Financial and physical resources are tools for ministry that make everything else possible. Planning for and directing these resources appropriately provides a map for how a congregation will act on its mission. This is foundational to having an impact and making a difference in the name of Jesus.
Steward Cash and Monetary Assets
Adequate and sustainable cash flow is critical to fund congregational ministry and mission through the timely paying of bills, including payroll and building expenses. To ensure this is done properly, congregations should forecast monthly needs, track actual results and have a plan for surpluses and deficits (such as internal reserves or a line of credit). Good stewards trust in God’s abundance; they also use God’s gifts of logic and rationality to anticipate month-by-month realities.
Longer-term investment and endowment accounts need to be managed separately from operating accounts, and larger cash reserves should be stewarded appropriately to minimize risk and maximize returns. Procedures are necessary to process offerings and to handle gifts of stocks, bonds and mutual funds. Avoid spending funds beyond their designations or restrictions or adding debt or selling physical assets to fund operations unless there is a greater plan to bring income and expenses back into balance.
Congregations can work on multi-year projections tied to longer-term vision and mission as an opportunity for improvement.
Manage Debt Wisely
It’s natural for congregations to borrow money to expand or update their facilities. What is problematic is when the debt level is too high relative to assets and operating expenses.
Congregations need to understand the benefits that debt may offer, while recognizing the risks and costs. Consider the tradeoffs between fixed- and variable-rate loans, overall debt levels, and monthly payment size relative to other income and expenses. Congregations may want to maintain a line of credit to make it through anticipated and temporary lean periods. Periodic capital campaigns can be organized to lower principal balances to more manageable levels.
Annual practices around debt would be assessing levels of borrowing, interest-rate forecasts, upcoming changes in loan terms, and overall financial trends in the congregation. Such a review might surface opportunities to lower payments or minimize risk. Contingency planning around debt and overall financial conditions could help to prepare for the unexpected.
Address Financial Shortfalls
Sometimes through budgets, we anticipate that expenses will be greater than income during certain periods of the year, while overall, we expect to finish the year in the black. In this case, a plan is made for internal or external borrowing to bridge the gap.
A different scenario occurs when expenses exceed income for sustained periods of time, veering to deficit spending for the year. In these cases, it’s natural to think that the solution is to cut spending. While that may ultimately be needed, perhaps there are opportunities to inspire members and constituents to grow in their discipleship and increase support of the mission and vision of the congregation (see “Emphasize Stewardship and Discipleship Year-Round” in the Stewardship module).
Be aware that people typically are not motivated by fear or anxiety or a sense that they are being asked to further fund a sinking ship. While numerical analysis is essential for finance teams, stories of how a congregation makes a difference are often better able to spark generosity than spreadsheets, bar charts and percentages. Communication is essential. Always aim for the right mix of hopefulness and prudent discernment and deliberation.
When spending cuts are needed, think about the size of the necessary reduction with an awareness of what programs, staff and capital improvements cost. No doubt your payroll expenses (including benefits) and building expenditures will represent the largest portions of your budget, meaning these decisions will be difficult ones.
The underlying challenge with and without shortfalls is having a culture and mission and vision that people want to be part of, communicating it regularly in inspiring ways, and programmatically implementing that vision affordably given actual levels of support.
Comply with Laws for Rental and Business Income
Because congregations usually are exempt from income and property tax, there are federal, state and local laws associated with how they generate income, including how they can use their property. Among other things, violations of these laws can result in a congregation losing its tax-exempt status, meaning donations to the congregation are no longer tax deductible, or a property tax will be assessed.
The laws around income cover many topics: whether the income-generating activity is consistent with the mission of the church (like a day school where parents pay tuition), how often the activity is repeated (once a year fundraiser vs. everyday operation), and whether the activity is happening on church property zoned as residential instead of commercial.
If your congregation has other revenue sources, a good practice is to check with a CPA every few years to make sure none of this activity puts your tax-exempt status at risk.
Manage and Plan to Take Care of Property
We don’t know when things are going to break or need repairs, but typical lifespans for roofs, furnaces, air conditioning compressors, etc., can be estimated to help build a budget for these larger capital expenses. Each year, in addition to regularly scheduled maintenance, money can be set aside in an emergency fund for these more substantial expenses. It is also common for congregations to organize one or more work days for volunteers to address a list of property-related projects.
From year-to-year, it is a good practice to have a general awareness of current maintenance and utility costs, upward or downward trends, opportunities to save, and scenarios for unplanned expenses.
Manage Computer Assets including Hardware, Software and Networking
Technology infrastructure is critical for everyday congregational work, from email communications to accounting to tracking information about members. Only a slight interruption reminds us of our dependence on technology. With that in mind, it makes sense to think about these assets as a special class of property and equipment that needs a specific plan.
When tools significantly affect productivity, we don’t want to be penny wise and pound foolish. Just because members donate their old computer gear to the church, it may not make sense to think this is the best way to equip the staff. With technology changing rapidly (operating systems, mobile devices, applications, cloud solutions), workflows and solutions should be part of a one- or two-year review cycle. Perhaps a simple and inexpensive RAM upgrade can noticeably boost performance. There might be other affordable opportunities to increase internet access speeds or move server functions to the cloud. Maybe a laptop, as opposed to a desktop, makes more sense for a given role.
Planning and deliberation around system and component redundancy, getting failed equipment replaced or repaired quickly and keeping data backed up and secure (see practice in the Risk Management module) is needed before disaster strikes.
Provide Feedback to Resourceful Servants
The Congregational Certificate Program is currently in the pilot phase. If there is a resource that is particularly helpful to you, or one that is not helpful, or if you believe a healthy congregational behavior is missing from our list, we want to know about it.
Use the Congregational Certificate Feedback Survey to guide your specific feedback to us. We will take all this feedback into account as we enhance this site.
Track Your Progress
Track your congregation’s improvement on healthy financial behaviors using the Congregational Portal. Start by indicating your congregation’s current proficiency on the behaviors associated with each of the 5 modules included on this website: Accounting, Finance, Human Resources, Risk Management and Stewardship.
As your congregation implements new behaviors, log in to the portal, find the behavior and indicate your improved proficiency.
To log in, you will need your five-digit congregational ID and the password provided to you to complete your annual report. If you need this information, contact Resourceful Servants at firstname.lastname@example.org.