Everything You Need to Know About Church Finances
Your organization operates on a tight budget. Like any nonprofit, every dollar needs to be stretched to its fullest potential to ensure optimal operations. Of course, managing your church finances is no easy feat. Here’s the critical information you should keep in mind about your budget.
Build a Conscious Budget for Church Finances
What’s measured is managed, which is why a budget is a foundation for all healthy financial practices. If your organization doesn’t already have a budget laid out, now is the time to pursue one.
Aside from basic earmarking of cash for your primary expenses, you should delve deeper and analyze your spending across categories–from complimentary refreshments at events to the cost of operating your various activities.
Once you have that expenditure sheet averaged with information from the past few months, you can begin to analyze the snapshot of your financial health.
You’ll immediately know how much you need to take in to maintain your current spending habits and you can begin to figure out how much more you need to take in to meet your future goals.
From these numbers, you can craft a budget that maximizes your income. Now you should prioritize following that budget by tracking all the money that comes in and goes out.
Be a Good Steward With Church Finances
When people give to a nonprofit of any kind, one of their biggest worries is ensuring the money is used to its fullest potential. Being a good steward is the absolute most effective way to continue collecting donations on a continuous basis. By showing in practice that your church is making a difference with the donations it collects, more people will be apt to donate.
As such, your budget should express your values and priorities on paper, but you should also go the extra mile to ensure it does so in practice. Part of that is looking at the numbers and constantly scrutinizing expenses. The other half is making sure everyone who handles money in your church is up-to-date on the right financial practices (including proper tracking and accounting within your systems).
Implement Anti-Fraud Practices
Unfortunately, fraud is a very real thing in today’s non-profits, which is why your church should be more careful than ever when it comes to preventing it. From third-party schemes, scams, and data leaks to internal issues, putting checks and systems in place will ensure donations stay secure so that you don’t lose money or your donors’ trust.
- Only allow trusted individuals to access your bank information
- Coordinate with a third party to perform external audits
- Require dual signatures for financial transactions
- Reconcile your ledger on a routine basis
- Verify IP addresses for online giving
If you have volunteers managing your money in some form, encourage them to rotate and check behind one another to ensure everything is in good standing.
Seek to Lower Expenses
As with any approach to money management, the ultimate goal for your church is to have more. You need this to invest and spend. That means putting in the time and effort to lower your expenses whenever possible.
Looking back at expense sheets from previous years is a great start. It will help you spot trends of categories that eat up a lot of funds and expenses that are increasing over time. A good example is your insurance premium, which may be negotiable if you call up your insurance company and have a quick chat. You could also look for a new quote that may offer bigger discounts.
Get Ahead of Future Costs
Looking back on past years’ expenses can help you cut costs. Of course, there are also areas where you’re sure to notice an increase in spending. You should always look ahead and strategize about how much you need to increase donations to continue covering increasing expenses.
You should write up a plan that details how you’re going to do that. Afterward, make a budget that reflects the necessary changes. In the meantime, don’t forget to save for your emergency fund, which you should always be building up.
Ultimately, if you’re trying to get a grip on your finances, you should make sure you’re using the right software to manage your donors and donations. Reach out to DonorWERX for more information about our software and coaching plans by clicking here. We can help you get your church finances in order.
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