8 Practical Steps to Setting a Church Budget

Operating without a Budget Is a Recipe for Disaster

I am often surprised at how many churches—and individuals—operate without a budget. They simply put the money into a pot, spend it as they need to (or wish to) and hope it all works out. To me, this is a little bit like driving to a previously unvisited destination without consulting the map first! The Bible tells us, “Be thou diligent to know the state of thy flocks, and look well to thy herds.” (Proverbs 27:23). Here are a few thoughts that may assist you in drawing up an annual budget.

1. Evaluate the Previous Year’s Spending

While the categories may be different from church to church, you’ll need to know what you spent on salaries, what was spent on health insurance, on utilities, on building payments, on maintenance, on insurance for buildings and vehicles, on missions, on office supplies, on telephone bills, on postage, on publicity and promotion, on printing, etc.

Once you have determined what was spent, you have a good baseline from which to develop a budget.

2. Analyze the Coming Year’s Needs

Consideration should be given to what is happening to the prices of particular items. Is insurance going up? Will office supplies cost more?

It should also be given to the progress that you wish to make. Do you hope to add a staff member? Are you planning on purchasing a copy machine? Do you intend to be more aggressive in sending out mailings to your community? All these will need to be factored into the amount you budget for the coming year.

3. Have a Little “Extra” in Some Categories

The goal should be that if the budget is met, there will be a decent-sized surplus. If, on the other hand, one category is higher than you expected, the “padding” that you put in another category will keep you from being in trouble.

4. Cut Some Areas of the Budget

The government never cuts anything! What Washington calls a “cut in spending” is merely a reduction in the desired growth of spending. If they have projected to spend ten percent on a program, and only spend eight percent more, they call it a two percent cut. We want to be careful that our people do not get the idea that we, like Washington, want to spend more on every area every year. I believe it is psychologically beneficial to the church family to see that you have honestly analyzed and determined that one or more areas do not need as much as was budgeted the previous year.

5. Consider the Previous Year’s Income

Did you bring in more or less than last year’s budget? Did you bring in more or less than you wished to bring in the previous year?

6. Set Appropriate Levels in the Budget Based on Your Church’s Individual Situation

Some churches are in a growth mode. In some cases, the Pastor has only been there a short time, members are being added at a rapid pace, and the income is growing as well. These churches would budget for larger increases than churches that are more stable. A church that is “holding its own” might want to keep the rate of increase in the budget close to the rate of increase in inflation. A church that is having moderate growth might expect a moderate increase in the budget.

7. Make Copies of the Proposed Budget Available Progressively

Share them with your staff and get their input. Share them with the deacons and get their thoughts. Share them with your people. On many occasions, we have mailed a copy of the budget to every member of the church and asked them, if they had any questions or comments, to call the office. This greatly reduces the number of questions that can legitimately be asked at an annual business meeting.

8. Present the Budget as a Part of the Growth and Progress of the Church

The budget is not about profit, it is about people. The dollars we collect are used to reach souls.

If this article was a help to you, consider sharing it with your friends.