23 May 2017

6 Simple Ways to Create a Church Budget

Founder Raul Rivera

For Walter, starting a church was new and exciting! However, managing the finances of the church was not. After all, Walter was called by God to be a pastor, not to be an accountant. 

The reality was that in order to fulfill God’s vision for the church, implementing a budget was necessary. Even though creating a church budget seemed intimidating, Walter knew it had to be done. 

Implementing a newly formed budget required effort from Walter and his board of directors. At first, it seemed like they disagreed on everything, but after several meetings and long nights, Walter and his board were finally able to establish a church budget they all agreed upon. In fact, it was not long until Walter’s church began to reap the benefits.

Strategic use of your church’s finances can help your ministry grow and meet its most important goals. However, in order for that to happen, you must manage well your church’s finances. The first step in doing so is by creating a budget for your church.

Courage to establish a financial plan for your church

At times, creating a church budget can be an intimidating task. After all, you did not enter the ministry to become a numbers cruncher, right? In order to operate a church and fulfill the vision God has given you, money matters. Even more, resources matter.

In fact, your church’s success in carrying out its vision can be directly related to how well you manage and steward your church’s finances.

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My point is that strategic use of your church’s finances can help your ministry grow and meet its most important goals. To do so requires that you manage well your church’s finances.

Hence, in this post I am going to answer a question that many pastors ask, “How do I create a budget for my church?” First, let us look at a couple of reasons why budgets are necessary.

Why a budget for your church or ministry is necessary

If I asked you, “Is it necessary for your church to operate on a budget?” my guess is that you would answer me with an emphatic, “Yes.” Have you ever really considered why this is true? As long as things are going smoothly and the bank account is not negative, all is well, right?

Well, here are some key reasons why a budget is necessary.

A. It lets you know where you are and where you are going.

Establishing a budget gives you a complete picture of how much money the church receives, and how the money is being, or will be, spent. Based on a budget, you can see if your finances are being appropriately used to meet your church’s goals.

For instance, are you planning to rent a larger facility? If so, are you saving your funds in a way that will make you ready for a down payment, new furnishings, and equipment needed in order to prepare your new location?

B. It provides protection for the board of directors.

Having a budget is a “frontline defense” in proving that the board of directors is operating in the best interest of the corporation. Tax-exempt organizations are such because they are operated exclusively for public benefit, and not for the private benefit of individuals. Having a budget shows numerically that the organization is not operating for the private interests of board members, but for the good of the public.

For instance, suppose a pastor receives a salary of $100,000. Outside the context of a budget, you may question if the church can support such a salary. However, if the church has a well-planned budget that clearly indicates an annual income of $500,000, with the majority of the budget dedicated to facilities maintenance, children’s ministry, and outreaches to the community, then it will be easy to see that the pastor’s salary is most likely reasonable.

(Recommended reading: “Love Offerings Directly to Pastor Spell IRS Trouble”)

C. It helps you identify weak areas of fiscal administration.

Creating a budget helps your staff see areas where you may have missed the mark in managing the church’s finances. These areas can range from incorrect management of a petty cash fund to extra-budgetary purchases made without the board’s approval.

Additionally, any staff members with access to church funds should be required on a regular basis to provide paperwork noting what was purchased and why. This helps you all maintain accountability while ensuring that everyone is sticking to the planned budget.

Now that we have a better understanding as to the necessity of a budget, we will next look at 6 easy steps to consider when creating a church budget.

(Recommended reading: “What Your Church Needs to Know About Reimbursements, Part 2”)

6 easy steps to create a healthy budget for your church or ministry

A common hurdle for new churches and ministries is determining how to plan a budget for their operations. Many new church plants are faced with the task of having to determine, or project, a budget even before they hold their first worship service.

A common hurdle for new churches and ministries is determining how to plan a budget for their operations.

The task of raising funds and then determining the best use of those funds can seem formidable. Yet, it does not have to be. Below are 6 steps for you and your church to consider when creating a budget.

  1. Begin planning early. Start planning next year’s budget a few months early so that any details can be worked out before the next fiscal year begins. You can even establish a budget committee to prepare a budget for the board to approve.
  2. Get a realistic idea of the income you expect. This is your guide to figuring out how and when you can reach your financial goals.
  3. Determine your financial responsibilities. What expenses must you have to function? Allocate funds there first.
  4. Determine your financial goals. Then determine where you should save and fundraise to meet those goals.
  5. Create “buy-in” to the budget. A budget is necessary, but keeping one going long term, and setting up the right procedures to carry it out takes commitment. Therefore, “buy-in” about the necessity of a budget is important. This “buy-in” keeps your entire team motivated. Be sure that all the board members have a chance to review the budget and share their concerns.
  6. Make a team plan for inner-office management of expenditures. Use the necessary forms to track who spends what, when, where, and why so that regular accountability is maintained regarding the use of church funds. Additionally, create a contingency plan for emergency expenses outside of the budget. Be sure that every department is aware of the protocol.

(Recommended reading: “How to Solve Your Church’s Financial Crisis”)

Creating a financial plan for the future

In short, creating a budget is important for the function and growth of your ministry. It can seem like an intimidating task, but remember, we are more than conquerors through Christ Jesus.

By using our Bookkeeping Service, you will work with a personal bookkeeper and seasoned CPAs that will help streamline and make sense of your church’s budget, and financial records. 

You will have the peace of mind knowing that your records are in great hands and that our staff is invested in helping you to have the best books possible. If your church desires to establish a powerful internal structure, I invite you to click on the link below for more information. And if you have questions about how our bookkeeping service can help your ministry, give us a call at 877-494-4655.

Get Your Church’s Finances In Order Today!

Click Here

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Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Blessings,
Raul Rivera


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