Church leaders are facing growing financial challenges as the sluggish economy impacts operational costs.
They are met with higher than projected costs for utilities, health care coverage, and office supplies and Finance Committees are pressured to cut costs.
As this pressure grows, finance leaders search for comparative statistics that will inform their difficult decisions, often seeking a percentage comparison between total staff compensation and the overall budget.
In other words, what percentage of the budget should be designated for staff compensation and benefits?
The percentage comparison between total staff compensation and the budget is largely dependent on the overall mission and vision of the church. It is not a practical approach to achieving fiscal stability.
Numerous variables – denominational support, building debt, designated funds, endowment, and others – affect the budgets.
Rather than searching to establish a comparative benchmark between compensation and budget or focusing almost exclusively on trimming expenses, church leaders would be wise to pursue responses to broader questions that impact overall giving.
Focused attention on increasing revenue by encouraging generous giving and by promoting the church’s mission and vision will help alleviate some economic downturns.
If contributions are flat or have decreased recently, analysis of people’s giving patterns at the macro and micro level is required.
• What has precipitated a lower giving level?
• Have a handful of particularly substantial givers moved, died, or decreased giving?
• Has the economy impacted people’s spending and giving habits?
• Is there some church conflict that has arisen?
• Does the church culture embrace joyful giving as a generous response to God’s love?
People have primarily two “pockets” for giving – giving from earned income and giving from assets.
As congregations age or as earned income decreases, giving through the offering or annual campaign often decreases.
Churches that are thriving financially promote giving from both earned income and assets. They promote annual gifts, major gifts, and estate planning gifts.
Annual gifts are primarily given from people’s earned income. Major and estate planning gifts are generated from people’s assets. So:
• Does the church have an effective approach to promote and to receive gifts from all of these segments?
• Does the church regularly provide estate planning seminars?
People under age 50 pay most expenses electronically. Giving to God is not to be equated with an expense.
However, if the church hopes to receive people’s first fruits, then it needs to position itself to be part of the primary family discussion when people are allocating money.
For younger baby boomers and younger generations many money decisions are made by authorizing electronic withdraws.
• Has the church promoted electronic giving through an Electronic Fund Transfer (EFT) program?
The number of non-profit, charitable organizations has increased dramatically in the past decade and many of these charities are very appealing to donors. So:
• Has some other charitable cause drawn people’s interest and gifts away from the church?
• Has the church positioned itself to educate the congregation about its core values, mission, and vision?
• Do people know all the ways that the church is changing people’s lives?
Finally, the hyper-consumer lifestyle people have maintained for the past several years has adversely affected their ability to give and save money. While recent studies indicate some decrease in consumer spending, it may take years to turn around their consumer debt.
Moreover, consumer spending may be down only because discretionary funds have shrunk.
When people have more discretionary money, they will most likely return to their prior spending habits.
Consider:
• Are people’s personal finances and consumer debt interfering with a God-honoring lifestyle?
• Do they pay more in credit card interest than they give to God through the church?
• Would a God-honoring personal budget course help realign people with God’s abundance?
Church leaders will be engaged in a broader financial discussion as they ponder these questions.
This broader discussion will most likely lead to new insights and possibilities. As church leaders move away from a mere discussion of fiscal solvency to an implementation of year-round stewardship best practices, the church will be repositioned toward vitality and overcome apparent financial dilemmas.
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