A budget is an action plan for the ministry and therefore a very important part of your church's overall financial health.
Below are some key points in setting up a budget for your church.
The first step should be deciding which
budget classification
(type of budget) you are going to use.
There are three different budgeting processes for creating a budget: (1) Incremental budgeting; (2) Zero-based budgeting; and (3) Program budgeting.
The second 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.
A church budget will include some variation of the following major categories:
Income (all funds coming into the church falls into this area. Often churches will set up several line item under the "income" category to include different types of income such as tithes, building funds, mission funds, etc)
Personnel (salaries, benefits, etc.).
Administration (operating expenses).
Property and Equipment (utilities, insurance on property, maintenance)
Outreach (missions, evangelism, social action, etc.).
Direct ministry (the various ministries of the church such as children, youth, counseling, adult, men, women, etc.).
Finances always are a delicate subject in any church or nonprofit. Without adequate funds, your organization cannot continue to minister effectively. Part of an effective ministry is meeting your financial obligations.
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 is not able to 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.
Free Church Budget Template from Calculito
Additional Resources
Basic Church Accounting
will provide you with a better understanding of the basic concepts of church accounting and give you some examples on recording common church transactions.
If your church is discussing the potential of laying off staff in order to reduce personnel expenses and the church budget. Please read this article first:
Before Reducing Church Staff
This next year will require some thoughtful response on our part... we need to be both prayerfully dependent on God, and wise and proactive in our planning. Here’s a place to start:
Budgeting in Difficult Economic Times
For a
detailed
description of the different types of budgets see online accountant
Paul Kateza's budgeting tips.
even though his site is for regular businesses, he has some great tips that could apply to church and nonprofit accounting also.
We get so busy with our church's finances that sometimes we let ours go. Here is an excellent site to remedy that:
www.christianpf.com, is a nice resource for your personal financial issues. Bob Lotich also has provided some wonderful free personal budget spreadsheets which makes him a pretty good guy in my books :)
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Your spreadsheets work wonderful-I have Pastored for 17 years in 3 different churches, and this is the best and easiest finance program for the Church that I have seen yet!
Pastor Tim
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