Most pastors are not formally trained in financial management. Yet in many churches, it is the pastor who assumes responsibility for properly managing church finances. Is the pastor aware of the monetary risks that can threaten a ministry? Is the congregation prepared to move forward after a catastrophic event such as a tornado, flood, or fire? Is the church positioned to deal with a personal injury while on a mission trip, or a lawsuit charging sexual misconduct of a church employee? These questions point out that being a good, faithful steward isn't always easy.

The good news is that plenty of help is available.

Financial risks that threaten ministries fall in one of two broad categories. The first risk category includes events which, if they happen, can be financially disastrous. The risk is loss of money or property, which can result in loss of ministry. The second risk category includes insufficient funding to maintain or expand ministries. The result, again, is loss of ministry or even ministry opportunity.

When Bad Things Happen
The first risk category is generally managed with the help of property and casualty insurance companies. The most common property damage claim is for damage caused by wind and hail. Although less frequent, fire and lightening damage claims represent the highest dollar value. While most churches have property insurance, simply owning a policy is not enough to manage the risk of loss from unwanted events. It is common for churches to underestimate the cost of replacing unique architecture or to neglect inflation in estimating construction costs. Good stewardship demands frequent review of your church's insurance coverage.

Another common weakness in church insurance coverage is failure to properly estimate costs associated with community building ordinances, according to Patrick Moreland, vice president at Church Mutual Insurance Company. Standard insurance policies generally cover the building as it previously existed but do not pay for improvements required by law, such as adding an elevator, handrails, handicap ramp, fire doors, sprinkler, alarm systems, or additional exits. "If a church suffers even relatively minor damage, rebuilding 'as was' might not be allowed," says Moreland.

Property damage is only one risk of financial loss facing your church. Another area is liability. When someone is injured in your building, the church may be responsible for medical expenses and loss of wages, and also for "pain and suffering" as determined by a jury of non-church members.

Tour groups or mission teams traveling outside the United States face risks associated with poor medical facilities, religious intolerance, disease, and civil unrest, according to Mitzi Thomas of Brotherhood Mutual Insurance Company. Being homesick is difficult enough, but being homesick and injured or ill with some endemic disease can turn mission into misery. Many church leaders are not aware that insurance policies purchased in the United States often exclude coverage or provide inadequate coverage outside the country.

Insurance companies that specialize in churches, like Church Mutual and Brotherhood Mutual, understand the risks of running a church and the insurance coverage needed. An experienced, qualified company and agent who understand the special requirements of a church is a valuable asset. Church leaders should spend time with their agent to develop a tailored insurance policy. This wise and faithful stewardship will provide security and peace of mind.

When Good Things Don't Happen
What about the financial risks associated with desired events that do not happen? Often, these risks involve the uncertainty of raising money for exciting new ministries. Many nonprofit organizations such as hospitals and colleges use fundraising campaigns to obtain a financial commitment and an emotional response to an opportunity or need. On the other hand, church fundraising seeks a spiritual decision focused on God rather than program money.

A successful stewardship program depends on members of a congregation intelligently praying about their role in financing the project, says Bill Wilson, vice-chairman of Viscern, the parent company of RSI, which specializes in stewardship programming and consulting for churches. To do that, each member must have enough good information to inspire generosity. A pretty brochure with a letter in the mail is rarely effective, in part because less than 30 percent of church mail is read, according to Wilson.

An effective fundraiser involves at least 30 to 50 percent of the congregation in the stewardship program. Without active involvement communication doesn't happen, learning doesn't take place, and intelligent praying won't happen. Members need to be involved!

First Things First
What is the most common cause of a church's failure to reach its financial and ministry goals? "Churches typically work backwards, doing the fun things first and leaving the heavy lifting for the last," says Scott Rolfs of Ziegler Capital Markets Group, which specializes in bond financing for churches and schools. Through his involvement in financing church building projects, Rolfs has seen church after church hire an architect, show the congregation a model of the new building, and then set out to finance the project. Hopes run high and excitement overflows, but the reality of the congregation's credit profile torpedoes the dream.

On the other hand, if the church does the heavy lifting first and determines its financial capabilities and limitations, it creates a firm foundation for project success. The church can then go with confidence to an architect or a builder and design an achievable project. This approach will avoid the disappointment of setting unrealistic goals.

A number of companies specialize in helping congregations finance major expansion programs. Alanar Incorporated, an investment banking company, assists churches in securing financing. Alanar reviews the church's financial situation and suggests actions that may help the church qualify for better financing terms. One of the funding methods recommended by Ron Reeves, CEO of Alanar, is the sale of church bonds. Reeves points out that bond financing has many advantages. One benefit is that bonds can be used to fund an entire project without the need for interim financing. Another benefit is that bonds offer a choice of either level or graduated payments.

A Clear Financial Picture
American Investor Group helps churches finance projects costing between $250,000 and $10 million. When asked what churches could do to assure easier and simpler financing, Phil Myers of the company says, "Have a designated financial officer and an independent group of lay persons manage the business affairs of the church."

In fact, all stewardship experts we talked to agree that it is essential for a church to get its financial house in order before seeking financing for a major project. Rex Frieze of Frieze Consulting points out that "lack of a sound financial system has caused a ton of trouble in churches." Of all the problems he has seen, the most common are mistakes involving the pastor's compensation. Expense and allowance benefits are often incorrectly paid, and the required documentation is missing. Not knowing the ever-changing IRS regulations can be hazardous. "Ignorance won't fly," says Frieze, "and could even cause the church to lose its non-profit status."

To keep your ministries alive and active, review your insurance to make sure you are protected against the bad things that could happen, and employ disciplined stewardship to be prepared for the good opportunities that will come along.

John Stahlman (nonfictionwriter@msn.com) is an experienced freelance writer living in Springfield, Illinois.