Church funding used to be something that was fairly dependable and predictable. Over the last 10 years, most churches began to see that dependability starting to slip away. The pandemic has greatly increased uncertainty in church giving patterns, which has resulted in sharp declines in giving for many churches.
Because many churches do not look beyond total giving, a significant number of churches assume their giving is much more sustainable than it really is.
There are important shifts taking place in giving that are having far-reaching implications on ministry funding.
- Fewer people are giving. On average, half of the church households give nothing. Of the households that do give, the bottom 50% give less than 5% of the ministry funding.
- More churches are reliant on financial leaders. As fewer people participate in church funding, there is a growing reliance on generous givers. The assumptions are this group will continue to give at their current rate and that they will give more. This is not always the case.
- Churches aren’t communicating impact like nonprofits. Because many churches have benefited from organization-centric givers who are most likely to support institutions, they don’t have the mechanisms in place to compete with faith-based nonprofits who are more skilled at communicating program efficiency, life change, and impact.
Together, these realities place the future of church giving at risk. Americans are giving about the same percentage of their income that they have over the last seventy years. The problem is that increasingly, Christians are giving more to other nonprofits and less to the church. It is time to sound the alarm!
Who is Responsible?
Too often, churches leaders don’t see themselves as accountable for the giving patterns of their members. As a leader, you are accountable. The purpose of the church is to grow disciples of Jesus who are committed to transforming the world into what God envisions. Leaders are entrusted with the responsibility for effective discipleship and giving is a very measurable sign of spiritual formation and discipleship.
If no one in your church is responsible, then there is no hope things will change. But there are a minority of churches where the leadership has accepted their role in growing disciples and they are thriving. Their best days are still ahead of them and yours could be too.
Giving is spiritual well before it is financial. Church leaders who are successfully embracing their responsibility for the spiritual growth and development of their congregations understand giving not as a prerequisite for faith, but as an indicator of spiritual and personal growth. They know it must be carefully cultivated, acknowledged, celebrated, and developed over time.
How to Respond
There is little you can do until you begin to look under the surface of total contributions. But, before you can do that, you must ensure that basic information is captured in a centralized database. Most churches achieve this through a church management system (ChMS).
Contributions are kept separately for privacy purposes; however, pastors and often key leaders need to have access to this information. Some denominations, such as the United Methodist Church spell out the pastor’s responsibility to know and purposefully use giving information. Depending on your context, it may require internal conversations about roles, responsibilities, and procedures. It may even require coordination with volunteer leaders to gain buy-in, support, and even help.
You may encounter some challenges, if so, here are some workarounds.
- Most modern ChMs systems and donor analytics allow you to scrub personal details in reports and analyses.
- You can work with an outside partner who can provide sanitized information to the staff and church leadership. Sometimes this is as simple as creating systems to help the church learn to do this for themselves.
Define What Will Be Measured
Once you have your operational plan in place, then those responsible need to clearly define what information is available, the quality of the data, how often it will be evaluated, updated, and reviewed, how will the key findings be reported, and who will be responsible for taking action next. I recommend downloading this 15-minute read which is designed to help church leaders understand the importance of data-based decision-making in today’s ministry environment.
The essential information that must be captured for IRS reporting and the basis for donor analytics is:
- Each Individual Gift
- Fund or Program Allocation
- Giving Type (cash, check, electronic)
- Recurring or non-recurring (is the donor giving automatically through an automated system such as ACH)
As internal information is passed beyond the core leadership team for review, it’s not uncommon for some of this data to be anonymized to protect the identity of any single giver and to operate in accordance with church procedures.
The next step is to develop dashboard reports that are reviewed by staff weekly and lay leadership monthly.
Basic Dashboard Reports (illustrated weekly over the previous 12 months and year-to-date)
- Total Giving (Restricted and Unrestricted)
- Average weekly giving
- Average weekly giving per household
- Large gifts (each church can define what constitutes a large gift)
- Percent of scheduled or recurring gifts (both the percentage of gifts and the percentage of income)
- The number of giving households YTD compared to the previous year
- The percentage of giving from the top 10% of giving households
Advanced Dashboard Reports (understanding the stories behind the numbers)
Basic dashboard reports will tell you what is happening but will not necessarily give you the information needed to understand why changes are occurring. To understand the stories behind the number, you will need to apply donor analytics software. Although the information you need is inside most church ChMs systems, getting out and into helpful formats is frequently difficult.
If you are having difficulty getting the advanced information you need, consider using one of the Horizons Analytics software solutions for as little as $99 per month. Click here for a free demonstration.
In addition to the basic giving reports, Advanced Analytics typically include tracking the following information:
- Lapsed donors
- New givers
- Changes in household giving over multiple years
- Household giving movement within specific giving bands over multiple years
- Household giving patterns over multiple years between designated and unrestricted giving
- Movement of giving in aggregate and by household among designated giving levels
Options are available that create automatic triggers (alerts) when a household changes its giving pattern in a way that requires a thank you note or the attention of the staff.
What to Do with the Information
Once you have the data in a format that can be reported on and reviewed, you now are able to have informed conversations at staff meetings, key committee meetings, and even strategic meetings about planning, operations, and future ministry.
There is something about data that brings the unknown into the known. What you don’t know can hurt you. But what you do know can help you.
When you are clear about your present circumstances, you have the power to change your future. This couldn’t be more important in the midst of this season of extreme change.
The more aware you are about the current state of giving in your church, the more effective you’ll be at prioritizing and evaluating priorities and plans. When you know you’re focused on the right things, it’s easier to commit time and people because you know the outcome is meaningful to the spiritual growth and culture of your ministry.
Next Level Generosity
The local church is critical to the spiritual health of its congregation and the community it serves. If your church is unable to fund ministry, it will leave a gap that can be filled by no other in the lives of real people, neighborhoods, and communities that desperately need hope, love, and faith.
When you choose to create intentional experiences for spiritual growth, you will begin to see other behaviors emerge. Generous givers are often those who are always ready and willing to volunteer, serve, and disciple others. The work of any local church is not outsourced to the staff. Instead, the paid staff exists to be catalysts for ministry and spiritual growth in individuals and families throughout the congregation.
Choosing to take your generosity to the next level means you’ll have more money for serving, helping, and meeting the needs of your church, communities, and the world.
If you will choose to build a structured process to measure and review the giving habits of your church, you’ll be more confident in your decisions, more courageous in your communication, and possess a greater level of clarity that you are spending your resources of time, money, and staff in ways that are building ministry capacity for life change and Kingdom impact.