Creating a Simple Church Budget

It’s not uncommon for some small churches to operate without a budget because it’s not uncommon for many people to operate without a budget in their personal finances. The church I serve operated for the first few years without a budget. In their minds as long as the incoming was greater than the outgoing then everything was fine.

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In my mind, everything wasn’t fine, in my mind that seemed like a terrible way to handle church finances. They needed a budget, and your church does too.

A budget allows you to not only see where the money is going but gives you the ability to plan where the money is going.

The interesting thing was they weren’t opposed to a budget, they just didn’t know how to set one up. You may be in the same situation, so I want to show you how to create a simple church budget.

A budget is made up of income and expenses.

Income is pretty simple. It consists of tithes, offerings, and any other type of special giving. The income in your budget should reflect the average giving in your church over the last few years.

If your church has been growing or declining, it can be wise to look at the trends over multiple years. For example, say your giving in 2014 was $250,000, in 2015 it increased to $300,000, and you’re on track to receive $350,000 in giving in 2016. If this is the case, you may feel comfortable budgeting your income at $400,000 for 2017.

Remember you can always go back and readjust if giving is more or less than you expected.

Now, let’s move on to expenses. The great thing about tracking expenses is that you can see exactly where the money is going. To keep things simple, let’s put our expenses into five categories.

Employee Compensation

In this category you want to track salaries, but don’t forget about the additional employee expenses such as: housing, bonuses, insurance, retirement, payroll taxes, etc. All of these should be included in this category. The average Protestant church spends around 45% of their total budget in this category.

Facilities

Facilities include mortgages, leases, utilities, landscaping, and maintenance. We also include expenses like cleaning supplies, paper towels, hand soap, toilet paper, etc. This category should make up 20-25% of the total budget.

Ministries

For us this category consists of any expense related to the ministries in our church including: kid’s ministry, first impressions, small groups, student ministry, worship ministry, and leadership. This category should be around 10% of the total budget.

Outreach

Outreach includes foreign and local missions, marketing, and benevolence, as well as other administrative costs. This category makes up 5-10% of the total budget.

Weekend

This category consists of expenses directly related to the weekend worship experience. A large portion of this budget is related to special events like Easter, Mother’s Day, Father’s Day, Fourth of July, and Christmas. It also includes things like coffee, doughnuts, free gifts, and creative elements in the service. This category is around 5% of the budget.

Hopefully, if you’ve done the math correctly, you should have 5-10% of the budget leftover for savings. However, don’t be surprised if unexpected expenses arise that take a portion of this percentage.

If you’ve never had a budget before, you may have to guess on some of the expenses the first year. Don’t let this keep you from doing a budget. What you’ll find is that each year you’ll get better and better at knowing where the money is going, and that’s a very important thing.

Does your church have a budget? If not, I’d love to help you get one set up, just go to my contact page and send me an email. Also, if you haven’t already make sure to subscribe to the blog and get tips on church growth, leadership, and more delivered to your inbox each week.

Is Your Church Average?

I’m a big fan of Tony Morgan. If you’re not familiar with him, Tony is a church consultant and blogger who started a company called The Unstuck Group that is dedicated to helping churches get healthy. Several years ago, we brought Tony into our church and his insight was incredible. I highly recommend it. This week I got an email from him with some interesting statistics.

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Did you know the average church has…

  • 59% of people in small groups or studies?
  • 45% of people on volunteer teams?
  • 7% of people baptized each year?
  • $43 given by the average person each week?
  • 1 staff member for every 77 attendees?

It didn’t take long for me to realize that my church isn’t average. Here’s what our numbers look like this year.

  • 30% of people in small groups or studies.

It’s no secret that we’re not great at small groups. We’re working to get better, but the struggle is real.

  • 40% of people on volunteer teams.

We have some incredible volunteers, but it seems to be getting a little harder to get people to start serving. We are putting some plans in place to grow this number going into next year.

  • 10% of people baptized this year.

The number I’m most proud of. We continue to see above average numbers in baptisms each year. A big part of this was offering a creek baptism during the summer. Many people want to be baptized the same way their parents or grandparents were, and that means going down to the creek.

  • $17 given by the average person each week.

Giving has to be the struggle of every small town church. At least I hope it is, or we’re doing something wrong. We continue to look for ways to teach people about finances, budgeting, and the importance of supporting the local church.

  • 1 staff member for every 110 attendees.

When giving is lower, staffing ratios are bound to be higher. We would love to hire another two to three people right now, but the budget just won’t allow it. We need to look for ways to get creative with volunteer staff or unpaid interns.

Tony’s research was based on a survey with over 200 churches. That may seem like a large sample, but when you consider that there are more than 300,000 churches in America that hardly scratches the surface.

Either way my church isn’t average, and I bet yours isn’t either.

How does your church compare? Post your numbers in the comments below, and if you haven’t already make sure to subscribe to the blog to get tips on leadership, church growth, and more sent to your inbox each week.

Evaluate Each Ministry

One Thing Series

This post is a part of the “One Thing” series. Often we feel like we have to take drastic steps in our life or church to see significant change, but that’s not always the case. Sometimes the small things create the biggest impact. In this series, we’ll focus on “One Thing” you can do that will get you and your church moving in the right direction.

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One of the areas that is often overlooked in the busyness of church work is the area of evaluation. Sure, many of us may know what is going right or wrong within a ministry in our church, but few of us actually sit down and write out an accurate evaluation.

Part of this is because we don’t feel like we have the time, and another part of this is because we just don’t like to face reality. Sometimes it’s scary dealing with what’s going on in the different ministries within our churches.

Yet, if we’re going to get better and if we want to see our churches continue to grow, we have to be willing to face these problems head on. This means evaluating the ministries within our church on an ongoing basis.

This doesn’t have to be super time consuming. You just need to answer these three simple questions for each ministry you’re evaluating.

  1. What’s going well?

It may not always feel like it, but in almost every instance you should be able to find something that is going well within the ministry. Our natural instinct is to look at the negatives, but I’ve found when you focus on the positives first you’ll often find it’s not as bad as it seems.

  1. What’s going wrong?

In similar fashion, ministries that are doing well are often not doing as good as they seem. In almost every case there’s some minor tweaks that can make the ministry better. Then, for some ministries the list of things that are going wrong may far outnumber the things that are going right. In these cases you may be tempted to do away with the ministry altogether.

  1. What needs to change?

This is the most important question you need to ask because without changes, the problems don’t go away. It’s great to diagnose the problem, but you have to be willing to take the medicine. Sometimes this can be painful, but it’s necessary to get the ministry well.

Answering these three questions should give you clarity to make your next move. This may mean replacing a leader, having a hard conversation with a volunteer, or doing away with an ineffective ministry.

Evaluation is not always a fun process, but I’ve found it to be a key to growth.

How often are you evaluating your ministries? What changes have you made because of it? I’d love to hear about them in the comments below. Also, make sure to subscribe to the blog to get tips just like this delivered to your inbox each week.