Finances: How is the church budget created?

Sometime between November and January, I initiate the budget creation process. It all starts by projecting how much the Church Treasurer and I think we will receive in church gifts for the upcoming year. We base our projection on the giving history dating back to the mid-1980s (that’s when the church started tracking the data, at least that we’ve been able to uncover). We also attempt to factor in the national and local economic trends. As financial planners, we have a conservative bent to begin with, so we are hesitant to push the envelope. That’s a good thing, but it needs to be balanced out with a God-centered awareness. A step of faith could be easily squashed by a fiscally conservative mindset – we spend a lot of time working through that one. As we look to the 2006-2007 budget, it will be interesting to see where our projections fall. We’ve experienced unprecedented growth over the past two years. We saw tremendous growth a year ago, but were hesitant to anticipate sustained growth through 2005-2006. We’ll be faced with the same question again this year.

The expense budget is built entirely around the projected income. We do not spend what we do not receive. With the income figure set, I sit down with Pastor Scott and ask him what areas he wants to emphasize in the coming year and what his goals are for the church. The budget, as a key tool for how our ministry gets carried out, has to be led by our Senior Pastor. He needs to set the tone and in general identify what will be the main emphasis of the coming year.

Pastor Scott then communicates to the ministry leaders the things he is looking to emphasize and asks the leaders to submit their ministry plans and how they’ll fit in with the overall direction of the church. From this information we work with the ministry leaders to project ministry expenses and categorize them.

I then take the detail of each ministry and consolidate the numbers into one and see where we end up. From there, we usually enter a refining phase, eliminating projects to reduce the expenses to be under the projected income.

The actual process is similar to having a completed puzzle, then disassembling it into minute pieces to see the detail and then reassembling it once again.