FINANCIAL MANAGEMENT IN A GROWING
CHURCH DURING AN ECONOMIC
DOWNTURN
A Project for the National Institute in Church Finance and Administration
And
The Southern Baptist Church Business Administration Association
Candler School of Theology
Emory University
Atlanta, Georgia
Submitted by
William P. Harvill
Prince Avenue Baptist Church
Bogart, Georgia 30622
NACBA and the Training Center do not endorse or attest to the legality of the statements or
materials included in the report and project.
TABLE OF CONTENTS
I. INTRODUCTION ....................................................................................................................................... 3
AUTOBIOGRAPHICAL STATEMENT .................................................................................................................. 3
CONSULTING TEAM ....................................................................................................................................... 4
PRINCE AVENUE BAPTIST CHURCH ................................................................................................................ 6
II. BIBLICAL FOUNDATION ..................................................................................................................... 10
ORDER ........................................................................................................................................................ 10
WISE DISTRIBUTION OF FUNDS .................................................................................................................... 10
MINISTRY LEADERS KNOW BEST ................................................................................................................. 10
III. FINANCIAL OVERHAUL..................................................................................................................... 12
A REVIEW OF THE PAST ............................................................................................................................... 12
ESTIMATING THE FUTURE ............................................................................................................................ 13
SETTING PRIORITIES .................................................................................................................................... 14
WORKING THE DETAILS ............................................................................................................................... 16
EXPLAINING THE PRIORITIES ........................................................................................................................ 19
III. LESSONS LEARNED ............................................................................................................................ 20
WHAT WENT WELL ..................................................................................................................................... 20
WHAT DID NOT GO WELL ........................................................................................................................... 21
FOR THE FUTURE ......................................................................................................................................... 22
V. BIBLIOGRAPHY ..................................................................................................................................... 26
VI. APPENDIX ...................................................................................................................................................27
2
I. INTRODUCTION
Autobiographical Statement
I began my business career in July of 1978; working as a Cost Accountant in a
manufacturing company. From that time forward, for the next 25 years, I worked in various
positions in accounting and financial management. Most of this time was spent in a
manufacturing environment. I always had an interest in reviewing and understanding the
costs of the organization I worked for and working to make sure that when money was
spent there was a tangible positive impact on the business results.
I have also been involved with the work of the church for many years. I grew up in
church and from the time that I was old enough to take a leadership role, I have filled many
positions within the church. My involvement has included many committee memberships,
serving as a deacon, and teaching in Sunday School for over 20 years. Since I had worked in
the area of finance for my entire career, most of the work with the church involved the area
of finance. This included work on several Finance Committees and eventually I was asked to
serve as the Treasurer in the church I attended at the time.
During the summer of 2000 I felt very strongly that God may be leading me in a
different direction in my career. My wife, Nancy, and I took a short vacation to the lake that
summer. During that time we prayed together about what God would have me do. When the
weekend was finished, we knew that I needed to make a change in my career; however, I still
was not sure what that change should be. For several years we continued to pray about what
God wanted me to do. In 2003 I was contacted by Prince Avenue Baptist Church about
coming to work as their Church Administrator. As I looked into this opportunity I realized
that this was what God had been leading me to since that summer at the lake.
3
I have worked as Church Administrator for Prince Avenue Baptist Church for the past
seven years. Since I came into the position having been involved with church work for many
years, I felt that I had a pretty good idea of what to expect. However, in the seven years since
I began, I have learned how little I did know. Primarily, that churches function in an entirely
different manner than businesses. Things usually take longer to do in a church and there are
far more meetings to work through. Typically, in a church, there is no one decision maker as
there is in a business. Decisions are made by groups and in some cases involve the vote of
the entire church family.
Consulting Team
Rev. Bill Ricketts, Senior Pastor, Prince Avenue Baptist Church
Brother Bill has been in the ministry for over 48 years. He graduated from Western
Kentucky University and has Master of Divinity degree from Southeastern Theological
Seminary. Brother Bill was called as the Pastor of Prince Avenue Baptist Church in
December of 1973 after serving as a Youth Pastor at First Baptist Church, Jacksonville,
Florida. Brother Bill came to our church as a young 29 year old with his wife, Darla, and two
young sons. He has served as Pastor of the church for over 37 years now. During this period
the church has experienced a tremendous amount of growth and added several ministries.
