Open Your Eyes to Manage the Finances of the Church
Open Your Eyes to Manage the Finances of the Church

By Brad Dupray

We lived in fear. It could happen at any time. We stood with our freshly shined shoes on the edge of the carpet scanning the mall. Waiting. Watching. Our shoe store’s district manager would show up only about once a month, but when he did, we knew we were in for it. He had a knack for finding those things we didn’t see. We were “store blind.”

Store blindness happens when the proprietor or employees of a retail store walk into the environment so many times that they simply don’t perceive the little things—the crooked table, the dirty mirror, or items missing from displays—that are immediately evident to the person who walks in only occasionally.

This malady isn’t limited to retail stores. It’s not confined to products and displays. A church can become so accepting of the financial status quo that it becomes store blind to the day-to-day operational activities that can squander resources, waste money, and consume funds that could be directed to ministry.

As a high school kid selling shoes, I lived in fear of the district manager. Yet I learned a few simple tricks that enabled me to be ready when he sauntered into the store. Those who manage church finances may not live in fear, but they have a great responsibility to church members who devote their tithes and offerings to the work of ministry and, of course, to the Lord himself. It’s just not right to blindly manage the finances of the church.

So how do you make sure your church isn’t store blind when it comes to managing its finances?


Turn Around

Rather than scanning the mall walkers in search of the district manager, all I had to do was turn around and look. As simple as it may sound, the leadership of the church has a responsibility to take a look: make an annual budget, track its progress, and abide by it.

Here are some church-budget management ratios that will serve as a benchmark from which to start:

  • building payment (20 percent of budget)
  • operations (7 percent)
  • staff salaries and benefits (48 percent)
  • ministries (15 percent)
  • missions/compassion (10 percent)

The flexibility in these ratios is converse. The goal of the first three is not to exceed them. The goal of the final two is to increase them.

The building payment ratio can be tricky, especially relative to a church’s life cycle. A younger church may need to take a bigger bite on its building payment because it is in the first phase of building toward growth. A more established church may not have a building payment at all, thus allowing it to direct a greater share to ministries, missions, and compassion causes.

A building payment is a form of debt (unless you are renting), but it’s actually a wise use of someone else’s money for a period of time for something that will provide value to the church for a longer period of time. That concept is often referred to as “leverage.” Leveraging a large amount of money today can provide a place of ministry for the church that can far outlast the time it takes to repay that borrowed sum.

Younger churches may need to designate as much as 35 percent toward a building payment, sacrificing in other areas to provide space that will serve the church for decades to come. It is also wise for a church to designate extra principal in its monthly payment in order to pay off debt more quickly.

Operations takes into account the practical things it takes to run a day-to-day ministry: a copier, paper, electricity, insurance, and other necessities.

Staff salaries and benefits can vary widely depending on (1) the demographic location of the church and (2) the ministry style of the church. Churches located in an area with a high cost of living will need to make a choice of either having a lower ratio of staff to church members or sacrificing in other areas in order to provide the staff support the elders deem as necessary. On the other hand, the church’s ministry style may be such that there is greater dependence on volunteer or “tent-maker” ministry support so fewer dollars are designated for staff so that more support can be directed to other areas.

For the average small to midsize church, a common ratio is one full-time equivalent staff member per 100 people in attendance at weekend services. Larger churches (1,500-plus) may be able to provide a higher ratio of staff members because they experience higher income levels and have a larger constituency to support.

Ministries should suggest a budget to the budget committee; that group will then need to decide how to divide available resources. Many ministry needs are covered in other areas that spill across ministry lines, things like salaries and mission support. As the budget is prepared, the church must decide how much is reasonable on a “pay as you go” basis (for example, will the church subsidize kids going to camp?) versus a fully supported ministry like, for example, a “Night to Shine” event.

Some churches choose to allow designated gifts for specific ministries while others feel that all gifts should go to the general fund and have ministries supported from there. That’s a matter of opinion which varies from church to church.

Missions and compassion causes are a reflection of a church’s values. Many churches use the tithe, 10 percent, both as a guide and an example to the congregation. Others will designate monies beyond the tithe because they have either the capacity to do so or a certain passion for the ministries they support.

Some churches set goals of 20 percent, 30 percent, even 50 percent or more toward missions. While this is commendable, the church should think through this decision carefully. What impact can an extremely high percentage of missions have on local ministry? What happens if the church experiences a sudden financial decline? How does the church, at that time, adjust the amount of support it had been giving to certain missions or causes they love without damaging those ministries?


