002007 FWC = 14.7% + 42% + 43.3% = $665,000 600
Budget Insights:3) As a Rule of Thumb: 15 to 20% of budget = Underwrite ministries & Missions expenses 40 to 60% of budget = Salaries 20 to 45% of budget = General Admin. & Building management Gen Year Church Ministries Salaries Admin Budget Constituency2006 KWC = 14.4% + 48% + 37.6% = $1,100,000 13002007 FWC = 14.7% + 42% + 43.3% = $665,000 600
An Important ClarificationIt is not uncommon for the average person in thecongregation to „raise their eyebrows‟ when theyfirst hear that typically only 15-20% of theirdonations are used to underwrite the ministries ofthe church … however, don‟t forget that thesalaries portion of the budget (40-60%) is also acomponent of „church ministries‟. One of theministries of the church, are the services thepastoral staff provide to the congregation and thecommunity. (i.e. counselling, preaching, visitation,coaching, teaching, practical help to people, leadership,planning, etc.)
Mainline Churches’ Pastoral SalariesGeorge Barna indicates pastoral salariestypically comprise 33% of the annualbudget for most mainline churches(vs. 40-60% for evangelicals).This is probably due to the fact that mainlinechurches typically have older buildings, thusrequiring a greater percent of the income to bedevoted to renovation, repair, utilities, etc. notbecause evangelical pastors are paid better. Barna.org „Report examines the state of Mainline Protestant churches‟ Dec. 7, 2009
Class ExerciseChurch size: 180 peopleChurch Budget: $180,000/ yr. 18% available for ministries: $32,40019 Ministries: Children Support Group Social Comm. Teen Ushers/Greeters Benevolent Men‟s ALPHA/Evangelism Sports Ministry Women‟s Interior/exterior Decorating Young Adult Single Parent Community Outreach Nursery & VBS Audio/Visual Pre-school ministry SeniorsEmphasis this year: offer more practical help to the hurtingHow would you divide the $32,400 between 19 ministries???