Church leaders have the responsibility to ensure that there is adequate and ongoing funding for the costs of operations and programs. This is often a very challenging task. However, many church financial problems can be avoided by proper planning, consistent budgeting, and accountability for spending.
Experienced leaders use five critical tools to support healthy financial management for their churches.
1. Strategic Plan
A strategic plan is a basis for financial management. It includes setting goals, financial planning and reporting, and designating activities. It becomes a course of action for all church activities to direct resources strategically to all critical areas of the ministry.
A church budget can serve as a roadmap for planning and decision-making. Church leaders use the budget to achieve their strategic objectives and to monitor and control spending. A church finance committee, utilizing a process for oversight, can ensure transparent accountability.
3. Revenue Projections
Many churches are trying to operate with uncertain revenues and should be making realistic projections of donations. Church leaders should consult a qualified professional for the kind of expertise that yields realistic and accurate projections.
Make sure that the congregation is aware of the financial situation. Create a communication process - financial reports, significant [expenditures, cost-saving plans, fund-raising goals - to regularly share the status of church finances with its members. It is vital for church leadership that the congregation knows how resources are being used.
5. Emergency Plan
Every budget - family, business, or church - needs an emergency fund. A church should have a plan for a financial emergency that will address anything from a crisis in the physical plant to an abrupt loss of donations. Budgeting for an emergency allows you to create a buffer against a fiscal crisis.
When it comes to financial planning, budgeting and dispersing, it is critically important that these tasks be managed with knowledge, integrity, and professional expertise. Volunteers and staff must be involved, but financially sound churches do it with the guidance of a qualified professional.
Charles P. Myrick is a Washington, DC accounting firm offering specialized CFO services to churches and religious institutions. Myrick CPA was voted Best Accounting Firm in DC, 2016 and 2017, Washington City Paper Readers' Poll. Request a confidential consultation, today.