Budget reserves

Budget time in smaller churches is often a time of great tension.  The way it is done in many small churches is to see how much was spent last year, add a little to it for inflation, and present it to the congregation for approval.  There is seldom a lot of reflection on how the budget will impact the ministry of the church.  The mindset is often that the budget needs to be kept as low as possible so it can be approved.  I remember one year when I was a pastor that the congregation rejected the proposed budget believing that it was too much.  The finance committee pencil-whipped the budget by lowering the budgeted amount of a few items until they thought it would be approved.  There was no real thought that went into the reductions; they were made to satisfy those who wanted to see a lower number, and the revised budget did pass.

There are at least two problems with such an approach.  The first is that the budget should reflect the vision of the church and the anticipated ministry plans for the upcoming year.  The most honest way to prepare the budget might be to begin each year with zero amounts for every item and determine as accurately as possible what will be needed to fulfill the ministry each item represents.  The budget should be a statement of the ministry the church believes it will perform in order to fulfill the vision God has given it.

The second problem with the way many small churches prepare their budgets is that it should include some reserves.  Some might argue that does away with faith, but I disagree with that argument.  In times of plenty it seems to be good stewardship for a church to put some money away for when the times are not so good.  I know of few churches that actually have a line item in their budget for reserves that will be set aside for a later time when they might be needed.

In our current economic situation many churches are really struggling financially.  I personally know a number of pastors who will not receive any salary increase this year.  Some have had salary or benefits cut, and several I know have been told they will have to pay more towards their health insurance.  Churches are cutting ministries because they can't afford them.  Some of this could have been avoided if these churches had built reserves into their budgets when the economy was stronger.  They would have resources they could tap into now to maintain their financial strength.

How much should be set aside?  Each church would have to answer that for themselves.  A place to start might be to consider following the advice that Christian financial counselors sometimes give their clients.  They tell their clients that the first 10% of their income should go to their churches as a tithe and the second 10% should go into a savings/retirement account.  They can then live on the remaining 80%.  I often recommend that churches give 10% of their offerings to their denominational mission funds.  As a pastor I believed our church could not teach our members tithing if we as a church were not tithing our income, and the easiest way for a church to tithe is to give to mission support.  What would happen if we then set aside another 10% of our offerings to go into a savings account of some type?  It would just be added to the budget.  People would see the total amount that needed to be raised each week and would soon forget that 10% of that is going into a reserve fund.  By putting 10% of the offering into a savings fund each week, a church would soon build up some reserves it could use during financial challenges.

This will probably require a shift in some people's thinking, but it seems to be a matter of good stewardship to save some money during more prosperous times that can be available for ministry during challening times.  For those who say a church should just have faith that they will be able to raise the money they need regardless of financial conditions I would ask if it is faith that leads a church to cut the pastor's salary and benefits when the church faces financial shortages?  If a church should just have faith that God will always provide then it should be willing to give the pastor a respectable salary increase each year regardless of the economic conditions.