Why should a church budget?

In the context of counting the cost of discipleship (Luke 14:28–31), Jesus uses two examples of planning ahead: a king with a smaller army than his enemy has to plan strategically, and a man building a tower has to plan to ensure he has the necessary resources. In our experience, churches which apply those principles of strategic planning and resource management are far more likely to meet their goals than those churches where projects, initiatives and activities are cobbled together quite literally on a wing and a prayer.

Budgeting is an area which some churches see as purely a business tool serving to hold back, to restrict and in some cases even to remove our reliance on God. Used wrongly this can be true, but used properly – with input and involvement from the church leadership, where the budget serves the church, and where the budget is a reflection of the vision of the church – we believe that budgets can bring many advantages including:

Helping the church prioritise its actions and resources;
Helping the church congregation take “ownership” for the future;
Providing an early indication where the church’s finances deviate (positively or negatively) from what was expected;
Adding a layer of accountability;
Demonstrating good practice – doing what is right in the eyes of men as well as in the eyes of God.

As part of the introduction to its guidance on charity finances, the Charity Commission says: “Good management of a charity’s finances and other assets enables it to succeed in delivering its charitable aims. To achieve this, trustees must properly supervise their resources and satisfy themselves that they have:

Realistic funding plans and strategies;
Effective management controls and systems;
Planned for their charity’s assets and resources to be used in the best possible way for their beneficiaries.”

Building on this, as part of its guidance in CC12, the Charity Commission makes it clear that it expects trustees to consider budgets, including cash projections and business plans, expressing the view that budgets should be produced at least annually, but more frequently if the financial climate makes it necessary or desirable.

Of course, having reached the point of recognising the worth of budgets, there remain the practical issues around budget construction. We have recently written a briefing paper (“Financial Planning and Budgeting for Churches”) which explores in more depth the reasons why budgeting is good for churches and goes on to consider the more practical issues of who takes responsibility for the budget and how it should be constructed.

Church Finance: it's better as a team sport

Briefing papers...

Raising the Standard: Transforming the Culture of Money in the Church