Rev. Doug Nix, Associate Pastor for Discipleship, Prince Avenue Baptist Church
Doug grew up as a member of Prince Avenue Baptist Church. Upon graduation from
college he worked in business in the area of business management for around five years. At
that time he accepted a call to become the College Pastor for PABC (Prince Avenue Baptist
4
Church). He worked in this position for about 18 years developing many meaningful
relationships with college students living in Athens, Georgia. Later, he took the position
which he currently holds. He has worked as Associate Pastor for Discipleship for about nine
years. In this position he has responsibility for the education and discipleship ministries at
PABC.
Jerry Haas, Associate Pastor for Missions, Prince Avenue Baptist Church
Jerry also began his career in business working in upper management levels in the
risk management and finance fields. He did this for 25 years before coming to PABC in his
current position 11 years ago. Jerry has a Bachelor of Science degree in multi-disciplinary
studies, majoring in business and social science from Liberty University. He was a member
at PABC for approximately five years before accepting the call to serve on the ministerial
staff. Jerry has responsibility for the WorldReach mission arm of the church in addition to
overseeing the Korean and Hispanic ministries that are conducted on the campus of our
church.
Mike Maxey, Missions Ministry Team and Finance Ministry Team Member
Mike and his wife, Debra, joined our church in March of 2006. Mike currently serves
on the finance and missions ministry teams in our church. He also teaches Sunday School
and serves as a deacon. He has always had a heart for visitation and missions in the churches
he has attended. In addition, he also has a very extensive business background working for
Ernst and Young for 29 years while working for 21 years as a partner. His current work is in
acquiring, building, and operating rental properties.
5
Robert Ashe, Trustee and Chairman of Finance Committee for Winterville First Baptist
Church
Robert and his wife, Maylin, have been members of Winterville First Baptist Church for
many years in Winterville, Georgia. During their time there Robert has served as Trustee,
Treasurer, and finance committee member. Robert graduated from the University of Georgia
with a degree in Accounting. He began his career working in public accounting and later
worked in accounting for several private businesses. He completed his working career after
30 years with the University of Georgia where he retired as Manager of the Accounts
Payable Department.
Prince Avenue Baptist Church
Prince Avenue Baptist Church of Athens, Georgia first began with the name Baptist
Tabernacle. The church was established in October of 1912 as a part of the outgrowth of a
revival held in the Athens, Georgia area during the summer of 1912. The church began with
138 charter members with most coming from First Baptist Church. A lot was purchased on
Child Street and services were held in a tent at this location until construction of a building
was completed in June 1913. On Easter Sunday morning, April 13, 1919, the church building
burned down.
A committee was formed to find a more desirable location, and a lot was purchased
on Prince Avenue. A new church building was completed on this lot and services were first
held there in 1920. The name of the church was changed to Temple Baptist on April 4, 1920.
6
One month later, on May 20, 1920, the church voted to change the name again to Prince
Avenue Baptist Church.
For many years the church occupied this location. Many additional ministries were
added including a school, radio station, pregnancy center, missions organization, and Korean
and Hispanic Ministries. As the church grew, over the years, property close to the church was
either purchased or leased to be used for the expanding ministries. By the 1990’s the church
leadership began to look for more property as the existing campus was not sufficient to
handle the growth of the church.
In 1998 the church purchased 40 acres in an adjacent county, Oconee. Most involved
with the purchase of the new property did not expect that it would be used by the church in
the near future. The opinion of most was that it would be a good place to build a school and
possibly use as a satellite location for the church. However, most believed that the church
itself would not use the property anytime soon, at least not in their lifetime.
Over the following years some of the church ministries made plans and raised
funding to move to the new property. In the summer of 2005 the radio station moved to the
new location. At that time the school was also in the process of raising funds and a new
school building was completed on the Oconee county property in the summer of 2006.
