Confidence and trust in church and charity finance: A view from independent examiners

At Stewardship, we are convinced that churches and charities that are trusted by their supporters will be better resourced in what they do. 

This is especially the case when it comes to giving and finance. We often hear from leaders who worry about the difficulty of raising finance, but don't take the steps to build trust and confidence in the area of financial ‘good practice’.

AAA rated

At Stewardship, we like to talk about ‘AAA rated’ churches and charities: those who have taken deliberate steps to show they are ‘good with money’.

If an organisation can master these three aspects, they will nearly always be ‘good with money’. 

• Attitude
• Accountability
• Administration

An example is in the way money is talked about in church. If money is only ever mentioned on a Sunday when the church has a ‘hole in its budget’ or a special project it needs to fund – and yet the heart issues around money and wealth that Jesus or the Apostle Paul talked about have never been taught – then the church will not have built a good foundation.

Other examples would be the way the charity is governed, the feedback on finances (or lack of it), or the ways that the church or charity finances are used. All these add together to either help or hinder the charity build confidence and trust and become ‘AAA rated’.

An independent viewpoint

One of the teams at Stewardship that serves churches and Christian ministries is our Accounts Examination Service. We serve around 500 churches and charities by helping with their annual accounts and acting as the charity’s Independent Examiner. 

As a result, we do see a lot of situations where we think that the leadership team could help their church or charity by intentionally making themselves ‘good with money’. It often isn’t just one thing, but a combination of areas that together would mean supporters develop a sense of confidence in the aspects that make up the ‘AAA’. 

While we could create a very long list of issues we see, here are some areas of weakness that the accounts team have seen more frequently:

1. Poor trustee governance. One of the great safeguards in the charity world is the oversight of charities by a group of people who are not paid (or most of them are not paid), namely the trustees. Many of the recent problems in charities, including Christian organisations, highlight weakness in governance as a major reason for the failure. We see this in minor ways in the accounts work, but they point towards ‘weak’ rather than ‘effective’ governance.

Examples can be small, but together can add up to a bigger issue. They include:

• trustees failing to be active in their role or playing it only cosmetically
• failure to have regular meetings which, at the very least, occur as often as laid down in the governing document (the constitution)
• ad-hoc decisions being made informally by a small group, without being ratified at properly constituted trustee meetings

2. Visionless annual reports. We sometimes see annual reports that say the same things as they have for many years. They fail to show how what is being done is intended to meet the charitable objectives of that church or charity and its community, both within the organisation and further afield.

What might be appropriate for one church might not be for another due to the area served, demographics, past history and so on. But a good annual report demonstrates thoughtful accountability and gives ‘vision’ in explaining why the money was spent as it was.

3. Lack of detail on what money was spent on. This can be particularly the case when reporting back to church members. This often leads to members struggling to see the connection between their giving and what is being achieved.

4. Lack of finance team. So often we see situations where one person handles all the finance aspects. This is unhelpful for the charity, as it can lead to a narrow perspective on finance and over reliance on one person. We also often see emails coming from them late in evenings at weekends, indicating overwork.

5. Hardship payments – money paid out to those ‘in need’. We sometimes see a lack of authorisation of ‘emergency’ payments, a lack of policy showing why some needs are met and not others or payments being made to a ‘friend of a friend’ (that is, someone in need that the church has come across and taken pity on, without an explanation about why this person was helped and not others).

We believe that good leadership in all aspects of money really helps churches and charities become ‘AAA rated’ and by so doing, means that givers develop confidence and trust, becoming more generous and doing so with joy. 

Using the words of the Apostle Paul, they become ‘cheerful givers’ (2 Corinthians 9:7).