Tag Archives: Budget

Funding the Vision

budget

budget (Photo credit: 401K 2012)

Many churches start their new budgets in September.  So with that in mind, I am writing this blog post with a few thoughts on creating a budget.  I’ve been working with budgets for years; personally, in business settings and in ministry settings.  One thing I have learned is that you do not set a budget based on what you need, but on what you have available.  A budget says “If” we bring in this amount of money, this is how we are going to spend it.  They are actually designed to focus on making effective use of income rather than searching for money for expenses.  With that said, you should always start with a clear understanding of your income for the set time period.  When you are calculating this, you should never use percentages of increase to project your budget.  Always use real numbers.  If the past two quarters showed an increase of $2,000 each, trends would tell us that there is a good chance that the next quarter will show and increase of around the same amount if all other factors stay the same.

Projecting Your Income:

  • Numerical Projection:  Determine what your history has been.  You can look over a given history to help you in looking forward.  If possible, use at least two to three years of history to get a clear picture of giving.  Use this picture to identify trend of giving based on your history.  If in looking at the previous two to three years, you see that each year you had an increase of $50,000 annually, then you can project that conservatively you will see $50,000 in additional giving in the coming year.  You don’t go up on your projected giving until you have a track record that shows your giving can increase.  Use real numbers.
  • Per Capita Projection:  What is your per capita giving?  Take your average attendance and take your average weekly income for the year and divide it.  You will come up with the per capita income per person per week.  (The longer the length of time is for your averages, the more accurate your per capita giving will be.)  You then can use your average attendance and your projected attendance to make an calculated per capita projection.

Calculate both the numerical projection and the per capita projection and compare these together.  If there is a huge difference between these, you may need to look at what some variables may be that would be causing a huge difference.  Have there been some huge one time gifts?  If so, you may need to pull these out because they are skewing your results.  I’ve found that, generally, using both of these calculation methods put me very close to the same projections.  Once you determine an annual projection using real numbers, you can begin to move forward.  It is a good idea to be conservative on your projections.  You can always do more with increased giving, it’s harder to cut back from initial projections when the giving falls short.  Conservative budgets also will give your staff freedom to spend their budget as it is needed.

Creating Your Budget:

Once you have a good understanding of your estimated income you can then create A, B and C budgets.  The A budget is if God really blesses and everything goes right (could be anywhere from 10 to 20% above budget).  The C budget is if things get tight and things go wrong (maybe 10 to 20% below budget).  The B budget is the primary operating budget and this allows shifting up or down.  You need to plan all three budgets in advance.  It’s easier to make alternate plans in advance than when you’re in the middle of the storm.  As you create these, have a simple one page broad budget by major categories.  Don’t get too detailed, just list general categories (i.e  Children’s Ministry, Student Ministry, Evangelism etc…)  Have 2 or 3 line items in your budget that are open and flexible, these could be designated as “Special Projects & Events”, “Ministry Expansion”, etc…  This gives you opportunity to also meet needs as they arise through the year using these categories.  When you are assigning dollar amounts to budgeted areas, don’t make it so tight that ministries can’t function.  Allow room for flexibility.

Filling in the Details:

Look at the overall pie and determine the percentage of the pie that goes toward Staff.  Keep in mind that churches are largely volunteer in structure, so we need staff to lead them.  Only use percentages for allocations.  Payroll should be no more than 50 to 55% of budget.  If your payroll is below 30% you are probably understaffed or not paying your staff enough.  Building needs should be 20% of budget.  Missions should be at least 10% of budget (this is all missions including international, national, state and local). Areas of Ministry should be 10% of budget.  This leaves 5 to 10% for other areas.

You need to know your seasons so you can manage cash flow.  When is your biggest quarter? When is your weakest quarter?  Are there times in the year that the cash flow expenses may naturally increase, but at the same time the cash flow income slows down?  Generally first quarter is going to be one of the strongest quarters.  At the same time, the end of second quarter and third quarter can also be a struggle.  Have a plan of action in place for if you consistently miss budget.  When will you move to “C” Budget?

If possible, allow your ministries to have the same budget as previous year plus half of the planned overall percentage of increase.  (i.e. if after you determine your dollar amount projection, you determine it will be a 8% increase, allow each ministry to increase their budget by 4%.)  Then look at what was spent in each ministry.  Identify growing ministries that may need slightly more of an increase to cover needs.  Prior to having the staff develop their budgets, give them the specific dollar amount they will have to spend for the year.  Don’t give percentages or expect them to calculate their overall budget.  Once they have their overall budget, have the staff submit 3 budget requests.  The first request is their General Budget Request (this will match the number they have been given).  The second request is a One Time Request.  This is when a ministry has an expense that is not a reoccurring expense.   The third request is a Ministry Expansion Request.  This is to expand their current ministry into a new area that will be an ongoing part of the ministry from that point forward.