About that same time the church was approached by a community college that had
been operating in the Athens area for years. Their primary campus was located in north
Georgia, but they had desired to expand their operations in the Athens area for a while. They
were interested in the purchase of our down town location along with all of the buildings the
church had acquired over the years. After much prayer and seeking the Lord’s leadership, the
church family voted to approve the sale.
7
Within a few months after finalizing the sale the church was meeting in the
gymnasium of the new school building on the Oconee property. The church had also formed
a building committee to begin planning a new church building to be placed in front of the
school on the Oconee county property. In addition, a fund raising campaign was started to
raise money for the new church.
About the time that our fund raising began in earnest the economy was hit with what
some have described as “The Great Recession.” Capital Stewardship giving for the
construction of the new building continued at a pretty good pace, but general fund giving was
down by around 8-9 percent. This did not create a great difficulty as expenses were also
reduced since we had no building complex to maintain (other than the school).
However, the reduction in giving continued even after the completion of the new
church building in January 2010. In addition, with the opening of the new church building,
expenses also had increased dramatically with increases in cleaning, utilities, insurance, and
grounds maintenance. For a while the church managed the increase in operating costs and the
reduction in giving through reducing discretionary spending for ministries. The church made
a commitment to continue its missions giving essentially at budgeted levels so most
reductions were made in the ministry departments programming. Staffing was reduced and
salaries were frozen. No department was allowed any spending unless they obtained
preapproval. This greatly reduced the ability to plan.
The year that the new church building was completed we did see an increase in giving
as new families were coming into the church. However, expenses had also increased.
Budgets had essentially been left at pre-recession levels because we did not know what to
8
expect in giving and we did not know exactly what new expenses to expect upon occupying
the new church building.
Once we had occupied the church for a year we felt we could reassess the giving
levels and have a pretty good idea of what to expect in expenses. It became apparent that we
would still be facing a shortfall in revenues, and we would not be able operate in the same
manner as we had in the past. The purpose of this project was to lead the church to reevaluate its priorities in allocating funds across all church ministries and address several
issues including: What financial resources would we have available? How would we allocate
these resources across our ministries? How will we communicate the changing priorities and
funding allocations throughout the church? How could we create buy-in from all ministries
for these changes?
Ultimately we needed for our church to get back to a position of positive cash flow.
“Happiness is positive cash flow-at least for a church treasurer. So how can we increase that
happiness? Proper management helps.”1
1
Pollack, David R., Business Management in the Local Church, Moody Publishers, 1996
9
II. Biblical Foundation
Order
1 Corinthians 14:33 tells us that “…God is not a God of disorder but of peace.” 1
Corinthians 14:40 continues this theme by saying that “…everything should be done in a
fitting and orderly way.” The church had been forced to control spending in a somewhat
disorderly fashion. Some areas had been allowed to spend nearly all of their budgets while
others had been cut severely. The result was that many areas were not able to effectively
make plans for activities in their area. This made ministry far more difficult and disorganized
than it should be.
Wise Distribution of Funds
Acts 6 describes a situation in the early church where complaints were raised due to
the perception that some were “…overlooked in the daily distribution of food” (Acts 6:1). As
a result the church chose men to oversee this distribution in a wise fashion. It is reasonable to
conclude that if the church took such great care to put men in charge of overseeing this
ministry in a wise manner it is also necessary to be wise in distributing funds, or any
resource, that is to be used in ministry. Our church had continued with priorities that had
been set in place in years past and needed a fresh evaluation.
