Paul Clark

Each year's budget is different

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?

Generosity instead of stewardship

There was a nice section in an article I was reading in the NACBA MultiBrief today regarding the concept of generosity as juxtaposed with stewardship: 

'Generosity' as a broader concept 

The word “generosity” can express the concepts in a way that is more understandable and palatable today. “We don’t find the word as often as stewardship in the Bible, but we see the actions of God and people that reflect generosity and abundance,” Swint said. “If we are made in the image of God, we should have received the generosity gene in our spiritual DNA. We don’t necessarily want to be labeled a good steward, but we want to be seen as generous.” 

Generosity can be expressed with different terminology. “Be anti-budget,” Swint declared. Promote an “annual ministry plan” instead. “Don’t talk about income; talk about contributions.... Don’t talk about expenses; talk about costs. It’s costly to follow God and costly to carry out our mission.” And be sure to include the stewardship’s other aspects -- hours and talents given -- in the church’s annual reports.

We stopped talking a long time ago about stewardship. We talk exclusively in terms of generosity. But I especially like the advice about reframing the dialogue about budgets, income and expenses.  I'm going to use that in the weeks ahead presenting our 2010 budget (opps, I mean "ministry plan").  That's good advice!

how to approach the big buy- part 3

A big-ticket purchase is creeping up on you. The bus is breaking down. Or the server is malfunctioning. Or the phone system is obsolete. You know you’ll have to persuade the pastor, the board, maybe even the congregation, in order to make the buy...

The Congregation

1. Collect information and support beforehand, if possible. Introduce the issue to a subgroup of the congregation beforehand. This helps you uncover questions and gain support before the congregational meeting. Asking a focus group, “What questions or concerns would you have about this purchasing decision?” isn’t manipulative, it’s strategic. It helps you build consensus and tailor your presentation to answer concerns before they are voiced.

2. Lead with vision. People respond to vision. Use the power of story to explain how this purchase will impact people’s lives and extend the church’s influence in the community. Use your executive summary, prepared above, to briefly explain the issue and have all of the supporting documentation at your fingertips in case detailed questions need to be answered.

This article was published by the great people at Your Church magazine as part of their 2010 Church Buyers Guide edition.  Click here for the entire article.

Going Beyond the Numbers at NACBA '09

This week I presented two seminars at the NACBA National Conference, the first of which was explaining how to use financial reporting as part of an overall strategy for communicating vision among measured outcomes.  Here's the workshop description: "Financial reports are the cornerstone for understanding the fiscal health of any church. Financial reports are generated every day by thousands of church administrators across the country, but too often financial reports never get beyond the basics of information or go beyond the administrator’s office. This seminar will examine the benefits of using financial reports to inform our staff and leadership in order to measure, plan for and evaluate our ministries from a strategic perspective. Going beyond informing, we'll also look at how financial reporting can involve staff and leaders in good financial decision-making, gain greater buy-in, and improve organizational control. The seminar will also address using financial reports to inspire the church towards celebrating God's provision, connecting finances to stories of transformation, and inspiring greater generosity"  If you'd like to take a look at the slides, you can download them under Conference Resources on the right sidebar.

What might happen...

In yesterday's workshop with Dan Busby, the president of the ECFA, he mentioned five things that might happen in Washington which would impact the way we manage the church.  I thought you might find them interesting:

1. Annual reporting to the IRS.  We may be required to complete Schedule 990's, which would add an enormous burden to the church office.
2. Reporting of contributions.  We could be required to track donors contributions and report each one to the IRS according to the donor's social Security number.
3. Church definition.  The working governmental definition of a church could be defined, which would affect the wide variety of church models, including house churches, etc.
4. Health care reform.  As the government moves toward a massive government health care program, and tries to find ways to pay for it, the existing health care plans we provide could become taxable income to our staff members.
5. Cellphone policies.  The government is working toward eliminating the IRS restrictions for cell phone use for business purposes and the confusing and complex paperwork required to substantiate.

Some good, some bad...  a good workshop, though.

Survey of '08-'09 Giving

At yesterday's CLA conference seminar, Dick Towner also shared some statistics he gathered from a survey of 1,000 churches regarding their 2008 and YTD 2009 budgeted giving.  I'm not sure about the size of these churches in terms of comparison to your own, but the stats are interesting nonetheless.

2008 Year-End

29% of the churches missed their budget
25% of the church hit their budget
46% of the churches exceeded their budget

2009 YTD

53% of churches are behind budget
36% of churches are meeting their budget
10% of churches are ahead of their budget

We missed our 2008 budget by 2%, but are currently ahead of our 2009 budget by about 7%.  We also are in the second year of a three-year capital campaign totaling $6,600,000 in pledges and are on-track with our projections.  All told, we are thrilled and overwhelmingly grateful to God that the recession has not as of yet had an impact on our giving.  But we know other churches are feeling the effects and we understand the challenges they are facing and the decisions they are wrestling with--we've been there ourselves and could be there again.

