Congregational Finance


7 Resources
For The CRG Created For The CRG
Faith and Money

When I was young, I went to worship with my parents and six siblings. My stepfather prepared our offering envelopes the evening before worship. He placed a dollar in each envelope.

At the beginning of worship, he passed the envelopes to each of us. When I received my envelope, I experienced a weekly moment of truth, just as my brothers and sisters did. My stepfather had left each envelope unsealed. It was our choice to add to the offering or to seal the envelope with no additional gift.

The moment of truth
In many different ways, those who worship at your congregation wrestle with a similar moment of truth whether they are conscious of it or not. How much shall I give to the congregation?

Of course, many dynamics influence any single person’s response to the question. A primary influence is the way your congregation talks about faith and money. Is money a taboo subject? Or is money talked about openly and honestly?

Congregations which promote a culture of giving have intentionally chosen to be a primary place where generosity is taught rather than being simply one place among many that asks for money.

Exploring generosity
Purposeful development as a primary place which explores generosity is a variable. Does your congregation support a way of life that celebrates generosity?

Here are some signs that your congregation is just such a community:

Each day, we are figuratively handed unsealed envelopes that serve as requests for us to be generous human beings. Our congregations are meant to teach us the practice of giving. If not us, who are part of communities that hold beautiful stories of generosity, then who?

After all, there is work to be done and decisions to be made.

To learn more, search faith and money on the CRG.

For The CRG Created For The CRG
One Budgeting Idea when Funds are Scarce

Sometimes funds are scarce. God has created the world abundant with water, trees, blue skies and people we love. Though we have what we need, we don’t have everything. In congregations, this lack is sometimes evident regarding budgets.

Budget realities
The finance team would like to increase the budget for youth ministry, but the cost for the new parking lot is an unpleasant surprise. Or, pledges are down because a major employer left town. There is a widening gap between income and expenses.

Sometimes a congregation’s board does have to decrease the budget. Tough decisions are part of leadership in a faith community, just as they are in a business or a family. It is common for leaders to have difficulty deciding where to make budget cuts and for how much. The discussions about budget cuts can be as unpleasant as the cuts themselves.

Shortened budget
Here’s an idea that might be helpful if you face decreasing income. Try creating a budget for a period less than a year. Create a provisional first quarter budget or establish a half-year budget.

By shortening the time frame of your budget, you leave room for positive, unforeseen adaptations. You also feel the pain of shortfalls incrementally. The downside to this is that your congregation could be delaying a painful decision; pushing the inevitable down the path and hoping someone else doesn’t stumble over it later. However, shortening the timeline of your budget in times of scarcity can be a way for your congregation to be more nimble, to adjust more quickly to difficulties or opportunities.

Congregational story
During a recession, one congregation chose to freeze salaries, but only for the first quarter. The board agreed to revisit the decision after four months. When the time arrived for further consideration, giving had increased almost ten percent. This happened, in part, because the congregants knew about the provisional decision and many members boosted their offering because they wanted to support the hard working staff. As a result, each staff member received a two percent raise.

Resources you can use
When it comes to congregational budgeting, sometimes tried and true resources are among the best. Kennon Callahan’s Effective Church Finances is a practical book for clergy and laity alike.

When money is tight, illustrate the budget situation with more than numbers. Some congregations create narrative budgets, a way to represent income and expenses with graphs, illustrations, and even stories. The article Narrative Budgets, prepared by the Anglican Church of Canada, will provide you with more information.

If you have a specific budgeting question, use our chat function or email us to begin a conversation.

We want to help you move from scarcity to possibility.

CapinCrouse, LLP
This company offers consulting on a wide range of accounting, financial, and management topics, including providing financial audits.
web resource Updated
Church Law & Tax
This website helps congregations navigate the complex legal landscape with articles and interactive training.
web resource
Financial Information & Tools
This website provides links and information about finance in congregations.
Internal Revenue Service (IRS) Tax Information for Churches and Religious Organizations
This website offers useful information for congregations seeking to clarify their nonprofit status, understand legal requirements, and find details about tax information for charitable organizations.
Tax Guide for Churches and Religious Organizations: Benefits and Responsibilities under the Federal Tax Law
Created by the IRS, this booklet helps congregations ensure their compliance with the current federal tax code.

About the Contributor

Beth McKee

Beth is the Center for Congregation's chief financial officer and director of internal operations. Beth is also an elder and deacon in the Presbyterian church.

Church Finances

Managing the finances of a church or congregation can often be a bit different than the process of managing a regular business. There can be a lot of intricacies involved, when it comes to managing the finances of a church, and a few missteps can possibly place a congregation into a difficult situation.

There are a lot of common pitfalls that can accompany managing the financial situation of a church. One of the biggest issues that people encounter is that the congregation still has to find a way to keep the lights on, even though it is a nonprofit organization. And while the leaders of the congregation might not be looking for a way to make money, they will still have to pay the water bill, pay the gas bill, pay the mortgage, and pay their electricity bill. Furthermore, because a congregation is very rarely going to sell anything, they will likely need to find another way to generate revenue. This can usually come in the form of donations from the community and members of the congregation.

Therefore, it might be a good idea for anyone who is looking to run a church to be familiar with the potential financial aspects of this issue. For example, a lot of people may like to start by reading a church finances book. It can also be a good idea to reach out to other people who manage churches, in an effort to see what they are doing right. There are a lot of issues that people may need to address, if they would like to manage a church successfully. With numerous video resources, online classes, books, and professionals to learn from, there are plenty of ways that people can discover how to successfully run a church.

