Church Management: Budgeting

1. Management & Leadership
in Ministry
Church Budgeting Process

2. The Church Budget
A church budget is a reflection of the plans and ministries
of the local church. By stating the ministries of the church
and assigning dollars to the ministry areas, a church
budget serves as a means to help the church achieve its
goals. A good church budget:
- helps the church implement & prioritize current
programs/ ministries
- provides a way for church members to work together
- gives guidance in distributing available funds
- encourages a good accounting of funds
- challenges members to provide funds to carry out
ministries of the church
- authorizes church leadership to act within guidelines.

3. The Church Budget (cont‟d)
Although the church budget functions as a guide, an
authorization and a control, it is only a tool that reflects the
vision and goals of the church. It should not run the church
but rather be a yardstick or a measurement of the church's
movement towards the vision.
Cdn. Southern Baptist web site

4. Four ways Church Finances
are typically spent.
1) The church & ministry leaders spend money in
reaction to needs & situations, as they arise.
2) Ministry leaders duplicate their spending habits from
the previous year.
3) The Finance committee (or treasurer) independently
exercises great power over who spends money in
the church (solely determines: who, when, how much, what
for).
4) Ministry leaders annually create a ministry plan
(events, programs, etc.) and a budget, based upon the
values & mission of the church and then spend in
accordance with the approved budget.

5. 4 ways to determine the Church Budget
1) Line item budgeting: the Finance Committee
estimates how much money ought to be allocated to
broadly defined „Expense Categories‟ in the budget,
with no input from the ministry leaders.
ie: Photocopying=$350 Outreach = $2,400
Advertising = $650 Guest speakers = $890
Teaching Supplies = $1,050
2) Ministry based budgeting: Each Ministry is
allocated a budget … but there is no break-down,
thought or direction given to determine „what or how‟
they will spend their money.
ie: Youth ministry = $5,600/yr.
Men’s ministry = $900/yr.
Children’s ministry = $3,500/yr.

6. 4 ways to determine the Church Budget
3) Incremental Budgeting: Ministry leaders are given a
standardized ‘raise’ in their budget, based on last
year’s expenses (i.e. All ministries get a 5% increase).
4) Mission/Ministry Prioritization Budgeting: Ministry
leaders are empowered/expected to estimate &
submit a request, outlining the budget they need to
successfully operate their ministries for the upcoming
year. This budget request is based upon the ministry leaders
developing specific programs / plans/ events for
their ministries, which are aligned with the overall
direction/vision of the church.

7. The following slides outline a
suggested process for preparing
a “General Operating Budget”

8. The 2 Big Guiding Principles
• A budget is intentionally created that
enables the advancing of the church’s
vision/mission AND in alignment with
the core values of the church.
• A budget is created with SIGNIFICANT
input from the ministry leaders who
are on the front-line of actually ‘doing
& leading’ the ministries.

9. Preparing the Church Budget
1) Church Leaders annually recommend
a yearly emphasis i.e. small groups,
kids, outreach, women, evangelism, teens, singl
es, poor, etc.
- Determined by the senior pastor in
consultation with informed church leaders &
the pastor‟s prayer time away from the
church.
- What area/ministry of the church needs to be
strengthened, in order to significantly move
our church ahead?

10. Preparing the Church Budget
2) Finance committee begins to project
anticipated MONTHLY income (not just
annual)
- Usually based on previous years monthly
giving trends
- Anticipated „mood‟ of church & community
factors (unemployment)
- Excludes any „unusually‟ large or small
donations from the previous year

11. Preparing the Church Budget
3) About 3 months before the end of the current
fiscal year, the Senior pastor meets with the
Staff & Ministry Leaders & shares with them
a motivational, high level vision casting
session (a recommended ‘emphasis’ for the
upcoming fiscal year) & the Finance
committee distributes a ‘Budget Request
Form’
(See next 2 PowerPoint slide)

12. # of Sundays

14. In addition the Finance Committee also begins to prepare a
Budget Recommendation concerning Salaries AND an
estimate for MONTHLY „income‟ for the upcoming year.
Health Life
Position Base Housing Pension Insurance Insurance Travel Other
Senior
$35,000 $14,500 $5,800 $12,000 $3,500 $750 $1200
Pastor
Youth
$28,000 $12,000 $4,500 $9,000 $3,500 $650 $750
Pastor
Office Sect. $22,000 0 0 $5,000 $1,200 0 0
Janitor $12,000 0 0 0 0 0 0
Book-
$6,000 0 0 0 0 0 0
keeper
TOTALS 103,000 26,500 10,300 26,000 8,200 1,400 1,950

15. Preparing the Church Budget
4) Ministry Leaders work with ‘Fractal’ team of
leaders (the leadership team of their individual
ministries)to prepare their ministry plan
(events, programs for the upcoming year) AND
a budget request consistent with the
church’s high level objectives for the
upcoming yr.
5) About 3 weeks later, Ministry leaders,
Administrators & the office/ pastoral staff
turn in the first drafts of their ‘budget
requests’ to the Finance Committee. It is very
helpful if each ministry leader, highlights which
of their expenses are „negotiable‟

16. Preparing the Church Budget
6) Finance committee compiles all budget
requests (from the ministry leaders) and
compares the total budget requests, against
the anticipated total income.
7) If the budget requests exceed anticipated
income, the Finance committee, in
consultation with Ministry Leaders, remove
the ‘negotiable’ budget requests & then
compares the new total, against the
‘anticipated income’

17. Preparing the Church Budget
8) Finance committee returns the ‘Budget
Request Forms’ to the Ministry Leaders,
and asks all ministry leaders to make a final
adjustment to their budget (i.e.: please
reduce your budget request by 10%)
9) Ministry Leaders re-submit their final
amended Budget Request Forms to the
Finance Committee.

