Seven critical mistakes for organizations and church finances exist. In fact, they're so important that we highlighted all seven in a recent webinar. If you want to view it in full, please register at Giving365 for free.
There you’ll find the webinar, Money and Ministry: Seven Financial Mistakes You Don't Want to Make, and an entire on-demand library of stewardship and generosity resources.
You'll hear Joe Park, CEO, Horizons Stewardship, Ken Tan, Partner, and Stan Reiff, Partner and Consulting Practice Lead, both from CapinCrouse, speak about seven critical mistakes in their entirety.
However, we'll address the top three mistakes to give you a sense of what you’ll find when you watch the entire recording. Once you know these mistakes, you’ll be one step ahead. The reality is we live in a highly complex world. As a result, churches and faith-based nonprofit organizations need to ensure healthy and safe finances. Not doing so is a risk that could get very costly. Further, church members and supporters want to associate with and donate to organizations that wisely steward their gifts.
Not paying attention to the following mistakes could be perilous. You'll gain fresh insights when you watch the entire webinar recording on Giving365. You'll learn how to create a framework for conversations about critical financial decisions. And you'll also learn how to engage with non-financial leaders in meaningful ways. The webinar explores the following seven mistakes.
Not Optimizing Your Financial Operations Team
Assuming Your Current Financial Systems Can Support Your Growth
Not Accounting for New Expenses in a Hybrid Ministry Model
Managing Budgets Like Nothing Has Changed
Not Reviewing Current Commitments or Adequately Preparing for New Lending Opportunities
Ignoring Vulnerabilities That Lead to Fraud
Not Understanding Your Giving Data and Risks
Unfortunately, many churches don't always maximize their financial operations teams' talents and skills. As we know, due to the pandemic and the Great Resignation, things changed. However, churches and organizations should view it as an immense opportunity. In short, organizations have the chance to hire highly talented and gifted professionals.
As we know, the digital era requires new levels of know-how for church finances. Meaning, organizations need exceptionally talented people with the vital skills necessary to succeed in financial operations. As people reorient their careers and new technologies and processes take hold, organizations have an excellent opportunity. It's the moment to transition and avoid not optimizing finances.
This moment is an opportunity to upgrade a leader with a modern CFO's mindset. It could also mean upgrading a bookkeeper to a controller. Or, leaders could decide to take advantage of services, such as a fractional CFO. Post-pandemic, leading-edge organizations shifted to this type of role. Why? It's an opportunity for broader and more expert knowledge and experience.
One of the top mistakes around church finances is ignoring vulnerabilities leading to fraud. There's a simple reason this mistake is so common and prevents fully funding church ministries. Most churches never had anyone come to help them assess blind spots. The reality is the current digital era upended everything. Thus, policies and practices from 10 or even five years ago no longer work. In short, organizations and churches face a new reality.
Churches work on the idea of trust. That means leaders have a responsibility to their members. When trust gets violated, it has immense implications. For starters, church leadership never imagined the scenario or culprit doing what occurred in most fraud cases. However, it's vital to understand that financial fraud is a multi-billion dollar industry. Moreover, the average median loss is $75,000, and that's a lot of money for many churches.
One of the simplest things is fully grasping the internal controls to prevent fraudulent activity. For example, it's crucial to have the segregation of duties. People making decisions and authorizations shouldn't have custody of accounts. Another approach is to ask a third party to review financial operations. Many churches believe they can't afford more. However, safeguarding church finances warrants a thorough review and understanding of blind spots.
As we know, giving impacts church finances. Still, churches and leadership want to treat everyone the same. While that's a solid Christian value, we need to also think of the current environment. In short, the digital world creates many opportunities for fraud. So, it's essential to ensure that talented experts oversee giving data and risk. As was mentioned in the webinar, you wouldn't ask someone to sing on stage who doesn't know how to sing.
Understanding giving patterns is vital for handling financial projections. Further, shoring up organizational and church finances requires insights from giving data. Not knowing this creates a big risk for lost money. An aspect of giving data that most churches miss is whole donor engagement. In other words, it's not enough to know the different levels of church giving. People involved in church giving must also know donor personas and behaviors, and they also need to understand the frequency of giving.
Church giving is a vital part of healthy church finances. Thus, church leaders must understand donor patterns and engagement. As you'll hear in the webinar, church giving stops approximately six months before a person leaves. Church leaders need to spot it and then respond to it. For instance, did giving end because someone lost their job or relocated? Is there a health crisis or medical bills?
When people stop supporting their church financially, a church must take notice and care. Giving data allows churches to learn what givers won't tell them—if they don't ask. So, data is an opportunity for church leaders to mitigate financial risk and loss and steward members. In other words, giving data is a discipleship path that informs church leaders.
We know leaders require new ideas, processes, and thinking. The rapid and uncertain changes that continue from one crisis or issue to the next need expert guidance. As a result, Horizons and CapinCrouse will produce a webinar series called Money and Ministry.
Here's your chance to hear the whole discussion of the Seven Financial Mistakes You Don't Want to Make about church finances. Just register for free at Giving365. You’ll find the webinar recording and related materials there and will also be invited to participate in the entire series. You don’t want to miss it!