As we think about working through the budget process, let me
share several tips that I have learned over the years. And by the way, if you’re anything like me,
you gotta love this whole process.
Budgeting is one of the most challenging and enjoyable times of the
year. Call me crazy, but the
spreadsheets, the calculations, the strategy, the rationale, the give and take,
the vision, the final product… it warms my administrator’s heart. So building on the last post, “Budgeting in
Difficult Times,” here are some things to consider:
Start wide and work your way in.
It’s a mistake to get too focused on specific ministry areas too early in the budgeting process. Solicit input from each ministry/department area for the budget based on their broad preferred ministry plans. At Fairhaven, the budget process follows what we call our 6-month work plans (which we formulate in March and October), so I am confident that the staff has thought through their ministry goals and activities, and therefore can submit a budget reasonably based on action plans. So gather the data from all the ministry areas without imposing too many “target restrictions” on them. Start wide, gather all the inputs from ministries, operations, personnel, missions, etc. and then begin the process of assessing whether reductions are necessary and how that will be handled. It may be that once you have collected all the data, you are significantly over your target budget. In that case, you can then assess which areas of the budget offer opportunities for reductions, or whether you might ask all areas to reduce their figures by a certain percentage. Or…you may find that after collecting the data you are not as far off as you thought you’d be. That was our case this month as we did our initial rollup. We were within striking distance of just where we wanted to be.
Point of Order: I rarely support asking all ministries to reduce their budgets by a certain percentage. This ignores the need to weigh the strategic opportunities that are nested within certain ministry budgets, and assumes that each ministry can equally trim their finances with equal impact. This is not always the case. If I trim our $20,000 Community Life budget by 15%, they have $2,500 less to work with. The impact will be manageable, since most of their funds provide curriculum, support materials, conference funds, event publicity, sport team fees, etc. They’ll find a way to manage with less material. On the other hand, if I reduce the $150,000 Worship & Fine Arts budget by 15%, they have lost $22,500. That may mean we have to cancel equipment acquisition, forego a special Christmas artist (i.e. last year we had Jaci Velasquez), or dramatically reduce the scope of our Easter season. The impact of $22,500 is much more significant and the options for reaching it are more dramatic. As the person who knows the entire budget, I prefer to ask each budget area to contribute something to the overall reduction, so that the effort is shared by all, but also dig deeper across every account (and we have hundreds) and identify the funds that I believe we can reduce without significantly impacting our overall vision. This of course requires some diplomacy and communication skills toward affected ministry leaders, but it yields the greatest results.
Don’t squelch vision.
It’s far more positive to allow the ministries to think broadly about what they believe God can and wants to do through their ministry and submit a budget based on that vision, than for us as administrators to impose ceilings or targets on them at the beginning of the process. One of the keys to empowering our ministry leaders is to encourage them to dream big; to be visionary and entrepreneurial. My job as the administrator is not to be the Grinch that stole Christmas, but to come alongside each leader and work with them to enable their vision as best I can, within the scope of our resources. That requires that I fight the urge to always see ”$$$” every time a ministry leader talks about or submits a ministry plan. The process of a ministry leader seeing the possibilities of what God can do through their ministry and translating that vision into actionable plans, which can be articulated and supported by a budget, should not be short-circuited by the possibility that those plans won’t end up fitting in the final budget. This makes the next tip all the more important.
Make lists of options.
As we work through the budget, we should be prepared to ask our ministry teams to prioritize their budget requests. One way to do that is to ask ministries to submit their budget in a prioritized format, so that it’s clear which request have the greatest impact on their plans and which they believe have the least impact. That can help when tough decisions have to be made and the impact considered. Some churches ask ministries to submit several versions of their budget, the first being conservative, the second based on expected income, and the last based on the possibility additional funds become available. For instance, if you are able to increase your budget by 20%, what would you do with it? This last budget gets at the heart of my point: when ministry dollars are tight, be sure to know what your options are both in case additional reductions are necessary, and in case income exceeds expectations and additional funds can be made available to ministry areas.
Keep promises.
It’s easy when things get tight to back away from promises that have been made to staff or ministries. Do everything you can to keep your promises. If you promised a staff member to increase their hours, or you promised a ministry funding for new equipment, make sure those funds are the absolute last dollars trimmed from the budget. Broken promises may be explainable given the circumstances, but they always leave a bad taste in the mouths of staff members and they create difficulties down the road when you really need staff to trust what you say. That said, be sure to document “promises.” A few years back, I had to give a $4,000 raise to an employee who said he was promised that in his second year he would be brought to a particular salary level. There was no documentation and the supervisor involved could not recall the conversation, but in order to be people of our word, we acquiesced. Lesson learned.