Church Finance Policy

First, it can be helpful to make sure that there is a strong church finance policy in place. When it comes to someone like a pastor spending church money, for instance, a key goal may be to have everyone be on board with how the money is being spent. In a lot of situations, a religious leader can be fantastic at communicating main aspects of their religious text to members of the congregation, while on the other hand, the pastor might not be the best person to manage the finances of the group, even if he or she is in charge. Therefore, it can be a good idea to hire a church treasurer to handle this duty instead.

When looking at creating a church treasurer job description, it may be good to develop a list of not only the duties of the job, but also the qualifications of the treasurer. A religious group is usually not going to be found in the same job market as a small business. Therefore, a congregation might not necessarily have a lot of experience in hiring people from the professional world. But one thing that may be good to keep an eye out for is making sure that the church treasurer has a financial background. For example, a BSBA from an educational organization might be a good place to start. Then, it may be good to try and find a church treasurer who has experience in managing finances for other companies in the past. And if the treasurer has managed the finances of a church, then this can be even better.

Finally, it may also be good to keep in mind that the congregation is still likely going to have to pay the treasurer. Then, the treasurer will be able to put policies in place that can help the congregation to manage its money effectively. For instance, the treasurer might want to implement a policy of total transparency. That way, everyone can see exactly when, where, and how the money is being spent. Or, the treasurer might want to put a policy in place that requires people to ask for approval, before church money can be dispersed. These policies can be helpful when it comes to the congregation properly managing its finances. That way, the group may still have enough money in the bank account to pay its mortgage, rent, and utility bills. Remember that there may be insurance premiums that have to be paid, as well.

Church Finances 101

When it comes to church finances 101, there are several key issues which may need to be addressed. Church management books can be great places to start. First, it can be good to understand that not all religious organizations are going to have to pay taxes. And so, individuals who are coming from the professional world might be surprised to hear that congregations do not have to pay things such as income tax, sales tax, and other examples of common taxes, in certain situations. On the other hand, there may also be other situations in which religious groups might be required to pay taxes. With this in mind, it might be a good idea for everyone to make sure that they understand exactly when, where, and how churches are going to have to pay taxes.

Next, when it comes to church record-keeping books, it may be a good idea to keep a few overhead expenses in mind. It may be a good idea for any congregation to take steps to make sure that they have enough money on hand to cover their overhead expenses. Some of the most common overhead expenses may include salaries for professionals, gas bills, electricity bills, water bills, mortgages or rent, and certain insurance premiums. To that end, it may be helpful for a congregation to ensure that they always have enough money available to cover these expenses.

Finally, these expenses will usually need to be less than the amount of money that the congregation brings in on a regular basis. This might be considered the key aspect of church finances 101. When it comes to religious groups, the vast majority of their revenue is likely going to come in the form of donations from the local community and members of the congregation. Therefore, it might be considered the congregation’s responsibility to make sure that it can conduct a strong fundraising campaign throughout the year, to help ensure that it can keep the doors open and the lights on. This can be one of the main jobs for church professionals to be able to accomplish.

Church Finances Best Practices

Ultimately, it can be good to think about the question, how should church finances be handled? This is where a few church finances best practices might be able to come into play. One of the first things congregations can do is make sure that there is total transparency, regarding how money is being spent. That way, there may be no opportunity for infighting that arises. Second, religious groups may also think about when, where, and how they are going to ask for donations from members of the congregation. It can be helpful to make sure that they do not seem like they are begging, but that they also likely need to make sure that the cash flow stays high enough. And finally, it can also be good for congregations to be able to anticipate expenses in advance. That is where a liquidity fund can be helpful. It can be good practice for religious groups to ensure that they are generating enough money to place funds into a savings account, to potentially cover the cost of emergencies which might arise.

Financial Stewardship

Financial stewardship refers to how the organization is handling its money. In contrast to a business, which has a tremendous amount of tax liability, a church does not have this issue when it comes to financial stewardship. On the other hand, it can also be goodt to think about financial stewardship and improving church finances. Pastor and church finances tend to go hand-in-hand. Because the pastor will often be in charge of the church, then he or she is likely going to have a significant say in how the money is being spent. Therefore, it may be a good idea for the leadership team to be familiar with how money is being spent. For example, does the money want to be used as a form of a scholarship to send a member of the congregation to college? Or, does the money have to be reserved for emergency situations? These are key issues that the church is going to have to address with its honey.

Managing Church Finances

When it comes to church financing, it can also be helpful to look at church financial problems. For instance, congregations might have difficulty in keeping their donations up when the economy goes south. In addition, religious groups might find themselves a difficult spot if the rent goes up. Or, the congregations may need to hire an additional person one day, leading to an extra salary that now has to be paid. Taking the time to consider these elements may be critical, when it comes to understanding church finances.

Fortunately, there are additional resources available. For example, there might be grants that churches can apply for which may be able to help them cover some of these expenses. Or, the group might be able to partner with a business in the local community, in an effort to generate some additional cash. And finally, there are also courses, videos, and audiobooks that may be able to help congregational leaders better understand how they can manage their finances.

Church Financial Management

Ultimately, church financial management can prove to be a vital aspect of the congregation to pay attention to. In some situations, it might be helpful for members of the religious leadership team to enroll in a church financial planning class. These classes can be useful because they tend to cover many key aspects of managing a congregation. For instance, this class may teach individuals how to develop an emergency fund. Or, these classes might teach people how to negotiate with lenders, when it comes to rent payments or mortgage payments. Finally, a financial management class might also be able to help members of the religious leadership team to learn how to partner with businesses in the local community, in an effort to raise more money. All of these issues can be good to consider, when it comes to financial planning for religious organizations. Even though congregations might not have to pay taxes, they are still likely going to have overhead expenses they need to cover, in order to keep the doors open.

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