Disruption of any kind can be incredibly difficult to manage. The amount of change happening within local churches today is unbelievable. One of the most important steps you can take right now to lead through this challenging season of ministry is to develop an action plan around cash flow management, re-budgeting, and financial strategies. Your ability to manage your financial resources effectively will directly impact your ministry capacity.
Joe Park, CEO of Horizons Stewardship, and Stan Reiff, Partner and Professional Practice Leader at CapinCrouse, a national full-service CPA and consulting firm devoted to serving churches and other nonprofit organizations whose outcomes are measured in lives changed, recently hosted a webinar to provide some very practical ideas around financial strategies to help pastors and church leaders that will help create some confidence in the future while navigating uncertainty.
Watch the webinar recording now.
One: Accurately Forecast Your Cash
Visibility into your cash flow is critical to helping you make real-time financial decisions that will directly impact your ministry capacity. Download CapinCrouse's interactive Cash Forecast Template, Cash Requirement Worksheet, and Budget Analysis Template.
Move to weekly tracking of your income and expenses.
Weekly cash flow analysis takes out the variances created by differing numbers of Sundays in each month. It also gives you better insight into the natural cycles of giving and expenses in your church. Ideally, your graphical representations will show three years of weekly history overlaid on a single 52-week calendar.
Two: Re-Budget the Remainder of 2020
No one knew last fall that a pandemic was coming. If your church uses a calendar fiscal year, you probably prepared your Ministry Funding and Spending Plans (Budgets) expecting 2020 to be “business as usual," but this season of ministry is anything but business as usual. Much has changed in the way you are doing ministry and how your church is funding that ministry. Many of the new patterns will be long-lasting or permanent.
For most churches, thriving in the future will require a newfound willingness to embrace adaptive change (where the best answer is not already known and new learning is required to determine the best solution). It will also involve learning to let go of some of the programs and ministries that once served the church well, but are no longing providing a fruitful return on the resources invested.
For most churches, the first step in a growth strategy is not to decide where and how to grow, it is to decide what to abandon. In order to redeploy human and financial resources into the future God envisions for your church, your leadership must have the courage to stop outgrown, obsolete, and unfruitful ministries.
Three: Begin the Re-Budgeting by Asking Questions
The re-budgeting process begins by evaluating the effectiveness of your current vision and ministries of your church. Staff and church leaders will need to prayerfully and courageously align around these questions.
- Can we clearly connect our ministry vision and activities with measurable evidence of life change?
- What ministries need more human and financial support?
- What ministries need adjustments in purpose, process, or funding?
- What ministries need to stop being resourced?
Four: Invite Financial Leaders into Your Re-Budgeting Process
Financial leaders are the 5-10% of your giving households that provide 35-50% of your ministry funding. It is a great idea to engage this group in the re-budgeting conversation. The importance of building support with the financial leaders that fund such a large portion of your ministry budget may seem obvious, but there are many other good reasons to invite them into the process.
Those with the gift of generosity often possess a level of wisdom, experience, and perspective that can greatly enhance the re-budgeting conversation. When financial leaders are invited in, they can be some of your best advocates for change and will frequently increase their financial support for ministry strategies they believe are impactful.
Many financial leaders are looking for ways to make an impact during this challenging season of ministry. They tend to be attracted to high impact and short-lived teams such as participating in evaluating the effectiveness of your current ministries or launching new ministries. Some will be energized by simply being a conversation partner with the pastor or key ministry leaders. If you’ll align your staff, volunteer, and financial leaders around the re-budgeting questions, you will begin the process of reallocating resources with a strong and important base of support.
Five: Measure Your Financial Health: Benchmarking
You need an accurate financial dashboard to lead your church as much as a pilot needs a fully functioning instrument panel to safely fly a plane. The simple truth is few church leaders are provided the forward-looking projections of sources and uses of cash they need to make good decisions. Most church financial reports provide no more information about giving than a line item for pledged, unpledged, and special offerings, nor are expenses benchmarked against peer or growing churches.
Every church, regardless of size, can provide the necessary financial tools to their leadership by establishing a dashboard of agreed-upon critical reports. Basic reporting can be created from data pulled from the church management software or through analytical software that does the calculations for you.
With so much at risk today, I encourage you to put in place the necessary financial strategies and best practices you need to lead your church to the future God has in store for you. If you’d like to explore implementing these strategies in your church with Horizons as your guide click here to schedule a conversation with an experienced Horizons Ministry Strategist. You don’t have to make this journey alone.