Financial Management

Establishing a proper budget for your ministry

Some pastors may find the idea of budgeting to be discomforting. It requires conscious planning and thinking, which takes a lot of time. That’s often a major challenge, because you’re thinking, “As long as donations and God’s grace continue, why should I worry about how I spend our money?” In addition, most preachers have trouble thinking ahead beyond a couple months. So the general response to performing a budget for the year or even quarter is a collective shrug.

However, let us consider Luke 14:27-28: “Whoever does not bear his own cross and come after me cannot be my disciple. For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?” We must bear the cost of our actions, and that requires taking stock of what we have and how much we spend. In order to better serve your parishioners and provide more for your ministry, it’s ideal to set up a yearly budget. It can be especially helpful when times become lean. Learning the basics of budgeting will help you plan far enough ahead that you don’t have to worry about the hard times as much.

Establish realistic goals
The first step in building a proper budget is knowing what you want out of your ministry, and whether every stakeholder understands that. As David R. Pollock, writing for Church-Based Training International noted, being on the same page is critical, especially when donations hit a lull and funding is weak. In order to define your goals, first set up a mission statement that your church board and leadership can agree with and receives updates on a regular basis. From there, create some goals that actually fit in the context of this vision, especially when it comes to fundraising. Don’t be afraid to talk to your staff and fellow pastors to get some input on what works, and be open to making some tweaks to the plan.

Creating a proper budget will only help your ministry.

Look at your prior history to see your future income
Even if you don’t necessarily plan a budget, you do keep track of your donations. It helps you determine what you can spend overall. The first numbers you want to look at is your fundraising through parishioner contributions or general fundraising over the last 2 to 3 years to find out what you can work with in terms of income. Pastoral Care Inc. recommended that you can easily set up a budget if you spot a consistent trend in your incomes. If your annual returns have inconsistencies, try to figure out the reasons why – for example, you had a major fundraiser to renovate one of your churches – and remove them to see if that gives you a clearer picture.

When you understand the pattern, assume an income based on the current trend. Much like your goals and mission statement, you should use realistic expectations to define the income. It’s better to aim a little lower in your expected donations and be pleasantly surprised than set an aggressive goal only to find you’re coming up short and must re-plan, according to Enrichment Journal.

“Many of your basic expenses have schedules to them.”

Devise expenses that make sense
Once you have your income, you can develop a budget around it, determining what expenses you must make over the course of the year. That goes from compensating your staff to paying utility bills for the church. Many of these things are not only already apparent, but likely have schedules to them as well. Create a baseline of expenses that takes these essentials into account. You can also use this opportunity to create a church calendar that centers on the budget, according to

After you remove the crucial spending from your income, you can begin to plan around events, specific church holidays or annual fundraising drives. If you’re not sure about how to calculate these expenses, work with your staff to get some estimates on certain costs and go from there. There’s a potential that you’ll make mistakes and not get this portion right the first time. Just keep your expected income at a safe level, and make sure your staff keeps track of actual expenses so you can plan accordingly the following year.

The process of creating a church budget can be tedious at times. However, with proper planning and understanding of your income and expenses, your ministry can mitigate most of its suffering.