18. Preparing the Church Budget
10)Finance Committee forwards a
recommended budget (Income & Expenses)
to the Church Board (elders) and the Senior
Pastor’s recommendation for a ‘ministry
emphasis’ for the upcoming year. The
Church Board reviews and ultimately
forwards a Budget recommendation to the
congregation for congregational approval
(Annual Business meeting).
11)Church family votes: For OR Against; OR
modifies the 2 recommends:
- ministry emphasis for upcoming year
- budgeted income/expenses.

19. Budget Approval Process
a) Make sure the annual Business Meeting is duly
called & adequately announced /promoted.
b) Ensure that the Church Board has a specific
budget number & a ministry emphasis to
recommend to the church family.
i.e. The church board recommends that:
- 2013 Church strongly emphasize
children‟s outreach ministries this yr.
- 2013 Operating Budget be: $144,300.
c) 3 weeks in advance of the church‟s annual
business meeting, hand-out to the church family
a „high level‟ over view of the budget (not line-
by-line) and a statement about ministry
emphasis for the upcoming year.

20. One of the keys to helping the
Budget approval process move
along smoothly and quickly, is to
provide the church family with „high
level‟ budget numbers, not line-by-
line expense items.

21. 2013 General Operating Budget
Recommendation
2013 Budget 2012 Actual 2011 Actual
Income $145,500 *$141,347 $138,203
Expenses $144,300 $141,057 $138,309
Difference: +1,200 +290 -106
Expenses 2013 Anticipated 2012 Actual
Church Ministries (children, men, youth, women) = $22,200 20,124
Outreach = $7,500 6,600
Missions Support = $10,000 9,000
Salaries = $65,000 61,750
Office Admin = $ 5,800 7,126
Facilities (Mortgage, Utilities, maintenance) = $33,800 36,457
TOTAL $144,300 $141,057
(See Special Notes on next slide)

22. 2013 General Operating Budget
Recommendation
Special Notes:
The proposed 2013 Budget anticipates a 3% increase in
giving.
Salaries have increased by 5%, due to adding our new
youth pastor, plus salary increases.
Missions contributions are increased by $1,000 over last
year.
Congregational approval of the budget includes granting
permission for the church board to spend up to 10%
more than the budget, before needing congregational
permission.
2013 Emphasis on „Children‟s outreach ministries‟.
*Income excludes any income for one time, special projects

23. Budget Approval Process
d) Include a written statement to
the congregation: “A detailed
break down of the budget is available from the
treasurer. Contact: Fred Smith at 555-5436”
e) 1 wk. before Business meeting, hold an
information mtg. to allow anyone an opportunity
to ask detailed financial questions to the
chairperson of the finance committee and the
senior pastor.
f) At annual business mtg. present the overall
budget numbers (income & expenses) for
congregational approval. Don‟t ask for line- by-
line approval.

24. Budget Insights:
1) As a rule of thumb: Income is approx.
$1000 / person connected with the church.
Thus: a church constituency of 125 = $125,000 /yr.
Income with av. attendance of 100 = $165,000 *
2) Zero based budgeting is considered a normal
procedure. All ministries start with needing to
justify all their expenses for the upcoming year.
Start with $ 0.00 budget and work up … rather
than each ministry getting an ‘increase’ over last
year.
* Barna.org „Report examines the state of Mainline Protestant churches‟ Dec. 7, 2009

25. Budget Insights:
3) As a Rule of Thumb:
15 to 20% of budget = Underwrite ministries
& Missions
expenses
40 to 60% of budget = Salaries
20 to 45% of budget = General Admin. &
Building management
Year Church Ministries Salaries Gen. Admin.Budget Constituency
2006 KWC = 14.4% + 48% + 37.6% = $1.1 m 1300
2007 FWC = 14.7% + 42% + 43.3% = $665,000 600

26. Budget Insights:
3) As a Rule of Thumb:
15 to 20% of budget = Underwrite ministries &
Missions expenses
40 to 60% of budget = Salaries
20 to 45% of budget = General Admin. &
Building management
Gen
Year Church Ministries Salaries Admin Budget Constituency
2006 KWC = 14.4% + 48% + 37.6% = $1,100,000 1300
2007 FWC = 14.7% + 42% + 43.3% = $665,000 600

27. An Important Clarification
It is not uncommon for the average person in the
congregation to „raise their eyebrows‟ when they
first hear that typically only 15-20% of their
donations are used to underwrite the ministries of
the church … however, don‟t forget that the
salaries portion of the budget (40-60%) is also a
component of „church ministries‟. One of the
ministries of the church, are the services the
pastoral staff provide to the congregation and the
community. (i.e. counselling, preaching, visitation,
coaching, teaching, practical help to people, leadership,
planning, etc.)

28. Mainline Churches’
Pastoral Salaries
George Barna indicates pastoral salaries
typically comprise 33% of the annual
budget for most mainline churches
(vs. 40-60% for evangelicals).
This is probably due to the fact that mainline
churches typically have older buildings, thus
requiring a greater percent of the income to be
devoted to renovation, repair, utilities, etc. not
because evangelical pastors are paid better.
Barna.org „Report examines the state of Mainline Protestant churches‟ Dec. 7, 2009

29. Class Exercise
Church size: 180 people
Church Budget: $180,000/ yr.
18% available for ministries: $32,400
19 Ministries:
Children Support Group Social Comm.
Teen Ushers/Greeters Benevolent
Men‟s ALPHA/Evangelism Sports Ministry
Women‟s Interior/exterior Decorating Young Adult
Single Parent Community Outreach Nursery & VBS
Audio/Visual Pre-school ministry Seniors
Emphasis this year: offer more practical help to the hurting
How would you divide the $32,400 between 19 ministries???