Budgeting in Difficult Economic Times

Over the next few days, I’m going to write about some of the considerations we should visit as church financial leaders, in light of the current economic crisis facing our nation. Without a doubt, there will be some economic impact on our church’s financial picture in 2009.  Most economists predict that it will be well into 2009 before we see some sense of stability return to the markets and the economy as a whole.  This next year will require some thoughtful response on our part, as we lead, and we need to be both prayerfully dependent on God, and wise and proactive in our planning. Here’s a place to start:

1. Get the facts first

A. What are your historical giving trends?  Have you been on a positive giving trend?  What is the average annual increase in your giving?  Our giving has grown about 6.4% each year on average over the last 10 years. That figure is one useful benchmark in projecting giving for 2009.  Knowing that figure, do you expect giving to increase or decrease from the average?  Why or why not?  Some considerations might be:

• How many new people have you added to your church in 2007 and 2008?  Statistics show that it can take upwards of 18 months for new people to come online in their giving. Is there reason to expect that new givers will come online in 2009?
• Is there a building campaign in process that could siphon funds from general giving in an economic downturn?  Are there some special projects underway that might impact giving to the budget?  Some churches take on special missions projects that can impact giving to the operating fund.  One church in our city has pledged $1 million to address the needs in Africa.  That’s an incredible commitment, but when the economy turns south, many people will honor their commitment to missions or a building fund before their commitment to the operating fund.
• Are there unusual expenses that should be considered, which will impact the funds available for operations?  For example, capital replacement expenses such as a new roof, HVAC unit replacement, parking lot resurfacing, etc. are things that sometimes cannot be postponed.  So if those things are going to hit in 2009, you’ll need to take extra consideration of their impact on cash flow.

B. How has your congregation responded to previous economic downturns?  For instance, in 2001, the economy (GDP) grew at only a 0.8% rate, which was the lowest growth rate in the last eight years.  What was the growth in your church’s giving during 2001? Our giving grew by 2% in 2001. We could perhaps use that figure as a starting point for setting a conservative budget for 2009. The question could logically be asked, “If giving grew at 2% in the last recession, can we reasonably expect giving to grow at a much higher rate in 2009?”

C. What is the local economy doing in your church’s geographic area? As stock prices fall and the shake-out hits certain companies particularly hard, what is the anticipated impact on your community?  For instance in Dayton, we are heavily saturated with automobile manufacturing and related vendors.  So as Big Three shares fall, and rumors of merger talks pick up steam, the uncertainty for our city is a serious consideration.  That factor speaks loudly for caution.

D. What are your attendance trends?  Are new people coming to your church?  Hopefully you can measure the real increase in attendance.  While increased attendance does not automatically correlate with an increase in giving, at least not immediately, it does measure the increase in your influence in the community. As long as that influence is growing, you can expect giving to trend upward—assuming that stewardship and generosity are central truths being taught in your church.

• That said, there is still some calculation possible correlating to new families being added to the church. If your per capita giving (in this case, giving per family) is, let's say, $3,500 annually, then it makes some sense that you might expect 15 new families to equate to $52,500 in additional giving--all things being equal (which they never are).  If those families fit the general demographic of your community and church family. Not perfect, but at least it's a place to start.

Having real facts-- objective data, helps us to make the case for whatever budget action we believe is necessary. It probably won't give us "the number," but it helps us get a feel for what is prudent--what makes good sense. Additionally, it gives our Board confidence that we’ve done our homework, and that our recommendations are based on something other than fear or feelings.