Is Your Giving Culture Healthy?
An increase in total church giving doesn’t necessarily mean you have a healthy giving culture. In fact, your actual contributions are a lagging indicator of your future. Lagging indicators describe what has already happened which means there is little you can do to change it. In contrast, leading indicators point to what’s coming.
If the term “leading indicator” is new to you, let’s consider how you make a cake. You need ingredients, tools, and time. Your ingredients are your leading indicators. They tell you what’s possible. Tools are what you need to prepare your leading indicators (ingredients) to become your preferred outcome (cake). To grow your ministry capacity,you need the right ingredients (new, growing,retained givers, etc.)and tools (intentional discipleship pathways, analytics, generosity strategies, etc.).
Your Current Giving Might Not Be Sustainable
Horizons Stewardship has measured giving trends in thousands of churches. In far too many, stable annual giving is creating a false sense of security about future giving. By focusing only on annual giving, a lagging indicator, these churches are failing to monitor their leading indicators such as declining numbers of giving units, a falling median gift, lapsed donors or a growing dependence on financial leaders, all of which could be undermining their ability to fund existing ministries in the future. Horizons regularly encounters churches with stable annual giving, but who receive 40 percent or more of their annual income from donors over the age of 70. It is also very common to see churches with high concentrations of giving coming from the top 5% of giving households.
If your average new donor gives $1,500 per year, it will take almost 17 new donors to offset the loss of a donor who gives $25,000 each year.What made church giving work for so many years was a broad base of members regularly contributing to the church budget. As new people came, they brought with them the expectations they would join in the church giving process. As individuals and families realized regular increases in earnings, they increased their giving to the church. However, today’s church giving climate looks considerably different.
Many congregations appear to be healthy because they are meeting or exceeding their budgets. But they aren’t minding the gap between their growing funding needs and data that would help them project the trend for future giving. When you don’t mind the gap between leading and lagging indicators, you expose your ministries to needless risk.
Measure Your Leading Indicators
Pastors and church leaders of large and small churches need to pay attention to these basic data points that reveal the trends today that will impact your giving tomorrow. While this list is not exhaustive by any means, it will get you started.
- The number of new giving units
- Total giving from new giving units
- The number of lapsed giving units
- Total giving lost from lapsed donors
- Movements in the median annual gift
- The number of donors and total giving in each of the following giving bands ($0-$199, $200-$999, $1,000-$2,499, $2,500-$4,999, $5,000-$9,999, $10,000+)
- Total giving by age (under 19, 20-29, 30-39, 40-49, 50-59, 60-69, 70-79, 80-89 and 90+)
Tracking these leading indicators will allow you to see if giving is in a growing and healthy place and help you identify trends that are threatening the future of your ministries. Take action now to make these leading indicators of future giving part of your finance and leadership team’s monthly dashboard. If you are having trouble extracting this data from your Church Management Software, reach out to Horizons and we will help you identify the church analytics software that is right for your church. Money and giving aren’t the definition of success. No one would argue that. However,if you can quantify the relationship between leading and lagging indicators of growth, you will be able to take steps that result in greater ministry capacity. Without a clear understanding of these data points, you’re simply flying blind, and hope—without a well-crafted, measurable plan—is not an effective ministry strategy.
Do you want access to more practical tools to help you cultivate a culture of generosity in your church? Visit our Giving365 resource center.
Click here to request a free 20-minute consultation with a Horizons Ministry Strategist about how your church can increase ministry funding and improve discipleship through a process we call Next Level Generosity.