5 Ideas for Managing Your Church Budget in the 'New Normal'

1/25/2023

By Ken Sloan
Discipleship Ministries of The United Methodist Church

If there is anything we have learned in recent years, it is to be prepared to be flexible. Whether it's health-related, economy-related, or a weather incident like what we experienced with the freezing December weather and January tornadoes, here are five ideas you might consider to strengthen your church's ability to be financially resilient and adapt to the unexpected in 2023. 

1. THINK OF YOUR ANNUAL BUDGET AS FOUR QUARTERLY BUDGETS

I suggested this idea back in 2020, as the pandemic was just getting underway. Without knowing when or in what manner churches would be able to gather for worship, Christian nurture, and fellowship, it seemed impossible to rely on budgets prepared before the pandemic and to anticipate income and expenses for twelve very uncertain months. A quarterly review – income and expenses – with an opportunity for adjustment seemed a reasonable suggestion. It continues to be a reasonable suggestion. In a practical sense, it might mean that programmatic and some operating spending should be capped at 25 percent of the total budget for each quarter (with exceptions, of course, for extenuating circumstances). Staff hours might also need to be reviewed quarterly as well.

2. TRACK INCOME AND EXPENSES BY COMPARISON TO THE PAST FIVE YEARS

Many churches have gotten used to being able to compare this year to last year as a barometer of the financial health of the church. Comparing 2023 finances to 2022, 2021, or 2020 is problematic. Including 2019 data still provides a good reference to where your church was when “pandemic” and “COVID” were not words we used every day. The insights these comparisons provide may not be bad news; you may be pleasantly surprised by some of what you see. If your church was able to take advantage of emergency programs like the Paycheck Protection Program (PPP Loans) or other emergency measures, you will want to note those as exceptions to regular church income for year-to-year comparisons.

3. CHURCH LEADERS NEED TO SPEAK THE LANGUAGE OF 'INFLATION-ADJUSTED DOLLARS'

Concerning the four-year lookback (comparing five years total), you and your leaders may want to begin to not only look at inflation’s impact but also adopt the language of inflation-adjusted dollars. (I recently wrote an article on this that you can read here.) This may change the narrative of how well your church is doing financially. To say, “We are back to where we were at the beginning of 2020 -- before the pandemic” – does not accurately report the value of dollars in 2023 to provide for mission and ministry. This also needs to be tactfully and tenderly interpreted to your members and other donors. Even a congregation of “people on fixed incomes” should realize that 2023 brought a cost-of-living 8.7 percent increase in Social Security payments to seniors. The reality is that the dollar amounts the church received in previous years won’t provide the same level of ministry to the community, and your church’s ministry will have to contract instead of grow. This is the reality that leaders and members should talk about, and speaking in terms of inflation-adjusted dollars will help make that reality clear.

4. ASK WHERE TECHNOLOGY CAN MAKE FUNDING YOUR MINISTRY MORE EFFECTIVE AND LESS EXPENSIVE

Churches that have electronic giving in place (and especially programmed recurring giving) are in a much better position to weather financial stress. To my surprise, I still talk to churches that resist electronic giving. They say their main reasons for opposition are the costs and fees. I remind these churches about the cost of offering envelopes (about which I have never heard complaints). Most churches provide envelopes to members, even though some church members have stopped giving. I remind leaders that with online giving, churches pay a fee only when folks actually give! In addition, many online giving platforms offer timesaving and expense-saving add-ons that allow churches to download contribution data directly to compatible church software; or there are church management modules on the same platform as electronic giving! Digital, emailed quarterly reports of giving may be tailored to provide stories of the church’s impact and to remind donors of the importance of their contributions. As churches move their bill paying to online banking, they experience diminished postal costs.

5. STUDY BUILDING AND REAL ESTATE ASSETS TO DISCOVER HOW THEY MIGHT GENERATE FINANCIAL SUPPORT FOR MINISTRY AND MISSION

Can your church’s buildings and real estate assets be leveraged to better support mission and ministry?* Are organizations in your community looking for office space? Are there opportunities to make income from parking spaces? Can worship space be shared with other congregations? Is your property a good location for a cell tower (the North Georgia Conference has a relationship with SteepleCom to help navigate this option)? Could your parking lot be used by a film crew? Most importantly, are there ways you can use your building and real estate assets to communicate that your church is not present for a select few, but in service and in mission with the whole community? *Note: Discipleship Ministries is planning a webinar on this topic for May 2023.

Ken Sloane is the Director of Stewardship & Generosity for Discipleship Ministries of The United Methodist Church. Read this article in full at https://www.umcdiscipleship.org/articles/5-ideas-for-managing-your-church-budget-in-the-new-normal.