Ministry Leaders Know Best
Exodus 18 tells a story that some have described as the story of the first ministry
consultant when Moses is visited by his father-in-law Jethro. Jethro observed that Moses
10
served as a judge for the people in all of the cases for anyone in the entire nation. This went
on all day long. In Exodus 18:17 Jethro said that, “…The work is too heavy for you; you
cannot handle it alone.” Jethro suggested that the work be divided up and that Moses choose
capable men to handle the simpler cases. Only the more difficult cases would be brought to
Moses. The application to our situation is that we had been handling all disbursement of
funds at the highest levels. Due to the restriction of funds no ministry leaders had any
funding which they could count on. Since all spending had to be preapproved they did not
have freedom to lead in their areas of ministry and availability of funds dictated what could
and could not be done. A functional budget was necessary. The church needed to determine
the priorities and fund them appropriately so that the ministry leaders were free to conduct
the ministry. “The authority to spend money on ministry should come with the responsibility
for leading that ministry.”2
2
Malphurs, Aubrey and Stroope, Steve, Money Matters in Church-A Practical Guide for Leaders, Baker
Publishing Group, 2007
11
III. Financial Overhaul
A Review of the Past
In order to create a meaningful financial plan for the future our church needed
to understand how we had gotten to the point of our current crisis. To detail this more
specifically an understanding of our past history was necessary. To do this an analysis
of past years’ giving units and total general fund giving was created (Appendix A).
This analysis indicated that total giving had been decreasing starting in the year of the
move to the new property in 2007. Total giving units had also decreased.
The reduction in numbers had been anticipated to some degree since we
moved from meeting in a nice facility downtown to meeting in a school gym.
However, the effect on our giving had not been fully appreciated. Financial planning
for the years of meeting in the school gym continued with the old patterns for
estimating giving for a budget year. This meant taking the total previous year’s
budget and adding a factor for inflation to arrive at estimated giving for the next
budget year.
As total giving went down it became apparent that this method was not
sufficient in the current climate. The 2010/2011 budget year (our fiscal year runs
from July-June) had essentially left our budget total unchanged since we knew that
our giving was not meeting the budget requirements, but we did not know what to
expect in giving once we moved into our new building. This led to an allocation of
funds that paid all fixed and semi-fixed expenses but left very little for ministries
within the church.
12
After we moved into our new building in January of 2010, giving began to
increase. The number of givers also rose considerably. In addition, by the end of 2010
we had a year’s worth of history in the new church building to review to give us an
idea of what to expect in the future.
Estimating the Future
In order to set priorities and establish a budget that would be meaningful we
had to come up with an estimate of giving that made sense. Giving for 2010 had been
$2,637,156 (Appendix A). However, this figure included a gradual increase in the
number of givers as people joined the church throughout the year.
“To accurately project future giving, it is important to pay attention to past
trends of increases, decreases, or flatline giving from year to year.” 3 Kennon L.
Callahan’s book entitled Effective Church Finances describes a method of estimating
giving for budgeting purposes that takes into account the percentage of the budget
that is given each month. For example, most church leaders know that a great portion
of the budget is given in December. However, few churches factor this in when
calculating expected cash flow for the year. “In some congregations, the December
giving will be 10 percent, 15 percent, or even 25 percent of the year’s total giving.”
With this dynamic in mind our church developed an analysis of giving by
month (Appendix B). This analysis showed that giving for the months July thru
3
Malphurs, Aubrey and Stroope, Steve, Money Matters in Church-A Practical Guide for Leaders,
Baker Publishing Group, 2007
4
Callahan, Kennon L. Effective Church Finances, Jossey-Bass Publishing, 1992
13
4
December for the past three years averaged around 52 percent of the total giving for
the year. Using this average and the total amount given during July-December 2010
we arrived at an estimate for giving for the next year (2011) of $2,704,020 (total
giving for July-December 2010 of $1,406,091 divided by 52 percent). In addition, we
added an increase provision of approximately 1 percent to account for the expected
continued increase in giving. The total planned budget was $2,730,000.
While we still expected our giving to grow as the church continued to grow,
we wanted to put a conservative estimate for giving in place. This would allow us to
hopefully have giving exceed budget and allow us to build a cushion in operating
funds over the course of the next fiscal year. “In order for the budgeting process to be
an effective tool, it is necessary to operate with real numbers based on good
forecasts” 5
Setting Priorities
A budget of $2.73 million represented a reduction in budget of 4.5 percent
when compared to our previous budget. In addition, fixed expenses since entering the
new building had increased considerably. This created a need to reassess our
priorities and perform an extensive review of our ministries to account for the
reduced availability of funding.
