Do you ever find yourself trying to explain or defend how much of your budget is allocated to staff costs? Or why ministry budgets didn't get an increase in the new year? We've all been there.
People often ask me about budget percentages. What percentage of the budget should be allocated to personnel? How much is too much to spend on facilities or financing? What percentage of your budget is directed toward ministry costs? Those are great questions, but they are a bit narrow in their scope. The reality is that a church budget is a reflection of the overall strategy and focus of the church in a given calendar year. That focus can change from year to year and consequently, the budget percentages will change accordingly. Let me try to illustrate.
David Smith often tells our staff and Board that you are usually either buying staff, buying building, or buying ministry. You usually can't do all three in the same budget year. Each new budget will probably reflect one of those three priorities.
In our 2010 budget, we are definitely buying staff. We are opening a new satellite campus in September and we need to staff it. We're also adding a Director of Communications. In total, we'll be adding about a dozen new staff positions, some full-time, others part-time. That will skew the personnel percentage of our total budget in this calendar year. It will push 59%. But as I've projected our budget out to 2013, which I had to do in order to be sure those new staff costs could be sustained, our personnel percentage will fall back to a more comfortable level (53%).
Last year, we were focused on buying building. We were focused on the costs of an $8M facilities expansion project. Because we were trying to be prudent about the realities of the economy and our own capital campaign, ministry and personnel were held flat in order to create breathing room for people to give toward the building project.
Two years ago, we significantly increased ministry budgets. Each ministry received additional funding that was wrapped around their ministry goals. They were excited and that funding has helped carry them through the last two years when their budgets were held static. As I've told the Board, they are "comfortable" with their current level of funding.
The point I'm making is that percentages will change from year to year. It's a mistake to create arbitrary targets and expect that every year budget categories will be forced to fit within that target range. A budget is only a tool to help you accomplish your church goals and it should be as fluid and dynamic as your approach to ministry.
The leadership challenge is to help your staff, Board and congregation understand that the landscape of ministry is constantly changing and each year the financial approach will be refocused.
Agree? disagree? Your thoughts?
