Two-thirds of all the strifes, quarrels, and lawsuits in the world arise from one simple cause—money.
J. C. Ryle
The misuse of money blocks more ministry in the local church than any other single cause. The reason may be too much money, too little money, or misuse of just the right amount of money, but the result is the same: fractured relationships and spiritual atrophy. A pastor taking a new church had better get the financial picture of the church well in hand before anything else is attempted.
That’s not to say the pastor must solve all the church’s money problems. But he must be aware of them and have a clear understanding with the key leaders on how they are to be handled. If this base isn’t covered, relational and spiritual programs will be sabotaged.
As district superintendent of the Church of the Nazarene’s Michigan District, Neil Strait has counseled many pastors on church money problems. He knows the many flavors of pickles a pastor can get into.
“A fundamental axiom for a pastor changing churches: Look over the last two or three financial reports to see the relationship of receipts to bills. That sounds pretty simple, but it’s amazing how often it’s overlooked. Getting a handle on the unpaid bills is a big problem for many churches. It’s not that a pastor should make his decision whether or not to take a church (if that’s his decision to make) based on this information. It’s just that he needs to know the status of the church’s financial condition, or he can’t function effectively.
“Not all problems of this sort are caused by pastoral neglect. You’d be surprised how often the church treasurer is reluctant to give the pastor, especially if he or she is young, all the financial information. Sometimes the reason for this is the dismal state of the books; sometimes it’s because the treasurer sees this as a personal power base; sometimes it’s an honest attempt to keep the pastor from ‘soiling’ his hands with ‘worldly’ concerns. But even pastors who delegate all financial functions need to know the status.
“This isn’t a problem that faces young pastors only. Recently the treasurer of one of our churches refused to give a treasurer’s report to the church board. The pastor, new to that church but a veteran of several years, didn’t know what to do. So he asked me to attend a board meeting.
“I met with them and at one point asked outright, ‘What’s the balance in the treasury?’
“The treasurer said, ‘We’ve got some money.’
“I repeated the question, and he gave the same answer. I had to ask him five times before he would give it to me. Finally, after we had dragged it out of him, I asked him why he was so reluctant to tell.
“He said, ‘I’ve been church treasurer here for forty years, and here you are, a stranger, coming in and prying.’ After looking deeper into the situation, we finally decided there wasn’t anything malicious about it. He just considered it his domain. It was an extreme case of a treasurer who didn’t feel the pastor could handle financial matters.”
Twice a year Strait conducts a seminar on church finances for young pastors. The enthusiastic response has convinced him that the fundamentals of good budget control are among a pastor’s most important tools for ministry, whether in a new pastorate or at any point.
The young pastor sat with his wife, staring blankly through the tears. The dream that had led him to his first pastorate had become a disaster. His problems stemmed from church finances, and he took little comfort in the fact that many young pastors before him had failed for similar reasons.
John had little financial expertise. His family was well-to-do, so finances had seldom been discussed in the home. His college and seminary training were underwritten; thus some important learning experiences were by-passed. The few courses about church management in seminary had been elementary, and he hadn’t thought much about church finances. Now the day of reckoning had dawned, and all the challenge and romance of ministry seemed to fade.
Financial problems cast a heavy spell over all they touch. It’s essential for a pastor to develop good financial tools to properly handle church finances. Here are some basic steps in handling the finances of your church in these economy-chaotic days.
Work Out a Budget
A budget establishes the priorities for ministry and improves money management. It also provides a periodic review toward goals achievement. The church budget reveals what the congregation thinks is worth an investment.
Three considerations should be made:
1. Carefully select the people who fashion the budget. If developed by a group whose sole purpose is to save money, a lot of ministry and not a little future will be sacrificed. Input should come from church leaders who are on the front lines of making ministries happen and also have the future growth and spiritual development of the church at heart.
It’s been said, “Nontithers cannot have the same vision for a church as tithers.” The giving base of a growing church in my district consisted mostly of those who were deeply dedicated to evangelistic outreach. Most of them gave beyond the 10 percent tithe. However, the board had invited some newer members into the financial planning session, hoping to involve them in a meaningful way.
As the session got down to the nitty-gritty of working out the budget, several of the newer members voiced opposition to budget expansions. Some of the core group talked to them about “giving a little more” for outreach, but the idea was received with resistance. The level of commitment, to a large degree, does determine final dollars in a church budget.
2. Budgets also should be put together by those who may not know finances but know the church’s priority for ministry. Although others may be experts in percentages and cash flow, they will miss the point of ministry if they are overly concerned with mechanics.