Have a Watchful Eye

We were waiting and watching, but for the wrong thing. Standing in fear of the district manager brought only dread. If we had opened our store-blind eyes for those crooked tables, dirty mirrors, and unfilled shelves and done something about them, we would have met expectations and probably sold more shoes!

Jesus talked about the ten virgins waiting for the bridegroom. The five who waited until the last minute to get oil for their lamps missed out on the bridal party and returned unknown to the Lord (see Matthew 25:1-13). There are things you can be looking for now, beyond the budget, that will provide additional resources to your church, and they may be right under your nose.

Heed the advice of your finance committee. Every church should have a finance committee that provides monthly financial reports and can make recommendations about where the church can make adjustments. But beware of a danger: a finance committee that always says no to ideas can hold you back in ministry. Their expertise should be in reporting, not in decision-making. Decisions about whether to spend funds should rest on the shoulders of elders and/or senior staff.

The monthly report should include, at the very least, a balance sheet (statement of financial position) and a profit and loss statement (statement of activity). If your church is doing “back of the napkin” reporting, you need to begin by purchasing some simple accounting software. (

For a list of budgeting tools and how to select the best option for your situation, see “The Church Budget Shouldn’t Be This Hard” in this month’s issue. Also, the website, among others, can point you to a myriad of choices.) Larger churches should be working with an audit firm for at least an annual compilation, and possibly also an annual or semiannual audit. Auditors will not only examine your financials, they’ll also point out areas where you can improve performance.

Make a “stop doing” list. Your church is likely spending money on certain ministries that are providing little or no return. Get your leadership team together and conduct an analysis of effective and ineffective ministries. Some people will become upset, so be ready to take some flack. The upside is that you will be able to focus on the ministries you do well, maximizing the dollars spent.

Increase the use of volunteers. Many churches, over time, have begun to rely on paid staff for ministry instead of volunteers. It’s time to call the church to action, acknowledging that the “professional Christians” we pay as pastors are in place to guide an army of volunteers who can provide great ministry because it’s what they do from their heart.

Don’t borrow from Peter to pay Paul. If your church has designated accounts, do not borrow from one account to cover the other account with the intention of paying it back someday. Someday rarely comes. When you get to the point that you have to borrow from one fund to pay bills for another, you are in financial trouble and need to reassess your church’s financial plan.

Stay fresh. It’s easy for a church to make a year-in, year-out budget with little thought to the implications for real ministry. Other churches, conversely, will start from scratch each year to be sure they are directing funds properly. You may not need to step that far back, but you do need to look at the effectiveness of every dollar spent when doing annual budget planning. This may be the time to put together your “stop doing list” or to reexamine how you are using volunteers.


Be Prepared

The district manager was going to show up . . . sometime. All we had to do was prepare for his arrival. Cash flow planning is the very foundation of the practical side of ministry readiness. While surprises may pop up along the way, being prepared allows for an improved flow of funds throughout the ebbs and flows of church giving during the year.

Formulate a month-by-month budget. Churches have a “summer slump.” Plan for it. Churches can experience stronger year-end giving. Organize for it. Special times like Easter and events like VBS hit the calendar annually. Expect them. Rather than putting together an annual budget, try planning a month-by-month budget that predicts income and expenses for each month so you know when to set aside funds in the fat times so you’ll have money available during the lean times.

Use an electronic tool for cash management. The computer tool you use for financial statements should include a cash flow management component. Various computer programs will provide the level of sophistication necessary based on the relative size of your church.

Know the gift levels of your top 10 givers. It’s not necessary to know the names of the top 10 givers at your church, but you should know how much each one is giving so you can determine whether your church is too dependent on them. A church can make a financial plan, but then a major giver moves away and church income drops precipitously. If you know your church is dependent on a few key givers, or even one key giver, that is good knowledge to have so you can plan your budget to withstand a significant decline in giving, for whatever reason.

Plan for future debt. If your church is planning on taking on debt for a large capital project (a building, for example) put a place-marker in your budget for an upcoming building payment long before it is actually necessary. Build that line item up month-by-month; use the funds from that line item to create a designated fund for that project so that you have more cash to put into the project on the front end, thus allowing you to carry a smaller debt load.

Twenty-nine days out of 30 the district manager was in some other store chastising the poor salespeople for their store-blindness. But on any given day each month he could show up at our store. We needn’t have worried. All we had to do was to be ready by doing a little advance work. And when we did, we could rest in the fact that we had turned around, had a watchful eye, and were prepared for his arrival.


Brad Dupray serves as senior vice president of ministry development with CDF Capital, Irvine, California.

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