How to Build an Effective Church Budget and Choose the Right Tool
By Chris Boue
Building a church budget can be hectic and complicated. Even if everyone agrees on how much the church should spend 12 months in advance, technical and administrative issues always seem to crop up. We send files back and forth, miss important email attachments, and lose track of the “right” version of that Excel file or tab. These types of problems can give everyone a bad case of heartburn. You know the budget process is going poorly when you hear statements such as, “I’ll just put in what they tell me” and the ever-dreaded, “Just put everything in because they’re going to cut it down anyway.”
Part of the budget difficulty stems from a simple fact: Churches are not easily comparable to for-profit companies with staffs of similar size. I’ve run companies with 10 employees and companies with 1,000 employees, so when I became executive minister for a church with a staff of 30, I assumed the budget process would be closer to a 10-person company than a 1,000-person company.
I was wrong. Our church actually has a “staff” of about 800, of which only 30 are paid. In fact, many of the people who provide budget input aren’t actually paid staff. They’re elders, ministry leaders, and budget committee members. When we realize that, we understand why our budget process needs tools that are closer to a 100- or 1,000-person company than a 10-person one.
Before we jump into how to help solve these issues, consider that budgets exist to meet our goals without overspending, to get everyone on the same page, and to make sure we’re spending based on what’s effective, not just what’s traditional.
Trust the Process
Budget time should be when our organizations prioritize objectives as well as decide what to spend time, effort, and money on. The order is important here:
1. Prioritize your key objectives.
We frequently skip this step because we assume “everyone knows what to do,” or worse, “we’ll just copy what we did last year.” Whether it’s a meeting to discuss strategies or clarify key objectives, the question must be asked: “What is the most important use of God’s resources?” In an environment of trust, it is always best to take the key objectives and let your team put their department’s top supporting goals on a shared tool (like Google Sheets or Office 365).
2. Clarify your nonnegotiables.
Zero-based budgeting is a good direction for almost every organization, but very few budget managers are skilled or experienced enough to discern what is mission critical without a bit of help. My advice: Take a look at your assumptions of what is a missional “need” and what is a “want” and become familiar with the principles of zero-based budgeting.
3. Ensure that authority and expertise are linked to budget responsibility.
Before thinking about the numbers, consider who has authority and who has expertise in making decisions in select areas. For instance, consider who should decide about buying a computer, setting up a new process, or deciding on a large ministry purchase. For some areas, like technology, you might want to consolidate the budget under an expert. Of course, standard ministry areas should remain under the one who leads them. Finally, ensure that people who make money-related decisions are budget responsible, even if you give them only a few budget lines. Keep in mind that budget responsibility typically means engagement, buy-in, and ownership.
4. Let key objectives be the guide rather than how much you can spend.
When I joined the church staff, it was customary to offer budget guidance such as “everyone must cut 10 percent.” This approach not only takes away ownership from the people who need it most, it turns budgets into window dressing instead of a boundary-clarifying tool. Allowing the strategic plan and key objectives to guide the way can clarify the budget priorities in ways few things can.
5. Have brainstorming sessions around efficiency and effectiveness.
Consider the difference between telling your team, “we need to find 10 percent more savings as we meet our objectives” from “everyone must cut their budgets by 10 percent.” The first is empowering and drives collaboration. The other promotes silos and encourages employee thinking rather than owner thinking. I have seen the most progress on this when my team has used a shared Google sheet to help identify best practices for areas of improvement.
Tools for a Connected World
For those who need to involve 5, 50, or 500 individuals in the budgeting process, you should consider four areas of high leverage when deciding which tools to employ: budgeting cycle time, error risk (i.e., orphaned spreadsheets, broken links, and copy-and-paste errors), collaboration among teammates, and staff buy-in.
Each of these can be addressed through modern budgeting tools and processes. Tools range from stand-alone budgeting systems to online Excel/Google templates. For a summary of the options, refer to the chart below. I ranked the six tools and gave each a letter grade for each consideration.