One church asked three of its members who worked in the financial world to prepare its budget for the coming year. When it was returned to the board, it had severe cuts and adjustments. Although financially sound, it presented a number of ministry problems. When the board discussed the various allocations, three things surfaced:
• The finance committee had given more attention to investing escrowed funds than funding for ministry.
• They had built in recession anticipations, ignoring inspiration giving.
• They had eliminated programs on a dollar-for-dollar basis instead of their usefulness in ministry.
3. The finalized budget must be the gauge for all spending. It’s of little value to organize, plan, and underwrite a budget if it’s going to be disregarded. Although a planned process to approve extra expenditures is important, a church must learn to live within its budget.
An ambitious pastor I knew laid his dream for an expensive ministry before his church board. Some of the members saw the potential but asked for time to consider it; some pointed out the present budget would not be adequate for the ministry. They advised the pastor to scale down the plan to fit within the budget and then complete the dream sometime in the future.
The young pastor ignored the signals. He rallied a group around his plan and forged ahead. Needless to say, the budget couldn’t begin to handle it. Monies needed for utilities and current operating expenses were now threatened by other irons in the fire, and when the board met to discuss the problem, strong voices were raised. A sharp division split the board, and three families left the church.
In retrospect, the pastor saw his mistake. Had he lived within the budget for the year and built his dream into a longrange plan, he could have had his plan and his people.
Consider Zero-Based Budgeting
Zero-based budgeting simply means totally re-evaluating each section and ministry when preparing the coming year’s budget instead of simply adding a certain percentage to the existing categories. This helps promote those ministries that have produced results and eliminate those whose usefulness is over.
A downtown, traditional church in the East with a declining membership called a young pastor to its pulpit. He hadn’t been there long when he called for a brainstorming session with the leaders. The pastor shared two reasons for the meeting: one, to find out where the church was in its mission and to chart its future; two, to identify its purpose and establish priorities before the budget was designed for the coming year.
In-depth discussions followed over the next few months. In preparation for the budget, the pastor requested that zero-based budgeting be used. He then set up several committees to research the existing ministries of the church. To the surprise of several, some of the oldest programs were programs in name only—they had ceased to be relevant. Another group was at work identifying potential ministries. They studied the community, assessed its needs, and explored how their church could minister to those needs.
When the budget committee met, it was able to delete deadend ministries and incorporate meaningful ones. Zero-based budgeting had forced the church to see itself for what and where it was, and then chart a course of mission and growth.
Insist on Accountability
Gone are the days (or they should be gone) when the treasurer used to count, deposit, pay out, and raise money without anyone asking a question. No one on the finance team of the local church should be exempt from accountability. Three things result when accountability is built into the church organization:
1. Risks are kept to a minimum. Every church likes to feel it is corruption-proof, but churches are not exempt from temptation, dishonesty, and evil schemes. Controls should be established to eliminate potential problems by separating various jobs. For example, the person who writes checks should not be assigned the responsibility of authorizing the expenditures.
2. Groups and individuals are kept from building a power base. Church treasurers often feel as though they own their church’s money, and many are extra stingy with facts about the church’s financial status. Trust is earned when the treasurer is required to make regular detailed financial reports; accountability confirms ability and character.
A church in a small Ohio community discovered its treasurer of forty-three years had been mismanaging funds. Over several months an officer of the youth group had been placing funds with the treasurer to be escrowed for a trip they were planning. When the funds were requested to purchase tickets and complete other travel arrangements, the girl was told the fund was $1,800 less than she had figured.
Her father went over her books to make sure she hadn’t made a mistake. When he requested a meeting with the treasurer to help them find their error, the treasurer refused to make the books available, even when requested to do so by the pastor and members of the board. Within the week the stately, white-haired treasurer resigned in disgrace. A stunned church thought it couldn’t happen. Periodic accountability would have caught the problem much earlier.
3. Regular audits benefit and protect not only the church but the treasurer too. Insist on yearly audits, and have them done by a qualified accountant. Although in-house audits will save you money, they won’t tell all you need or want to know about the financial records.
Honesty is important in both the budget and the financial records. Keep in mind these three points:
• Don’t hide an item in the budget. Make sure “Miscellaneous” doesn’t get so big it raises bigger questions than you can adequately handle.
• Don’t solicit funds for one cause and use them for another.
• Don’t change the figures to make them look good.
Monitor the Finances
If you’re the pastor of a church without paid help, your job of monitoring is gigantic. If you pastor a larger congregation with paid bookkeepers and financial expertise, your job of monitoring can be delegated but is still important. Monitoring the budget keeps the church and its financial goals on course.
To monitor doesn’t mean to be a watchdog over all expenditures; it means all facets of the budget are reviewed regularly and corrections are made when needed.
