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Improving the financial fitness of your church

Improving the financial fitness of your church. Strategic Budgeting. Strategic Budgeting. Project Income Numerical projection

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Improving the financial fitness of your church

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  1. Improving the financial fitness of your church Strategic Budgeting

  2. Strategic Budgeting • Project Income • Numerical projection • Look at your track record of yearly income over the last several years. Base projection on income, not what you spent. Base projection on dollar amounts not percentages. Look for patterns of numerical increase. Note bumps from special one time large gifts, so you don’t budget off that amount. Never use percentages (percentage of what came in more this year than last) to budget with. • Per-capital giving • Based on avg attendance divided by total income. Amount per person. Be consistent in how you measure.

  3. Strategic Budgeting • Case Study

  4. Strategic Budgeting • Case Study

  5. Strategic Budgeting • Determine Allocations • Be conservative in your budgeting. Be practical. Budget according to strategic priorities, NOT according to what was spent last year, NOR by % growth from last year. • Ask the question: What are the two or three key strategic areas of focus for us as a church? Another way of stating that is: What are two or three things we need to do really well? • Allocate accordingly.

  6. Strategic Budgeting • Determine Allocations • The ministries don’t come to board and tell what they want to spend; the board presents the budget and tells each ministry what they have to spend for the next year. • The ministries simply submit a “Budget Request” proving they have vision and ministry plan to actually use that money productively. • Each ministry can submit a “one time” request (undesignated, special projects)

  7. Strategic Budgeting • Determine Allocations (Pie Chart approach): • roughly 43% to Staff, • 15% facilities (this includes putting some aside to cover a loan for new property or building), • 20% on denominational support/missions (until this becomes it’s own budget), • 17% Ministries • 5% including one time requests, and an undesignated fund for anything that comes up. Dividing this piece is difficult. • As increase comes (over budgeted projections) that increase is divided by percentage to different areas according to the need that year. Only budget out about 50% of that increase and reserve some for special unanticipated projects.

  8. Adjusted Income Projection

  9. Allocating the budget

  10. Strategic Allocation

  11. Strategic Allocation • What would happen if we planned on basis of a straight % of actual growth unadjusted for outliers?

  12. Strategic Budgeting • Case Study – Projection based on % growth, unadjusted for outliers

  13. Impact of “straight line” budget

  14. What to do with greater growth? • “Ministry Expansion” Request (this can be funded by surplus from previous year or out of ½ of the increase) • ½ reserved for future projects / additional opportunities • Ask: What is going to make disciples? What is going to reach people for Christ? • E.g. – investments in assimilation, outreach and stewardship systems yield significant increase in giving units and per capita giving

  15. Impact Income

  16. Revised Strategic Allocation

  17. Expense Budget - Impact

  18. Strategic Budgeting Principles • Numerical Growth • Per capita giving • Be conservative • Strategic Allocation • Impact Projection • ½ of increase is allocated • ½ of increase is invested in future reserves, projects • Ask: What is going to make disciples? What is going to reach people for Christ?

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