No matter where your church is in the budgeting process, it’s never too early to start thinking about next year. Executive Minister Ralph Kelley directly oversees the operations budget of First Presbyterian Church in Jackson, Mississippi, a congregation that averages 3,000 members. While church budgets and processes vary by congregations, Ralph explains that some practices can be an administrator’s saving grace.
It’s as important to develop a budgeting process as it is to develop the budget itself. According to Ralph, here are four guidelines to remember as you design the process of your church budget:
Prioritize communication with anyone potentially involved in the budgeting process. First Presbyterian’s process starts in July by meeting with each department or ministry team one-by-one to align budget expectations and set goals to stay on track. Depending on how large your church departments are, it may be worthwhile to appoint a committee of elders or deacons to each department to assist with ongoing communication.
In August, communicate with each committee to unify a collective understanding of budget decisions before taking the budget to the finance committee. Once the finance committee gives approval, the budget will go to the deacons and then the session for final approval. The process takes months and can easily lead to items falling through the cracks. To make sure everyone involved stays on the same page, communication really is key.
2. Know the Numbers
It’s not enough to know the numbers—you need to know their history. Familiarize yourself with the meaning behind the numbers, their context, and how they fit into the overall budget. Numbers change from year to year, so if you’re asked to explain a difference, you’ll need to be able to make a case for why more or less money is needed.
If you receive recurring financial reports, keep your eyes trained on how much money has been spent, or not spent, and why. Alternatively, recruit someone to be your number interpreter. Bottom line: each number has a story and it’s your job to know it.
3. Stay Organized
Never underestimate a good spreadsheet. Budgets are susceptible to oversights because of the many moving pieces involved. A spreadsheet will help keep everything in one place and provide a base for simple analysis.
Don’t limit yourself—there are tools and resources of all kinds that help you track, simplify, and interpret your church’s spending. At First Presbyterian, Ralph uses a month-to-month checklist that helps him keep the budget on track for final approval in the October session meeting. Other financial tools include cash flow analysis, accounting software, payroll management systems, and other systems designed to help you set goals and meet them.
4. Let the Plan Breathe
A budget is a plan, and sometimes plans have to change. It may be tempting to think of budgets as irreversible and set in stone, but this type of thinking lets the budget dictate spending rather than the spenders. Budgets are only meant to be helpful guidelines, so don’t be afraid to divert and reallocate money from one department to another.
Remember that it’s good to spend the money you’ve budgeted. Overspending isn’t a good idea, but neither is underspending. Maybe you will find a wonderful outreach opportunity to fund by spending unused money from another department, and that’s fine. A budget is a living, breathing thing set in place to help and not hinder you.
No matter the size of your congregation, payroll expenses tend to be one of the larger portions of expenses. The church’s most important assets are the human assets! PCA Retirement & Benefits provides a number of tools to help churches make decisions regarding employee compensation and benefits. Visit our website to discover our budgeting resources, sign up for a financial seminar, or contact us with questions—we would love to help.
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