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Get Off the 12’s…Embrace a Budget that Works

 

I’m sure you’ve been in the staff meeting where the pastor or financial person on staff drops the bomb that there is now a spending freeze. The rest of the staff freaks out because all their ministry plans are shot. They begin shouting over each other…“But I’ve got a retreat planned!”…”I’ve already ordered music.”…“What will I do for curriculum? I have to order curriculum!”…“I put this in my budget! I told you I was going to be doing this! You can’t tell me, ‘No’ now!”

 

In many cases this unfortunate situation can be avoided if the church would just get off the 12”s. What do I mean, “Get off the 12’s?” Most churches ask their staff and ministry area leaders to turn in a budget for approval. After some cuts the budget is approved and then divided evenly by 12 in order to establish what the monthly need will be. For some churches who want to monitor and measure their budget need weekly they will take their new budget total and divide it by the 52 weeks in a year. In either case you have an accuracy problem because just as obvious as it is that you’re not going to spend the money nice and evenly divided over 12 months or 52 weeks, you’re not going to collect it that way either.

 

Let me suggest to you a 3-step solution that I use with the churches I work with.

 

1. Add a “when” component to budget request process.

 

When you ask your staff and ministry area leaders for a budget add a “when” component to that process. In most cases your staff member or ministry area leader develop a budget with an itemized list of the different parts of their ministry plan with the budgeted cost for each item. Simply add to each line a place where they will tell you when that budgeted expense will occur. In some cases the expense is a subscription or an every week/every month type item and the budgetary cost is the same each month. However, in most cases the expense is unique to a certain time(s) during the year (i.e. a fall retreat, a Christmas production, a summer activity, etc.).

 

Once you do this for each area of ministry in your church you will have a prorated budget which tells you how and when the flow of your expenses might occur.

 

2. Compare your NEW prorated budget against past giving trends.

 

Once you have your prorated budget now look at the last 3-years and determine the timing of how the giving actually came into your church. For instance, in 2016 what was your total giving in January?...in February?...in March?...and on through the end of that year. Next divide each month’s giving by the total giving for that year, it will give you the % of your total giving that came in that month. Now do the same for 2015 and 2014. 

 

This analysis of 3-year’s worth of data will detail the typical timing of your annual giving by month, what I would call your monthly prorated giving trends. Why is this important? Because some people in your church give quarterly. Some people in your church give semi-annually or even annually. By just dividing your giving evenly by 12 months or 52 weeks you’re essentially taking a quarterly, semi-annual or annual gift and pretending like it’s coming before it comes. The analysis described more wisely predicts when your giving will actually cash flow into your church.

 

3. Build a strategy to offset your cash flow shortfalls.

 

Now that you have a solid idea about the timing of your expenses for the next year AND you have a solid idea about the timing of how your expected giving will come in for the next year…compare the two. You first want to identify months/weeks when the timing your expected expenses look to be more than your expected giving. Once you’ve done this, identify how many weeks/months the opposite is true and your expected giving exceeds your expected expenses. Now you can proactively build a strategy to hold the excess in giving over expenses in reserve in order to later cash flow the times when you have a shortfall.

 

 

I coach and consult churches through this process all the time. If you have questions or feel like you need extra guidance please email me and let’s setup a time to talk about this. Sometimes even by getting off the 12’s and doing the things I’ve mentioned above, you may still have times when even your reserves won’t build large enough to cover and expected shortfall. There are still other strategies we could implement to overcome this, so again, email me and we can setup a time to talk through those details which are too extensive for this blog. 

 

 

I submit these articles and ideas to you in order to add value to the work you’re doing in your local church. If you would like to talk about this or other ideas to grow you culture of generosity please email me. Keep me in mind if you’re looking for coaching or a consultant in the area of giving and/or a generosity campaign/initiative. If you don’t already I would also really appreciate if you would follow me on Twitter at @cstovall16 or on my Generis Facebook page.

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