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.
