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Posted by: Charles P Myrick CPA Posted on: Dec 28 2020 Posted in: church budgeting

Churches: Handling a Budget Shortfall at the End of a Pandemic Year

Earlier this year we shared the initial reasons why churches were concerned about reduced giving due to COVID-19 and how they handled it. Here, we look again at the challenges churches have faced and offer additional suggestions for handling a potential budget shortfall in 2020.

Challenges for Churches 

Being a church is about so much more than money, yet there can be no denying that meeting and sustaining a budget each year is a necessary part of keeping a vital ministry alive. What then, to do in a year of unprecedented changes and challenges

The national shutdown came quickly in March 2020 with minimal warning, leaving many concerned over finances and safety. The duration of the states’ shutdowns has extended from weeks to months, creating complicated conditions for churches and faith communities across the country:  

  • Ever-changing meeting requirements – Churches in opening states must make choices about if and how to gather. Some states have limited the number of service participants allowed or prohibited gathering at all. As COVID statistics change, so have church requirements.
  • Ramifications of living in turmoil – With stresses from the financial impact, health risks, isolation, a divided political climate, rioting, and protesting across the nation, churches realize their roles and responsibilities in the community are as crucial as ever.
  • Inconsistent giving – While many churches have been able to keep afloat due to having reserves to fall back on, giving has fallen in churches with fewer or no on-site services. Cash giving and check-writing has all but ended for most.
  • Online services - Many churches have found ways to offer Sunday and other services online, which in general has allowed exposure to more people and from farther locations than their usual geographical area. For churches with online services and mobile apps, giving has become more regular and even increased in many cases.
 

Dealing With a Budget Shortfall

The pandemic has changed some ways churches reach out, perhaps for good. Mobile apps have become a common way to collect tithes and offerings, giving a potentially more stable predictor for part of church income. Still, many churches will fall short of their annual budget goals for 2020 as the year moves quickly toward December 31st. What are some ways to address a lesser income for the rest of the current year and address potential losses in 2021?

Be transparent with your congregation

Constant communication with your community via social media, emails, and meetings to let them know critical church needs. Some in your congregation likely still have resources they will offer if asked directly to meet the demand. 

Reassess ministry priorities

As your building usage changes to accommodate the pandemic, so might your ministry objectives. Discuss with your members or elders how that will work.

Use the 2020 budget to develop 2021

With less building use, perhaps fewer office and staff hours are needed. Your year-end financial statements should clearly show “actual” income and expense figures, as well as what was budgeted. Make sure to accommodate any changes in your new focus on ministry. Virtual mission work or services might be less expensive than on-site work.

If possible, create additional revenue streams

Designate some church income toward investing to build diverse or passive income. Propose a new giving opportunity or hold a fundraiser for the initial funds to begin an investment. Create a committee dedicated to researching and proposing options. 

Watch for government opportunities

Stay on top of proposed federal and state legislation. Previous Paycheck Protection Program (PPP) or Cares Act plans for small businesses also included churches. Early applications to programs are more likely to go through. 

Keep the faith and stay in touch,

Charles Myrick and team

Myrick CPA can help churches with questions about budgeting, reorganizing their current annual plans, and building fiscal resilience. Get in touch with us today!