As a part of assessing the funding we had available we first performed an
analysis of the items that we had to pay. In order to do this all projected expenses
were broken down into fixed, semi-fixed, and variable expenses. Our first task was to
5
Pollack, David R., Business Management in the Local Church, Moody Publishers, 1996
14
determine the expense items that we had to pay. Items which had to be paid to operate
as a church were classified as fixed expenses. This included utilities, liability
insurance, etc. Fortunately, the small debt that we had on our new building was being
covered by pledges to the building campaign and did not need to be handled as a
budget line item.
The largest portion of our expenses were in the semi-fixed category. This
represented the cost of items that had been put in place due to previous decisions or
policies over the past several years. These included such items as missions, staffing
levels, fringe benefits, etc. All of these expenses along with the expected variable
expenses for our maintenance department were summarized (Appendix C) and
reviewed with senior ministerial staff. The total of all items that were “required”, both
fixed and semi-fixed, at that time was $2,596,608. If this number were used in our
final budget, it would leave only $133,392 to allocate across all ministries
($2,730,000 Planned Budget - $2,596,608 Fixed, Semi-Fixed, and required
Maintenance Expenses).
In an attempt to establish priorities for our spending a meeting was held with
the senior ministerial leadership in our church. A listing of budget priorities was
established. Obviously, these priorities would be subject to change as we proceeded
through the budgeting process and the budget was reviewed by the finance ministry
team, deacons, and entire church family. However, we had a starting point. The
priorities established were as follows:
1. Missions: Our church has a long standing relationship with many mission
organizations as well as providing support for several missionaries. We did
15
not want to create a budget that would significantly reduce our commitment to
missions and our support of these mission organizations and missionaries.
2. Middle School/High School: Over the past couple of years the Youth Pastor
for our church had resigned and a decision had been made to divide the Youth
Ministry into separate Middle and High School Ministries. The new church
building was designed to accommodate the separate ministries and two pastors
were hired to fill these roles. However, due to the financial crunch that had
occurred in the interim the ministries had never been supported financially in
providing sufficient funds for separate operations. This was an obvious
adjustment to priorities that needed to be made.
3. Staff Support: With the economic shortfall of the past few years our staff had
not been given any raises for the past couple of years. This was definitely
something that we wanted to correct.
4. Reliability: Above all, we felt that we needed to implement a budget that we
could have confidence in. The past realities had only allowed spending for
discretionary items on a strictly “preapproved” basis. This completely
eliminated the possibility of planning within each ministry department.
Working the Details
With these basic priorities in place, a total planned budget of $2.73 million,
and a figure established to allocate funding across our variable expenses we were
prepared to move forward with the process of preparing a budget. This process was
quite different from our standard budgeting process. Essentially we would be giving
16
each department a “not to exceed” amount as their total departmental budget rather
than asking them to request any amount they wished and then have to modify each
department’s request to meet the total budget estimate.
Our first step was to meet with the finance ministry team to review the
priorities and explain the approach planned for this particular budget. During this
time we also met with the deacons to explain some the differences planned in
budgeting for this year. Both groups understood the need for a change in our methods
and agreed with the basic approach.
Senior ministerial staff then assigned a “not to exceed” budget for each
department. This was done after analyzing expenses in each area over the past couple
of years. The past two years had been a period of reduced giving and spending had
been on a “pre-approved” basis. The idea was to cover the basic ministry
requirements in each area without exceeding the total planned budget.
