Church finances are one of your major concerns as a church administrator or pastor.
Whether we like it or not, we must discuss church finances. If you have specialized staff to look into your finances, then it isn’t so difficult. However, managing church finances can be quite challenging for smaller congregations.
One thing that you must understand is that the state of your finances affects your church’s health. What this means is that if you get your financial management right, you’ll keep your church in good health. So how do you improve your church’s finances? We will discuss 5 church finance best practices in this post.
5 Church Finance Best Practices
It doesn’t matter if you are a novice or professional, these best practices will help you improve your church’s finances.
Just as it is in the secular world, mapping out your expenses is very important. It doesn’t matter if the expenses are large or little, devise a way to calculate and record your expenses. A church management app will help with listing out every expense. The most common church expenses include:
- Administrative expenses such as taxes, office supplies, and internet.
- Facilities like utilities, rent, mortgage, and maintenance.
- Ministry and outreach expenses including evangelism, missions, and children/youth ministries.
- Personnel expenses such as salaries, insurance, benefits, and payroll taxes.
- Engagement expenses like church app, live streaming, and church website.
While it is great to track outgoings, you must not neglect incomings. A church makes income from digital donations, text giving, physical giving, gifts, etc. You should track all of these as well as your non-cash contributions, stocks, fundraisers, vehicles, and other items.
Making use of church accounting software and digital donations have helped churches track income. There are several online giving solutions that you can invest in for your church. These solutions record income automatically so that it is easier to generate reports. Also, they help you to track and accept non-charitable payments and transactions.
Being able to forecast your income is a function of tracking both current income and expenditure. If you don’t have records, it is impossible to make projections into the future. This is the reason why you must have a proper church finance management system.
You should look into the future and project how much you think your church should get in income over specific periods. Do this for a quarter, six months, a year, and three years. You can project as far as possible. But you must be careful not to exaggerate while making your projections.
One of the best ways to make your projection is to pay attention to your giving and attendance patterns. What is your current attendance figure? Check church growth metrics and how it affects income. These factors will give you a clear picture of how much you are likely to make per service, month, and year.
Note that it is better to err by being too cautious when doing financial projections. Be as realistic as possible with the estimates. These projections help you to draw up budgets and monitor how you spend.
Offer online giving solutions
One of the best ways to improve giving and manage church finances is by offering online giving solutions. Do you know that online giving solutions increase church giving by more than 32%? People want to give at their convenience and not be restricted to just when they attend services.
Online giving solutions allow donors to review their donations. They can download giving statements at the end of the year to evaluate how well they have given. While these solutions encourage donors, they are also very helpful to your church finance team. They help to make administrative tasks a lot simpler and also make it easier to prepare financial statements. Overall, they help you to make more efficient finance projections.
Share Financial Statements With Your Congregation
Unlike the old times, donors want the church to be transparent and accountable. They appreciate it when they know their donations are used by the church. As such, they want you to tell them how much came in, what you used it for, and how it is impacting the community. The more of this they know, the easier it is for them to give to the church.
Here’s our suggestion. Hold periodic meetings with your congregation to discuss the following:
- The church’s financial vision and goals for the year.
- Financial statements.
- Stories to celebrate your accomplishments with their donations.
Of course, discussing church finances isn’t so easy. However, it helps to improve your church’s overall health. One of the best things that you can do is to invest in church management software like ChurchPad. Meanwhile, check out our website for articles about church growth and administration.