Paul Clark

Budgeting in Difficult Economic Times - Final

Last few ideas on budgeting in tough times:

Understand Every Expenditure

Be willing to ask tough questions of ministry leaders: 

1. Is this expense strategic?
2. Can this expense be reduced?
3. Can this expense be delayed?

What are we spending our money on?  At Fairhaven Church we have over 300 accounts in our annual budget, and it's my job to be familiar with every account. In better economic times, that might be different. But when every dollar counts, it's part of my role to be the traffic cop watching every dollar come in and every dollar go out. 

What are we doing that is not mission critical?  How much are we spending on giving away free coffee or donuts?  Is the 4th of July float really accomplishing a community presence that leads to more guests coming through our doors? Is the Winter Ski Retreat so important to the ministry of the student department that it should consume 25% of their entire budget? Is having live camels in our gymnasium for the missions conference going to be the difference in inspiring a child to give their life to cross-cultural evangelism?

Often, ministry leaders are too close to their plans and too emotionally tied to what they want to do to have the objectivity to step back and ask big-picture questions. But asking those questions can free them to step back and evaluate what's really effective, not only towards costs, but towards vision.

So in case you've missed it, here's an outline of what I've discussed over the last few weeks for budgeting in difficult economic times:

1. Get the facts first: look for the objective data you have available to you to help you find the ballpark budget you should be aiming for.
2. Start wide and work your way in: allow the budget process to move from general to specific like you would in solving a puzzle. Don't get focused on details too early.
3. Don't squelch vision: allow ministries to dream and submit requests based on vision and opportunities. There will be time to sharpen the pencil later.
4. Make lists of options: encourage ministries to think in terms of priorities so that if reductions to submissions are required, lists of options can be generated and used later if funds become available.
5. Keep promises: always keep your word to staff and ministry leaders on budget issues. Respect is hard-won and easily lost.
6. Attack operating costs: the operating budget is fertile territory for reducing budgets.
7. Understand every expenditure: Know your budget like the back of your hand and be willing to ask tough questions of every account.

MythBusters Vignettes for Sermon Series

Having just completed a 6-week sermon series supported by Small Group curriculum and vignettes, I thought I'd post a sample of one of the short videos. The series went extremely well, with over 900 adults participating in Small Groups. All the material was written and produced in-house through our media department, HelloMedia, and is available for sale to other churches.

Budgeting in Diff. Times- Attack Operating Costs

Wow!  The news just keeps getting worse. DHL announced last week they were laying off 9,500 workers in order to trim operating costs during the down economy. That will hit Wilmington, Ohio, a small town less than an hour from Fairhaven Church, really hard. It's inevitable that when companies' revenues fall, costs must be reduced in order to stay solvent. The same is true in our churches. When income falls, and most churches have experienced some shortfall in giving this year, we must find ways to trim our budgets. Probably like you, one of the first places I look for ways to reduce spending is in operating costs. Let me give you some background.

For several years, our operating costs had exceeded budget. It seemed the costs of maintaining the facility, utilities, equipment, supplies, etc. just could not be wrestled within budget. We were willing to accept the situation most years because the church was growing, giving was strong, staff and new ministries were being added (and associated costs), and so the rising costs could be explained, if not justified. Last year, we missed our budget by $137,000 on the income side.  But compounding the situation, we overspent our general operations budget by $70,000. Fortunately, we cut back in other areas to soften the blow, but had we been able to hold operating expenses to within budget, our cash flow situation would have been vastly improved as we turned the corner on the year. It definitely brought to light the critical need to attack spending on operations for 2008.

This year, with the help of a new Director of Facilities, we took a magnifying glass to every line item within the operations budget. We identified areas where we could exercise greater spending controls, instituted closer scrutiny of projects and requests, and began a consistent communication plan to get the entire staff of 60 to "buy in" to the need to control costs. The results have been spectacular. Through 10 months this year, our operations budget is $3,400 under budget, which is a $74,000 swing given the fact that we did not increase the operations budget from '07 to '08. That has made a world of difference on both our cash flow and our ability to adjust to what looks like another giving shortfall (we are projecting $150,000, but currently at $110,000).

I'll summarize some of the ways in which we have been able to control what was before, seemingly uncontrollable.

• We repackaged our advertising in telephone directories to reduce costs, yet maintain our "wow" factor.
• We negotiated a buyout arrangement with Xerox, allowing us to replace both our copiers with less expensive, newer technology copiers.
• We created an inventory tracking system for light bulbs, maintenance supplies, perishables, etc. allowing us to replicate a "just in time" system to reduce costs and waste.
• We replaced our security service with a more dependable, low cost, team of two men, who not only lock the building each night, but are meticulous in making sure lights are out and thermostats are  turned down (or up).
• We began a ministry called, "Monday Morning Men," comprised of mostly retired guys who come in on Mondays for donuts, coffee, a brief devotional, and several hours of light handyman work around the building...saving us lots of paid man-hours, contractor costs, custodial costs--and providing them with purpose and community with other guys.
• We began an annoyingly repetitious mantra to turn off lights and turn down the air conditioning, which has resulted in almost $10,000 in savings YTD.
• We emphasized electronic communications over snail mail, which has saved over $2,000.
• We downsized our staff retreats and emphasized the need to hold down indiscriminate staff ministry expenses (taking congregants out to lunch, etc.).
• We downsized our dumpster, transferred more lawn care responsibility to volunteers, reduced the scope of snow plowing and salting areas, and lots of other small things which taken together, really add up.

Even though it's been a challenging year on the income side, these initiatives on the spending side have helped us to not only bring our operations spending under control, but it's made the operations budget a model for the other ministries. As I said, start by attacking operations.

wiki for telling the Story

I’ve asked our web programmer to design a wiki for the staff to use to tell their ministry stories.  We have to always “beat the bushes” to find the stories of the good things that are happening in their ministries. Like when we need a good print story or a videotaped testimony.  With a wiki, we can send out an automated weekly reminder for them to add any stories of ministry success, salvations, blessings, testimonies, stories of transformation, etc. to the wiki, and that way we can all read it when it is updated and be encouraged by what God is doing.  We’ll know what’s happening and can use the stories to draw from for video/print needs.  We’ll put it on our internal website, or intranet, so that it’s accessible by all the staff.  For now we’ll only use it internally, but depending on how it works, we may design something that the congregation can access on our website to tell us their stories.