Once the “not to exceed” amounts were established for each department we
met with the departments to explain the budget priorities for the coming year, explain
the “not to exceed” budgeting process, and inform each area of their allotted budget
funding. After two years of having no budget and all spending requiring pre-approval,
this process was received fairly well. It was certainly seen as an improvement over
the previous system. However, the departments did suggest an improvement in the
plan. This group requested that a second budget category be added which would be
called a “Vision Budget.” This would be in excess of the “not to exceed” amount but
would only be allowed if funding were available. This would give each department an
opportunity to plug in additional ministry expenses which could be planned if giving
17
levels allowed. Having a flexible budget or various spending budgets dependent on
funding available is not so different from what many businesses do in developing
their budgets each year. This modification to the plan made sense and would certainly
be workable. If giving levels did not reach the “Vision Budget” level, this additional
spending would not be triggered. This idea also made sense since the total budget
estimate (2.73 million) was very conservative as we had to make the estimate very
early in the year. Even though each department was essentially given their total
budget they were still asked to submit the standard zero-based budget forms for all of
their planned spending for the year. They would also add any other spending items to
be included in the “Vision Budget” if funding were available.
Once all budget figures were received from each department the numbers
were compiled and reviewed in total with the finance ministry team. They were also
informed of the addition of the “Vision Budget” items. The finance ministry team
understood the idea of a flexible budget but was a little reluctant to present more than
one budget to the church for approval. By this time several months had passed since
the original budget estimate had been calculated. After another review of giving, it
was apparent that giving levels for the current year would likely exceed the total
budget planned for next year ($2.73 million). Since the additional line items in the
“Vision Budget” only totaled around $23,830 and since giving was expected to be
higher than originally planned the total budget was increased to $2,753,830. This was
approved and forwarded to the deacons for their review.
18
Explaining the Priorities
Financial review meetings with the deacons had been held on a monthly basis
to inform them of our financial status. As a result, they were very familiar with the
financial changes we had experienced over the past couple of years. Upon reviewing
the budget for the year they were in agreement to recommend the budget to the
church. They felt comfortable with a budget for the next year that did not exceed
giving expected for the current year.
With the agreement of the deacons we needed to explain to the church family
what we were trying to accomplish in the budget for the year. They were also aware
of the financial issues the church had dealt with over the previous years. The first step
in communicating with the church family was a letter sent to each home explaining
the priorities of the budget and detailing the proposed budget for the year
(Appendices D and E). In addition, each member was invited to call the church office
with questions or to attend a budget information session to hear an explanation of the
budget planning and detailing of the total budget. Finally, the budget was presented to
the church and approved in a special business meeting.
19
III. Lessons Learned
What Went Well
For the most part, this process of reworking our financial planning went fairly
smooth. Our staff had already been use to not having a budget at all and only being
able to spend as funding was made available. As a result, even though they were now
being told their budget and matching their plans to fit the figure allowed it was seen
as an improvement over not knowing at all what they would have during the year.
This was very positive for our staff in building a like-mindedness as everyone was
dealing with the same constraints and was given a better understanding of how their
piece of the ministry needed to fit into the overall plans of the church. The leaders of
each ministry came together as a team in a way that had not been required before.
Because of the financial constraints in place before implementing this budget
the staff also realized how much could be accomplished with less. Everyone, out of
necessity, had to become more focused.
In addition our church family seemed to appreciate the approach of beginning
the budget with the end in mind. They had also been aware of the budget constraints
of the previous years. In some cases the church had begun to charge members for
materials (study guides, work books, etc.) that the church had previously provided at
no cost. The church could see wisdom in this approach and see that it was managed
well.
Finally, the experience of having to cut back spending in each area and
eliminate some spending all together brought a greater attention to what was
important. Each area had to evaluate their priorities and the church had to become
20
more focused on its mission. Establishing the priorities used in our budgeting process
helped to focus the church on the essentials.
What Did Not Go Well
While the main spending priorities established by the senior leadership of the
church were well received, getting agreement on which programs and spending items
contributed best toward the main priorities was far more problematic. Our main
approach was to have the leaders in each ministry area determine how best to support
the mission of the church within their area. However, throughout the review process
by the finance ministry team and deacons, there were several issues brought up where
some thought we would be better served to modify some items of spending or to
completely eliminate some.
For the most part, the objections fell into two basic categories. First, the
objection was for items that were cut that some felt should not have been cut. Our
experience was that some of these line items had a special meaning to individuals that
had been especially blessed by that ministry in the past.
