Church Budget Classifications

What is a Nonprofit or Church Budget?

It is an action plan for the ministry and mission of your organization.

What kind of budget should you use?

There are three different budgeting processes for the preparation of a church's annual operating budget: (1) Incremental budgeting; (2) Zero-based budgeting; and (3) Program budgeting.

Incremental budgeting, often called line item or traditional budgeting, is based on the previous year’s expenditures. Most churches follow this budgeting process. Incremental budgeting takes this year's budget as the basis for next year's budget and makes adjustments to each item for anticipated cost increases or activity changes.

This is a very challenging and time-consuming process. However, it is useful for churches and nonprofits whose programs and methods of operation carry forth year after year without question. Some suggest zero-based budgeting as a useful approach about every five years to provide a fresh look at all programs and activities.

In program budgeting, all programs and activities are evaluated, based on effectiveness at their current levels of funding and on their potential. The organization identifies each program or activity, the needs each program serves, and the past effectiveness of meeting those needs.

How do you prepare your budget?

The first step should be to establish a target budget amount for the upcoming year. This could be based on funding, pledges received, past levels of giving and projected growth, assessed needs or a combination of these criteria.

What categories are included in a church budget?

A church budget will include some variation of the following major categories:

• Personnel (salaries, benefits, etc.).
• Administration (office operations).
• Direct ministry (the various ministries of the church such as children, youth, counseling, adult, men, women, etc.).
• Outreach (missions, evangelism, social action, etc.).
• Facilities (building and maintenance)
• Capital expenditures (purchases of equipment, etc.).
• Debt retirement.

See an example of a church budget

It is important to protect your organization's reputation in your community, to your bank, staff and vendors. It is a sad situation when a church or nonprofit does not pay its bills on time or has to ask its staff members to hold their pay checks until after Sunday's offering or when more funds become available.

So prepare your budgets carefully and prayerfully. We are to be good stewards of the funds God entrusts to us, and part of that responsibility is to meet our financial obligations in a timely manner.

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Additional Resources

Recommended Reading and Products:

Basic Budgeting For Churches By Jack A. Henry / B & H Publishing Group Take the mystery out of managing God's money! In this clear, comprehensive guide, financial management expert Jack Henry explains the basics of developing a solid church budget. In easy-to-understand language, he shows how to organize your congregational finances---from developing a budget proposal to anticipating cash flow. Includes sample forms. 118 pages, softcover from B&H.

Church Treasurer's Record Book By Broadman / Holman Church Supply Yearly record book for use with single (unified) or double budget systems. Includes pages for paid-out cooperative program items; paid-out local expenses; bills and notes payable; monthly balance and report sheets; and summary records of receipts and disbursements. For congregations up to 500 members. 10" x 13" hardcover, from B&H.

Church Administration and Finance Manual Resources for Leading the Local Church By O.F. Crumroy, Jr. / Morehouse Publishing As a pastor, you probably feel equipped to handle worship, preaching, and pastoral care. But when it comes to budgets, fire safety, and church management, do you find yourself at a loss? Relax! This field-tested, comprehensive manual takes the mystery out of everything from employee records to financial planning and building insurance. 544 pages, softcover from Morehouse.

(Additional sizes available by clicking on product link then clicking on link under "CBD Stock Number")

Free to Live Zippered Hoodie, White, Medium By Know Him Apparel 80% cotton, double fleece lining, white heavy weight zip hooded sweatshirt. Caption: "Therefore if the Son makes you free, you shall be free indeed. - John 8:36".

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