Everyone Gets a Trophy . . . Almost
As the graph demonstrates, each budgeting tool has advantages and disadvantages. However, staffs of more than just a few individuals who need to work together to form a cohesive budget should choose one of the top three options.
Here’s a quick rundown of the options, from worst to best:
No. 6 — Stand-alone spreadsheets. This is the worst option, though it has been a staple of budget managers for decades. In a recent article, Enterprise Times reported about 60 percent of businesses in the United States are still relying on individual spreadsheets (e.g., Microsoft Excel). I think that figure is even higher among churches, based on my own unscientific polling. This process is simultaneously tedious and error-prone. It’s an improvement over pencils and ledger sheets, but far better options exist today. If you cannot give up the old-style spreadsheet, consider options 1 and 2. They will take your love of (and experience with) your old favorite tool and modernize it—quickly.
No. 5 — Accounting package budget tools. As the name suggests, budgeting tools of popular accounting packages (e.g. FlockBase, Aplos, ACS Technologies, PowerChurch Plus, and even QuickBooks) are just that—tools. They can be very powerful when used properly. For instance, uploading the annual budget will save your bookkeeper, accountant, or chief financial officer hours each month in automatically calculating variance to budget, identifying the top overspent areas, and creating a quick visual for the next finance team meeting. However, relying on these same tools to help with budgeting workflow is unwise. While the companies that make these packages are working to improve them, better options exist.
No. 4 — Spreadsheet plug-ins. This can be an option for smaller staffs. It’s easy to input the budget and create accounts, and the plug-ins produce nice-looking graphs. The issue is scale. While it’s easy to automatically break different budget areas into tabs, you still must send a single file to each user for input. This is fine when there are only a few staff members, but it becomes a logistical nightmare when there are multiple users and multiple revisions.
No. 3 — Budget/enterprise performance management applications. EPM applications take the budgeting/planning process to a new level: cloud-based computing. These are ideal for larger organizations. Tools such as Adaptive Insights, Host Analytics, and Vena Solutions combine the computing power of spreadsheets with the insight of an analytics engine; the result is a configurable workflow system and a truly scalable budget tool. Most of these applications also have beefy import/export features, and some communicate directly to your accounting system. The large negatives are cost and training time and effort. While many other enterprise-grade tools have become practical for midsized organizations, budgeting applications have not yet made the leap. Typical systems can cost thousands of dollars per month and require extensive training. I expect low-cost, easy to operate, cloud-based solutions to hit the market in the next few years. When that happens, this will be my No. 1 choice.
No. 2 — Office 365 Excel sheets. Office 365 essentially offers Excel (and the other applications in the Microsoft Office suite) as an online option. In theory, this allows linked sheets to automatically update, keeping you up on the latest numbers. In practice, however, users tend to download the sheets back to their computer (sometimes without realizing it), essentially unhooking them from the master sheet. Also, sharing with unpaid users almost takes a master’s degree in computer workflow. Microsoft will undoubtedly continue to make improvements—ironing out the kinks to smooth sharing and the inclination toward taking files offline. When that happens, Office 365 might match Google’s free tool (below).
No. 1 — Google Sheets. While Google Sheets is not the most feature-rich spreadsheet product, it is the best for collaboration—and that’s why I rank it as the top option for churches. With Google Sheets, you can collaborate with many individuals while all seeing the latest master. I’ll confess, for one-off, heavy analytics, I tend to use Excel and then import the results to a Google Sheets file. But modern budgeting is about keeping up to date, and Google Sheets uses a linked sheets feature that allows different sheets and files to be linked. And since virtually all users use this tool exclusively online, the risk of having offline discrepancies is significantly less than with Office 365 . . . and free (yes, Google Sheets is free) is a cost you cannot beat. This has allowed our church to involve a number of nonstaff users to advise, offer input, and analyze what we are planning without ever thinking about revisions. The only downside of this budget choice is that a reasonably knowledgeable techie needs to assist you in setting up the worksheets. Once done, however, your budget-leading world will be much better.
Chris Boue serves as executive pastor at Whitewater Crossing Christian Church in Cleves, Ohio.