“This doesn’t look right,” thought Pastor Jared.
Jared had been the pastor of his church for five years. Over those five years, the church usually found itself in a financially healthy position. But as he looked at the mid-year financials, he didn’t like what he saw. The church’s tithes and generosity were on pace with what they had predicted for the budget, but spending was up and financials were reporting a deficit. Jared quickly called in Sharon, their bookkeeper.
“Sharon, this doesn’t make any sense,” noted Jared. “Why are our expenses so high?”
Jared knew the church had not made any significant purchases or held any event that would be outside their ministry expenses. He then said the next thing that came to his mind.
“Is it embezzlement?”
Sharon shook her head. “No,” she responded. “I think it is inflation.”
When it comes to inflation, the conversation usually centers on the household budget. Milk is getting more expensive. Back-to-school supplies are more expensive. While the family budget conversation is certainly an important conversation, households are not the only ones impacted by inflation. Organizations, including churches, are feeling the effects as well. For many churches, it is more costly to do ministry this year than last year.
So, how can a church plan for increased expenses? The key is to develop a budget and ministry mindset that is flexible and ready to pivot when necessary. Here are a few suggestions on how to do this:
1. Review the church’s vision and mission.
It starts here. Reviewing the church’s vision and mission will be critical for any financial decision moving forward. The vision and mission of the church will help delineate between the essentials and the non-essentials for the annual budget. It will help determine what the church should say “yes” and what the church should say “not right now.” Church resources should be allocated in such a way that the vision and mission are supported. So, before taking another step, review the vision and mission of the church.
The vision and mission of the church will help delineate between the essentials and the non-essentials for the annual budget.
2. Identify ministry priorities for the year.
After the church’s vision and mission have been reviewed, spend time prioritizing ministries. Granted, many church leaders can demonstrate how each ministry strategy they employ is a good, worthwhile strategy. And they are probably right. They are not intentionally wasting resources and using ineffective strategies. But leaders of any organization must recognize there are some activities that are simply more critical to the mission and vision of the organization than others. Should budget shortfalls start occurring, prioritizing ministry tactics and strategies will help leaders know where adjustments should and should not be made. Going through this practice before it is necessary will help remove in-the-moment emotions that come along with these types of decisions.
3. Identify needs and wants.
In addition to prioritizing ministry strategies, church leaders should identify the church’s needs and wants. Again, this practice helps leaders make decisions prior to experiencing financial strain, removing potential emotions and getting everyone on the same page from the beginning. Many of the needs are easy to identify for budgeting. These are the ministry expenses that keep the church going. The church must pay its utility bills. The monthly mortgage payment must be paid. The church staff must be paid. Maybe a hole in the roof needs to be repaired as soon as possible. There will certainly be other needs outside of these examples.
After needs are identified, discuss wants. When discussing wants, note that these items are not unimportant. Otherwise, staff members may find themselves offended. These items are just not essential to keep the church going. The needs and wants can be placed on a t-chart for everyone to see. This way, they can better understand why certain expenses are reduced or cut if necessary.
Again, this practice helps leaders make decisions prior to experiencing financial strain, removing potential emotions and getting everyone on the same page from the beginning.
4. If the church is developing a new budget, build in anticipated increases.
Assume inflation in your new budget. As you craft the church’s new annual budget, don’t assume today’s numbers will remain constant for the upcoming fiscal year. Consider which expenses could be impacted by future inflation and increase the line item accordingly. For some churches, this will mean they must decrease spending in other areas.
5. Clearly communicate the potential challenge to the staff.
The church staff should be aware of inflation’s potential impact. This conversation is not meant to create concern but to create readiness. They need to know how the church will move forward should inflation start to create budget shortfalls. They also need to understand their role with any needed pivots.
6. Clearly communicate the potential challenge to the congregation.
The congregation also needs to be aware of how inflation impacts the church. It should be assumed that most church attendees and members have not put much thought into this matter. By bringing the challenge to their attention, they will not be surprised when ministry adjustments are made. Additionally, there are congregants who desire to financially help the church when there is a need. This will put such a need on their radar.
7. When shortfalls do occur, make sure no one is surprised.
If a budget shortfall does take place, get everyone on the same page as quickly as possible. It is very possible the shortfall will not fix itself, and a delayed reaction can lead to further financial challenges. Notify the staff of the challenge and remind them of the plan created earlier. Also, notify any congregants that you think would desire to financially help as the church tries to pivot. One question you do not want to receive from either the staff or congregation is, “Why didn’t you tell us?”
Thankfully, we serve a God who is in control of all things, including all the resources a church will ever need. As Psalm 50:10 reminds us, God owns the cattle on a thousand hills. God’s mission and the delivery of His resources cannot be impeded by inflation. So, pray that He will provide what He sees fit for the church, and trust that, whether inflation impacts the church or not, God’s mission cannot be stopped.