Three Budget Hacks to Grow Your Church

Church Revitalization Podcast – Episode 103

No pastor got into ministry because he wanted to make a budget. For most people in ministry, church budget season is like a bandaid that simply has to be ripped off. As a result, staff put as little into it as possible. You may have a finance team made up of lay leaders who do most of the heavy lifting. In most churches, there’s a lot of copying and pasting that happens from year to year.

But the budget season is an excellent time to think strategically. Ministry cannot happen without resources. The budget season is your chance to think deeply about how your church is stewarding its resources, and assess if you’re leveraging your finances to maximize your kingdom impact. For this reason, pastors and staff shouldn’t punt on budgeting. A finance team is helpful for oversight and advice, but the staff ought to be invested in the planning process. Their unique perspective on how resources impact their ministry is essential.

To avoid the copy-paste approach to budgeting, we recommend using a Zero-Based Budgeting method. In this approach, your ministries each start with a $0 budget. Then, the staff add in what they need and how they plan to use the resources to achieve the church’s vision and mission. We talk in-depth about Zero-Based Budgeting in Episode 58 of the Church Revitalization Podcast.

But even in a Zero-Based Budgeting process, there are three strategies that can go overlooked. As your church builds the budget for next year, keep these three strategies in mind.

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Budget Below Your Means to Alleviate Pressure

In ministry, we like to walk by faith. This is a good thing! But this can often push our churches to be on a razor’s edge when it comes to budgeting. The majority of churches we work with are in the habit of projecting an increase in giving relative to the current budget. Let’s say the church brought in $350,000 in the previous year. Churches tend to budget for the same $350,000. Sometimes, in faith, they’ll build their budget with an assumed increase–perhaps 5%–making the budget $367,500. 

Often, churches operate on the edge–wondering if they’ll hit their targets. This causes stress for the pastor, the staff, and the leadership teams. It also leads the church to operate more from an attitude of scarcity rather than abundance. Unsurprisingly, this stress can actually lead the church to be less successful in raising funds.

Alternatively, if your church began to budget for 5% less than the previous year’s income, then the church is highly unlikely to be at an operational disadvantage. That $17,500 cushion is likely ample room for contingency. You won’t have as much stress from week to week. You are unlikely to have to pause essential ministry if you hit a season of lower giving. It will be easier to manage cash flow. 

Counterintuitively, churches that budget below their means are less stressed about finances. You’ve wisely stewarded your resources so that you’re set up for surplus (more on this later) rather than having to “live up” to an aspirational church budget.

Defund What Isn’t Getting Discipleship Results

The easiest way to budget is to assume you can use last year’s budget as a template. But the easiest way isn’t the most productive.

While your church likely has a lot of fixed costs, especially in terms of facilities and personnel, the church has ample flexibility in how it spends money on ministry and missions. Based on our budgeting templates, this means approximately 30% of your budget can be re-worked fairly easily. 

Even within operational expenses, your church should evaluate regularly what it assumes are “fixed” costs. For example, is your church over-spending on a phone system that you rarely use? Is the church getting the best deal on its insurance? Personnel budgets should be evaluated anytime the church loses as a staff position. Does this position need to be re-hired? If so, does the church need to adjust the position so that it’s more fruitful? Personnel expenses should yield discipleship fruit. Your church cannot subsidize failure long term. If a staff position isn’t driving the church forward in discipleship, it’s time to evaluate.

But the larger issue is assessing the health of ministries, programs, and missions. Are you getting a good gospel return on the ministry you are funding? Churches accumulate ministries like most people accumulate clutter in their garage. Over time, churches add new ministries without eliminating those things which are failing. While any single ministry may not be demanding much money, in the aggregate, failing ministries could be costing your church thousands of dollars that could otherwise be spent on something new or bolstering something that is fruitful.

If it’s been a long time since you have evaluated your ministries, church budget season is an excellent catalyst for assessment. Learn more about how to evaluate the effectiveness of ministries here and also here. Take a hard look at everything you’re doing and everything that takes resources. Be sure you’re getting the return you need to justify the investment.

Choose Achievable Goals (Beyond Normal Operations) and Fund Them

True growth comes from escaping the weekly grind. When it comes to growing your church’s effectiveness, you need to set goals to improve—above and beyond what it takes to “do church” as usual. These margins for innovation—what I like to call “six yards of progress”—require funding. Some of these projects you’ll need to incorporate into your annual church budget. For example, you may decide that you want to re-vamp your online presence next year. That’s going to cost something. Integrate those costs into your regular budget.

Other improvement projects can be earmarked for surplus. If you follow the first strategy we outlined, it’s not merely possible that you’ll have a surplus… it’s likely. In the event that you have a surplus, you can have a prioritized list of capital projects. They can be facility-oriented, like replacing an old monument sign. Or it could be missions-focused, like sponsoring church revitalization projects around the globe. Or it could be ministry-focused, like providing additional scholarships for youth summer camp. Being a good steward and budgeting below your means empowers your church to step out in faith and take some swings at a God-sized vision because you’re not tied down to an operational budget you can’t afford.

Plan ahead. Pray for the increase. Budget responsibly so you can do more of what you dream of doing and spend less on what is viewed as “required.”

Before I close this, I want to acknowledge the reality that some churches (especially smaller ones) have zero margin for reducing overhead. Reading this article may even discourage you, and make you feel like you’re doing something wrong. I want you to know that I see you. You’re not doing something wrong. Instead, take the spirit of these principles and apply them to your context as best you can. You will need to adapt these strategies to your situation, but they’re still helpful for helping you maximize the resources you do have.

For those of you with more resources, please take these strategies to heart. Lean in. Do the hard work, and don’t punt the budget to your finance team. Don’t cut them out of the process, but instead collaborate with them. Get into the weeds. Become the expert on the budget, and work with your whole team to build a church budget that enables healthy, fruitful ministry. 

Seminary may not have set you up for making budgets, but the Bible talks about money more than 800 times! It’s God’s desire that you be a good steward, and that you make the most of what He has provided so your church can make and mature more disciples.

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Scott Ball is the Vice President and a Lead Guide with The Malphurs Group. He lives in East Tennessee with his wife and two children. (Email Scott).

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