The unpredictable economic climate has created budgeting challenges for many organizations. Church financial management is important to maintain fiscal viability.
This creates the need for churches to find help figuring out the best way to manage their sometimes limited resources.
Church leaders are often challenged with ensuring there is continued funding to support current programs and fixed operational costs.
This can be difficult because the financial needs of a church can be significant, and juggling limited resources can be stressful.
6 Church Financial Management Tips
1. Strategic Planning
Developing a strategic plan is one of the first steps to strong financial management.
Taking the time to set a course of action, and develop church goals and a plan, is the key to getting there.
The beauty of developing a strategy and plan is that it takes every area of church operations into consideration, and allows for designating resources toward those critical areas that will sustain and grow the ministry.
A well thought out plan also takes into considers those financial policies and reporting measures that are necessary for responsible financial management.
2. Realistic Revenue Projections
Many churches are trying to operate with uncertain revenues and should be making realistic projections of donations.
One way to address this is to consider a bi-annual or quarterly review of projections to ensure accurate financial targets for the year.
Budgeting is critical for successful financial management and church budgets are tools that help leaders achieve objectives and helps to control un-budgeted spending.
Investing the time, and committing the resources, to creating a budget can have a significant impact on the financial health of the church and can provide the necessary finances to support church strategy and goals.
4. Oversight and Accountability
Once a budget is set, oversight and accountability for adhering to the budget is important because it keeps the organization from spending resources that are not allocated.
Department managers are responsible for variances and adherence to the budget. The Church Finance Committee, coupled with a strong performance management process, is a great way to ensure accountability for budget oversight and spending.
Commit to financial transparency and solicit feedback from church members on cost-saving ideas, strategies for raising funds and make them aware of any financial challenges.
For example, if an unexpected major facility repair has occurred, let the church know about the unexpected cost.
As difficult as it is to present the cold hard facts, a church community loves to rally around a cause to help resolve problems.
Create a consistent communication process, share budget information and provide avenues to answer any financial questions that members may have.
6. Be Prepared for a Financial Emergency
Make sure your church has a plan in place in the event of a financial emergency and use positive profit margins to fund an emergency account.
When you budget for an emergency you create a financial buffer that buys you the time needed to make adjustments and spending changes in the event of a true financial emergency.
For example, if you live in the northeast, you are painfully aware of the weather conditions that can impact church attendance and giving.
Make sure you have a financial plan in place to offset those uncontrollable donation variances.
Many church financial problems can be avoided by good planning, consistent budgeting and accountability for spending.
Church leaders should embrace structured processes to ensure the resources are available to keep the organization in the black and moving forward, regardless of the economic climate.