The other objection was for items that were left in the budget that some felt
should have been eliminated. When the focus was to get as much out of our available
dollars as possible, there were many different ideas about what was really important
and what would advance the ministry of the church in the best way.
In dealing with these questions our primary approach was communication.
The heart of our approach was to fund the areas that were working the best and
reduce funding for areas that were not working or were working well but could obtain
21
funding from another source (other than our budget). In communicating the reasons
for the changes made we tried to detail as much as possible why we felt it was not
working, or if it was working, how funding could come from other sources.
Ultimately however, there seemed to be some issues that could not be
explained sufficiently to get agreement from all involved. In such cases our desire
was to build a consensus. “The broader the base of the leadership teams who project
the baseline budget, the deeper and broader the grassroots ownership for achieving
the giving goals each month.” 6 If we could build a consensus for a particular line
item, we felt comfortable in leaving it as it was with no changes.
For the Future
I believe that most of our staff would agree that recognizing a new financial
reality and developing and implementing a plan to deal with it has been a good thing
for us. So good, that there are several aspects of the changes required that we will
want to keep in place regardless of the economic conditions.
Primarily, the sharing of a common struggle and becoming more focused in
each area of ministry has led us to develop a greater level of trust. In order to
maintain this level of trust we will need to work together in the allocation of funds
going forward. As all departments have experienced spending cuts to some degree,
we must maintain the feeling of a shared sacrifice. In the future, if one department
feels that they have to bear an inordinate portion of the cuts this trust could evaporate
very quickly.
6
Callahan, Kennon L. Effective Church Finances, Jossey-Bass Publishing, 1992
22
We also will definitely want to maintain the heightened sense of stewardship
that has come about by becoming more focused. All receipts that we have in the
church are gifts given by individuals who have been led by God to give to support the
ministry of the church. We should never lose sight of that in good or bad times.
There are also budgeting practices that were begun as a result of this project
that will likely remain in effect going forward. Throughout the process of developing
and approving the budget many in church leadership commented on the wisdom of
basing next year’s budget on expected receipts for the current year. “The actual
budgeting exercise in many (if not most) churches involves guessing how much
money is going to come in during the next fiscal year and then deciding how to spend
every nickel of it.” 7 Basing a budget for next year on actual receipts for the current
year can help avoid making plans on increased giving that do not materialize during
the year. Any surplus that may be generated through additional giving can always be
used at a later date, but with the assurance that the funding is available.
We will also probably consider the continued use of a flexible budget. We
may even give each department a “not to exceed” amount but allow them to request
additional funding if it becomes available. This will help us keep the total budget
down to a maintainable base but allow for additional spending if funding allows.
I also believe that it will be valuable to review with senior church leadership
and adjust as necessary our budget priorities. This will help to keep us focused on the
most important ministry areas and provide a forum for discussing any changes that
may be taking place in our church.
7
Batts, Michael E. The New Normal: Strategic Budgeting, NACBA Ledger Volume 30, Number 2,
Summer 2011
23
IV. Conclusion
Times are changing, but financially difficult times are nothing new. We know
that these difficulties will continue. The unknown aspect is exactly when they may
occur. As a result our church should be constantly preparing for just such a time.
Being prepared means staying diligent in monitoring what funding is actually
being received and using our funding wisely. A good way to do this is to review
monthly giving patterns and develop a budget that recognizes when giving is likely to
occur. Most churches experience higher giving during Thanksgiving and Christmas
and less during the summer. Our budget planning should reflect this.
We will also implement a crisis cash management plan. Such a plan will
include monitoring cash flow and funding levels. If funding is reduced, a trigger for
implementing the plan will be set in place. In this way, if funding is reduced, our plan
is already established as to how we will handle the reduction in available cash
resources.
We also need to understand the financial priorities of our church. Setting
budget priorities will help us establish our ministry focus. This will enable us to fund
the critical areas if funding is reduced. In establishing these priorities we will need to
include the ministry needs as well as the needs of the facility. Many times in
preparing financial plans churches fail to recognize major facility needs such as roof
replacement, HVAC system repairs, and the need to update vehicles. Any complete
list of priorities will need to include a reserve for these expenses. Again, we know
they are going to happen, we just don’t know when.