Some wise words from Dick Towner

This afternoon I attended a seminar by Dick Towner, Stewardship, Generosity and Spiritual Well Being.  Dick is a veteran stewardship teacher and leader from Willowcreek Church.  He's the brains behind the Good $ense stewardship curriculum, which I've used successfully.  He is an extremely experienced and wise person and he had some great things to share with us about creating an environment for generosity in our churches.  He also included in his packet a piece he wrote about his perspective on the recession, which I thought was worth passing on to you.  I found it online at the CSN blog, so here is the link.  It's worth the read.  Tomorrow it's back to Dayton, but with a list of about a dozen action items I've taken away from the conference.  It's been great--kudos to the CLA.

Update on Financial U Stewardship Series

Now that we are three weeks into our stewardship series, Financial U, I wanted to give a brief update on how it's going. We have approached this as a three-legged stool, one being the weekly sermon series by our Senior Pastor, David Smith, the second being the Dave Ramsey Financial Peace University series, and the third being the series of topical seminars we have offered. It has been overwhelmingly well-received. In fact, I don't think we could be happier with it at this point.

Some Stats
We have about 50 families attending the Dave Ramsey 13-week FPU series, which started on February 15. Each family must pay $93 to be a member of Ramsey's FPU. The membership gives them all their materials and access to lots of online resources. It's a quality resource. We knew we would have fewer participants in that offering since the cost is a factor.

We are offering 13 topical seminars on a wide variety of topics, each being taught by industry professionals from within the church family. We wanted to use people from within our church as we felt this would increase the trust factor, as well as allow us to be sure of the integrity and motives of the presenters. We have had over 600 people sign up for those seminars, which was thrilling for us and for the presenters. Of all the seminars, the most popular has been the one on "How to Make and Keep a Budget." I guess that tells you where many people are--they're in need of help with the basics. Why shouldn't the church step in and help with practical issues like that? Here's a file with all the seminars and descriptions you can download: Download Financial U Seminars.

Finally, David has been preaching a sermon series that has been awesome.  It isn't heavy-handed, manipulative, or any of the things that people usually get nervous about when they think of stewardship series.  One of the themes he has repeated several times throughout is, "God doesn't want something from you, he wants something for you." And that nuance has colored his teaching throughout his messages. He's done a great job. Give a listen to one of his messages--or give the link to your pastor and have him contact David through his blog.  I know he'd be glad to share his message notes.

People are worried, they have questions, and some of their foundations are being shaken. The church has to step into this turmoil and help people where they live. They need help with their money, their future, and their faith.  Jesus spoke so much about money, which should tell us that it's an important topic for us to address, especially today. As pastors, we can't have all the answers, but we can do our best to be practical-- and allow the Word of God to provide a spiritual context for what's happening in our world.

Wow!  That was fun.  I just presented my first-ever webinar, sponsored by the National Association of Church Business Administrators (NACBA).  The topic was, "Financial Management in Tough Economic Time." If you are a member of the NACBA, I think you can access it on their website (or maybe you have to have paid for it to have access to it).  Anyway, I appreciate the 100+ folks who gave 90 minutes to talk about best practices in budgeting, increasing congregational ownership of finances, ways to reduce your budget, maintaining high staff morale during budget pressure, alternatives to reducing staff, and ways to increase your leadership value to the organization. In hindsight, I had too much to cover in the allotted time, but I did my best. As I stated in the webinar, if you have specific questions from the material, I'd welcome you to contact me and we can discuss. One thing I mentioned in response to a question about Dashboard Reports is that I have an example of one here on my blog under Conference Resources. There are lots of examples of stuff in that section that you might find helpful. In the days ahead, I want to write in more detail about that last section of the webinar: ways to increase your leadership value to the organization.  I think it's something to think about, not only in light of staff reductions, but just because it's good stuff to consider.  Thanks Phill Martin and the NACBA! If you're not a member, you need to join--they are a great resource for all of us!

Financial U coming to Fairhaven!

At Fairhaven, we're committed to teaching regularly and transparently about money and it's effect on people.  We do it every year--not for a Sunday or two, but usually for 4-6 weeks.  We want to teach God's perspective on money, including the broad spectrum of issues people in our pews are facing today.  Understanding money and the pull of the culture on our checking accounts is vital if we are to live for the values of Christ.  This year, we are launching what we're calling, "Financial U."  It's a coordinated series of workshops, classes and sermons dealing with a range of topics that people are talking about today: investments, retirement, budgets, debt, giving, saving, and the cord of faith that we want to run throughout each.  Studies show that the churches who are least impacted by changes in the economy are the ones that are the most up-front in their presentation of biblical truth about money.  Check out what we're doing at www.fairhavenchurch.org/financial-u