Reserves:

Don’t think you have to spend surplus just because you have it.  At the same time, you shouldn’t hoard what God has given to the church just because you’re not sure about what will happen in six months.  We serve a big God who is capable of providing our every need.  You can set aside a Cash Forward Reserve (2 to 4 weeks of operating budget) in a separate account so that if things slow down, you have a few weeks to make budget adjustments.  Anything past this amount would be considered idle money.  One of the principles from the parable of the talents is that God hates idle money.  It should be put into play for the Kingdom.  Not doing so will limit God’s blessings on your church.  Our faith is in God, not in our money.

Note: You should never promote that you are behind on budget.  People do not want to give to a sinking ship or a need, they want to give to a compelling vision. So promote a compelling vision.  What is God doing? Where is He leading? What needs can be met? Make it a habit to talk vision at every opportunity.  It is also good to identify your annual turnover rate of individuals/families in your church.  This number is good to know as it will help you not only understand the importance in developing a culture of giving in your church, but also realize that every year there is a portion of your income that is always changing.


Timeline Plans for Stewardship

I work best with systems in place.  I don’t have to continually reinvent the wheel, just tweak it from time to time.  The timeline below has worked great in setting up some simple stewardship plans within our church.  Many of these things I have learned by reading after Steve Stroope, Nelson Searcy, and other trainings that I go to on a fairly regular basis.  This plan has been put together as I have taken various aspects of those trainings to create a system.  I hope it is helpful to you.

Annually

Secure an Annual Commitment (Usually in January)

  • Use a card in services: Will you recommit yourself to being in a small group (which group), sharing your faith (who is on your card), quiet time (morning, afternoon or night), Serving (where), Giving (What will you give to general fund, building fund, missions fund). This is usually about the third week of January.  This is recommitting to basic Christian discipline. Allow people to specify how they plan to fulfill their commitments this year (including the amount they plan to give to the general fund, capital campaign and missions).  Don’t base your budget off of this amount – it’s for the individuals themselves. People are 15 times more likely to keep a commitment that they write it down and hand it in.

Receive Christmas Eve Offering (In addition to General Fund Offering)

  • This offering can go towards the Benevolence fund to help meet needs as they arise in the upcoming year.

Receive an Annual Offering (In addition to General Fund & Christmas Eve Offering)

  • This can be done every December.  Most nonprofits send out a lot of requests at this time of year, because they know that it is a time when people are most willing to give.  Identify what the Annual offering is going towards.  If it is missions, identify those areas specifically that people can give to.  Be detailed.  People want to know specifics.  Mail a separate envelope to the homes.  Additionally have a separate envelope in the chairs for this offering.
  • This offering is a special offering given during a set period of time around Christmas.  It encourages people to give over and above their regular tithe and offerings.  The areas this offering goes towards needs to be “Heart” projects.  It encourages people and challenges people to get involved and offers blessings for people who get involved.  The goal for this offering should be set initially to be 2 or 3 times your weekly offering.  Once your church has done this a few times, your goal will more likely be 4 to 6 times your weekly offering.
  • Identify One-time causes and new initiatives to work towards and promote.  Have no more than 3 or 4 heart causes (non-recurring).  Types of “Heart” causes could include: Missions, Church Planting, Servant Evangelism, Counseling, and Benevolence, Help for Poor & Needy, Children’s Ministry, Youth, Seniors, New Church Plant, New Multi-site Locations.  The good thing is if you don’t raise it, you don’t fund it.  These should be things that you can’t do unless people get involved.  Any money given over and above your goal can be divided equally between missions and the annual budget.
  • If you hit your goal before the season for giving is over, you can always expand the goal by adding additional elements to the goal.  Tell the church that “God has bigger plans”.  This would be a true statement if He is bringing in additional funding.
  • Note: If all of the leaders in the church give, you’re more likely to get all of your people to give.  If only half of your leaders give than likely only half of the church will give.  The Pastor and staff needs to step up and give the first gifts towards this offering.  Make it the first and best gift you can give.  If you need to pay over a few weeks, then do it.  Be sure you are a part of setting the example.
  • When you mail out your packet for the Annual Offering include, a letter from the pastor, 2 page overview sheets, Q&A Pages, Giving Envelope – Put all of this in a 6×9 envelope.  Mail this out the week after the offering is announced.  Send it to everyone who has an affiliation with your church.  If you extend the annual offering into the new year, you may want to mail another packet at the beginning of the new year.
  • You should begin your kick off for this offering the Sunday before Thanksgiving (even sooner if possible).  Include it in your Week at A Glance email newsletter every week.  Give updates and tell people where you are at in the campaign beginning in mid December (talk percentages or hard numbers, which ever works best for the time).
  • You should promote the annual offering from the stage, in sermons, in small groups, at events and activities, in leadership training meetings, etc… When you get tired of talking about the Annual Offering, the people will have heard it for the first time.  Use creative redundancy.  Think through how you say it.  Focus on the Why of the offering.  Focus in on a different area of the offering each week.