24
Finally, our church will need to be mindful of the changing economic climate
and watch for financial changes. “Recent economic developments have made it clear
that strategic budgeting is essential for the sound financial operation of a church. A
casual approach to budgeting, with no over-arching financial plan, can lead to great
stress and lasting damage to the church…” 8 We will either mange the coming
changes or we will be managed by them.
8
Batts, Michael E. The New Normal: Strategic Budgeting, NACBA Ledger Volume 30, Number 2,
Summer 2011
25
V. Bibliography
Callahan, Kennon L., Twelve Keys to an Effective Church, Jossey-Bass Publishing,
1983
Callahan, Kennon L., Effective Church Finances, Jossey-Bass Publishing, 1992
Henry, Jack A., Basic Budgeting for Churches-A Complete Guide, B&H Publishing
Group, 1995
Malphurs, Aubrey and Stroope, Steve, Money Matters in Church-A Practical Guide
for Leaders, Baker Publishing Group, 2007
Pollack, David R., Business Management in the Local Church, Moody Publishers,
1996
Gross Jr., Malvern J., Larkin, Richard F., and McCarthy, John H. Financial and
Accounting Guide for Not-for-Profit Organizations, John Wiley and Sons, 2000
Larkin, Richard F., Not-for-Profit GAAP, John Wiley and Sons, 1998
Perkins, Thomas, Financial Management in Churches that Rely on Volunteers,
Peachtree City Georgia, 2004
Miller, Rev. Rachel Booth, Why Churches Need A Church Business Administrator:
The Cornerstone of Church Staffing, Piqua, Ohio, 2003
Wilcox, Russell L., About Our Father’s Business-Financial Procedures at Hayes
Barton United Methodist Church, Raleigh, North Carolina, 2005
Batts, Michael E., The New Normal: Strategic Budgeting, NACBA Ledger Volume
30, Number 2, Summer 2011
26
Appendix A
Giving Analysis
Prince Avenue Baptist Church
Giving Summary
Year
2006
2007
2008
2009
2010
Giving Units
1,007
881
802
707
841
Amount
2,599,193
2,543,642
2,524,142
2,386,092
2,637,156
Average
2,581
2,887
3,147
3,375
3,136
27
Appendix B
Giving by Month
Prince Avenue Baptist
Church
% Given by Month
Month
January
February
March
April
May
June
July
August
September
October
November
December
2008
5.88%
7.05%
9.30%
9.19%
7.71%
9.23%
9.25%
7.38%
8.33%
7.65%
7.39%
11.64%
2009
6.32%
10.19%
8.51%
8.05%
7.22%
8.54%
8.85%
8.70%
7.24%
8.09%
7.92%
10.39%
2010
7.17%
9.05%
8.35%
8.50%
8.15%
6.38%
7.90%
8.38%
8.26%
8.80%
7.49%
11.22%
July-December Total
51.64%
51.19%
52.05%
28
Three Year
Average
6.46%
8.73%
8.72%
8.59%
7.70%
8.03%
8.66%
8.15%
7.96%
8.19%
7.59%
11.22%
51.76%
Appendix C
Fixed and Semi-Fixed Expenses
Budget
2011/2012
Fixed
Total Children
Total College
Total Discipleship
Total Financial
Total High School
International
Total Maintenance
Total Men’s Ministry
Total Middle School
Total Missions
Total Music
Total Pastor (includes Ministerial
Staff salaries)
Total Preschool
Total Singles Ministry
Total Support
Total Women’s Ministry
Total XYZ
(Senior Adults)
314,400
-
Total All
314,400
-
Semi-fixed
29,270
18,207
112,304
409,143
6,006
1,500
292,202
6,006
362,440
51,293
Variable
3,400
-
784,450
37,287
168,700
-
-
2,278,808
Note: Variable Expenses included are required maintenance items.
29
3,400
30
Appendix D
31
AtAtt
32
Appendix E
33
34
35