At least four items should be covered through monitoring the church budget:
1. Cash flow. This makes funds available for immediate use without having to borrow, and it makes them available for emergencies, improvements, or pending bills.
Whether we know it or not, cash flow tells us several things about what’s happening in the church:
• It’s an indication of stewardship; the acceptance of mission, ministry, and purpose by the congregation.
• When it decreases, it’s the first warning sign that something might be wrong either with the economy or the church. Proper follow-through will give adequate time to check out matters as well as correct any malfunction in the church by scaling back expenditures and/or developing ways to increase income.
• When it increases, it might be the signal that ministries can be improved or expanded without awaiting the year-end accounting report.
2. Accounts payable. They simply must be kept up to date. This doesn’t mean all bills are paid; it does mean that nonbudgeted items are not paid in place of budgeted items. If many budgeted items are held in abeyance in favor of payment of nonbudgeted items, deficit spending will occur.
One church had a substantial insurance payment coming up. During the same period, several church members were advocating a night of special music, which would cost about the same amount as the insurance bill. They felt if they would hold the bill, pay in advance for the music groups, and then take an offering the night of the concert, they could have the special music as well as the money for insurance. Well, there was a blizzard the night of the concert, and only a handful of people showed up. Less than $100 was raised; the insurance bill could not be paid.
3. Budget percentages. One should know as much about the percentages as the total dollars. Dollars raised and/or spent are meaningless unless they are placed against the number of months left in the budget. Before expenses can be scaled back or new components added to the existing budget, the decrease or increase must be put into the perspective of the entire year.
4. Legitimacy of expense. This is an area where close monitoring pays off in dollars and cents. It was not uncommon when I was a pastor to have my secretary/bookkeeper catch a bill mailed to our church that should have gone to another “First Church” in a neighboring town. By monitoring our expenses and researching undocumented bills, we saved hundreds of dollars.
Communicate the Financial Picture
Too often, the only time we talk to the congregation about finances is when money is needed. They need to know the total picture, which includes the blessings. Communication creates a feeling of ownership in parishioners. The money comes from those who sit in the pews, and they have a right to know about the financial situation.
One Midwest pastor had a slide presentation designed that graphically portrayed the intent and purpose of each budget item. Through such visuals the members identified the items and were able to see how they fit into the total purposes of the church.
A woman in my former church was remarkably gifted in drawing cartoons. She offered her talents to present the need for library funds to the congregation through overhead transparencies that depicted people reading, listening to tapes, and using other resources from a library. Her drawings showed our people the benefits of improving the library, and as a result, more funds were allocated for this ministry.
However one chooses to communicate the financial picture of the church, one thing is certain—the congregation will get a message. If there is little communication, the message will be shrouded with suspicion, uncertainty, and questions. The congregation’s response to opportunities is determined to a great degree by the financial message given.
Watch Investments
Not all churches need to worry about investing, but some need to consider it as a wise transaction. A church with inactive or escrowed funds should consider investing them in treasury bonds or whatever vehicles afford the most interest for shortest amounts of time and greatest security.
The following checklist is helpful regarding investments:
1. Determine what monies can or should be invested.
2. Determine if investment should be short-term or long-term.
3. Research investment potential. Use the services of a financial consultant who has some knowledge of the mission and methods of the church.
4. Determine before investing how income from such investments will be used.
5. Build in safeguards such as immediate access to investments in case of an emergency.
6. Keep investment research up to date especially on long-term investments to realize greatest potential of yield. Guard against the investment that is 100 percent secure, yet inflation-prone due to its low yield.
7. Keep the church board informed of all investments.
8. Don’t let the enticements of investments pull money away from meaningful ministries, thus thwarting the outreach of the church.
Allow Room for Growth and the Unexpected
In all the financial planning and control, save room for dreams, growth, and the unexpected as well as for faith. Not all intrusions into the budget are hostile. Sometimes a church is presented with an opportunity of faith, and it needs to have an available vehicle to respond to these opportunities without wrecking the budget. The “love offering” concept is one way. Where the hearts and purses of God’s people are open in love, the church will meet the needs God makes known.
A pastor I know in the West has been at his church three years. He followed a free-spending pastor who had brought the church almost to financial collapse. My friend did three things—none of them profound—that turned the church around financially. He asked the church to set a budget and live within it; he communicated the financial needs and opportunities of the church, speaking of future goals instead of past failures; and he set up proper guidelines for monitoring and accountability.
The church is now growing and giving more than it ever has. Because this pastor has put the financial house in order, he can give greater amounts of time to outreach and ministry, both of which will add to the financial base of the church.
Copyright © 1985 Christianity Today