Limit Special Offerings each year

  • Don’t nickel and dime your church.  You cannot hype something new every month and expect your people to respond fresh every month.

Annual Gifts

  • At the end of each year, everyone who gives over a certain threshold will receive a gift and a letter of appreciation to those givers.  The gift might be “The Treasure Principle”, a DVD of life changes that year, or even a book on spiritual growth. You can determine what the baseline threshold is.  This investment in these people will help them develop in their gift of giving and/or see what their giving has done to impact the Kingdom.

Quarterly Letter/Statements

Send quarterly statements to give people a chance to correct their giving before the end of the year. You need to maximize these quarterly giving statements.  Include a Financial Newsletter; keep it simple and easy to understand.  Make it about more than just finance by including small group involvement, ministry involvement and other areas.  Let people know what their gift has helped you to accomplish over the quarter.  Identify life change stories because of the giving – not just numbers … include names (remember that stewardship is a heart issue).  Let people know how you are accountable for money spent and identify how the money is spent (If you are audited, let them know).  This is a chance to communicate to your people how you (leadership) are being good stewards of the resources they’re giving.  The more formal your giving statements look, the more people give.  There is trust in professionalism.  This letter or newsletter needs to come either from the lead pastor or the executive pastor.  It is always good to remind people to be consistent in their giving (2nd Quarterly statement usually has this theme).  Always put a “P.S.” in your letters – People usually read this first.  Make it more personal by signing it first name only.  Place your title below the P.S.  When sending out your letter, find a strategic time.  You may use it to coincide with helping promote a new series or something that is going to be happening.  Include some add in promotional items with the quarterly statement. It doesn’t have to be right at the end of the quarter.  To grab attention, put teaser notes on the front of your envelope.  Let people know about projects.  Include a list of designated giving options they can give toward ($50 leather-bound bible that is given to new Christians to $50,000 van for the church … this can be things that are in the budget).  This is usually about 14 items. Also tell how to give online, etc… Put camp scholarships in newsletter.  If it is 4th Quarter statement, the front of the envelope can be, “Important 2012 Tax Documents Enclosed”.

Note: You could do another statement at the end of November to help promote year end giving.  This is an opportunity to let people make sure their records are up to date.  If you do send one out at the end of November,  your Third Quarter giving statement should go out at the first of October.  Make sure the 3rd quarter statements go out First Class; this allows you to know if the address is wrong.  Bulk mailing just gets thrown out.  A website resource for ideas on mail outs is lumpymail.com.

Monthly

You can promote giving in your monthly newsletter.  Make a constant box for online giving or automatic giving.  You can also use this section to insert testimonies from members who have seen how giving has changed their lives and their perspective on God.

Weekly

First Time Givers (Send Something)

  • Send out first time giver email… thank them for their gift.  According to our records this is the first time you have given
  • When someone gives to your church it’s a great time to ask for them to give again.
  • Can send a gift to first time givers.  “The blessed life” (Randy Morris) or “Treasure Principle”.
  • First time giving letters should come from the Lead Pastor.
  • Count the number of first time givers and the number of total givers to be able to track trends within giving.

Regular Givers (Thank Them and encourage with books etc..)

  • Get a big giver report every week …  ($1000 for the first time or out of the ordinary).  They will get a handwritten letter from the pastor.  “Dear ___, Thank you for honoring God with your finances.  Your giving helps support the ministry of our church.  (signed by Pastor)  Keep a record of who those notes go out to so you don’t continue to send out the same note. If they have never received the treasure principle book … they get the treasure principle book.  If they have that you can send The Generous Giver book, The Rest of God, Margin, Fields of Gold by Andy Stanley or other life development books could be helpful.

Extravagant Givers

  • Follow the regular givers layout above.  You can also write a personal handwritten note to key givers to thank them for being willing to give.
  • Consider lining up a meal (breakfast or lunch) once or twice a week with key donors.  Once they hit a certain point in giving, have these meals be automatically set up.  This meeting is not to show favoritism to those who give, but to invest in a leader within your church who has been blessed with the spiritual gift of giving.  When you go to this meeting, get a record of their giving.  This card should have the name of the spouse, kids, activity in small group, where they are serving, etc.  Ask the giver, “Is there any way our church can do a better job of helping you grow in Christ?”  Do you have any questions about where our church is going or anything that is going on in our church?” (If they have any concern about the direction or vision of the church it will affect their giving.)  Thank them for giving financially to the church.  Tell a story of a life that was changed in the recent past.  Ask them how you can pray for them and add them to your permanent prayer list.  You generally do not ask for money at these meetings and often times it is not discussed heavily. (If you’re in a capital campaign, ask them to pray about giving the biggest gift that they have ever given.)  The main goal of this meeting is developing relationships and trust with these givers.

The timeline above is really based on the idea that stewardship is discipleship.  We must invest in people and encourage them along the journey as they grow spiritually.  I pray that some of the above plans can help you move forward in developing a culture of generosity within your church.

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