10 Financial Mistakes Too Many Churches Make

The intersection of faith and finance is never easy to navigate as a local church leader.

The topic of money is inescapable for anyone who leads a church, so while many of us would rather lead people toward Jesus, we must also embrace the truth that the functions of a local church do not operate for free.

In this post, I’ve listed ten big mistakes to avoid on the subject of finance. There are many more detailed issues involving numbers and percentages, but that’s for another post. Let me give you one example.

When you step into the realm of numbers, there are so many variables. For example, the majority of churches would hold 50% of their budget as a maximum investment for total compensation for all (staff) personnel. A church plant, however, would be a little higher. And in very large churches, approximately 10,000 and larger, that number drops to approximately 35-40%. There are also considerations of variables from the cost of living in the city you’re in, to your current ministry emphasis. That’s just one item of dozens.

For this article, let’s look at principle driven issues that we must all lead well.

Ten Finance Mistakes:

1) Abdication of responsibility by the lead pastor

When a well-intentioned pastor relinquishes a huge amount of their direct involvement in the finances of the church to various committees and boards, they are usually asking for trouble.

The justification is often that they are trained as a pastor and Bible teacher, not a businessman. It’s good to have capable board members you trust, but if you end up out of the picture, you may soon no longer be leading your church.

2) Failure to connect the vision to the revenue

Projecting revenue and setting the annual budget carries a much larger scope than how to meet expenses. Vision and faith have always been the primary driving factors in cultivating generosity within a local church.

Start with your vision, then identify the major financial needs to achieve the vision. Compare those findings to the anticipated revenue, make any needed cuts, then finalize the budget.

3) Ignoring the tension between faith and prudence

Where do you draw the line between faith and fiscal responsibility? That has always been a great tension for any church leader. Spiritual leaders know that God will meet the needs, yet it’s not uncommon to have a financial shortfall. Prayer is vital and so is leadership.

Declaring“if we just believe” won’t increase the offerings. It’s of critical importance to lean into great faith, but it’s also vital to exercise strong financial wisdom in stewardship. The combination of those two together will serve you well.

4) Taking on too much debt

Many churches believe debt in any amount is to be avoided at all costs. I think we would all agree that in general, the less debt, the better. But there are some circumstances where debt is required to advance the Kingdom mission.

Your church’s ability to balance cash on hand and revenue will guide you in a proper amount of debt. Some experts will say that a debt level of two to three times your current income is acceptable, but that should be the maximum. Others suggest that one to two times your current income is the max. Consider factors like how well your church is growing to help you know what is an acceptable debt level if any at all.

5) Ignoring the budget

I find this one most surprising. Church leaders will do a good job working through a well-prepared budget. Then they ignore it. They go over in any category they choose and literally run out of money before the end of the fiscal year.

In effect, they are making it up as they go which is obviously a bad idea. Budgets are not straight-jackets, but they are strong boundaries put in place for good reasons. The practice of discipline in your budget carries over into the rest of your ministry.

6) Allowing donors to dictate the vision

It is unwise to allow donors to direct their monies to specific purposes of their choosing. We all know stories of a person with resources who says “If you do this, I’ll give this.” Resist that temptation with all you’ve got!

The pressure is great to cave in and receive the money, but we must trust God to meet the needs of the church without allowing anyone to hijack the vision.

Instead, use those moments for courageous discipleship and have an honest conversation about the way God teaches us to give without strings attached.

7) Lack of training in biblical stewardship and personal finance

There are more than 2,000 scriptures on money or financially related subjects. Teaching on biblical stewardship is a vital and necessary part of the discipleship / spiritual formation process.

There are two primary platforms that all local church ministries should include. First, regular biblical teaching on Sunday mornings. Perhaps one finance series a year. Second, small group curriculum and or seminars for practical money management with a scriptural foundation.

8) Trusting those who handle the money without safeguards.

Churches often place great trust in others without appropriate safeguards to protect those we trust from temptation. Developing appropriate internal controls against fraud and embezzlement can be established by any church.

For example, the same person should not deposit offerings, write checks to vendors, and execute the payroll for the church. Many churches may only have one person in the accounting department.  However, every church could include a volunteer to review bank statements on a monthly basis or form a finance committee to review monthly financial statements.

If you’re not sure where to start, Church Finance Today is a great resource for less than $5 per month.

9) Special treatment for the wealthy

James 2:1 makes it clear that we must not show favoritism. It’s a natural temptation, and the pressure is real.

 “If you show special attention to the man wearing fine clothes and say, “Here’s a good seat for you,” but say to the poor man, “You stand there” or “Sit on the floor by my feet,” 4 have you not discriminated among yourselves and become judges with evil thoughts?” James 2:3-4

No church has too much money, but if it is gained by privilege rather than spiritual maturity, God’s blessing may be withheld.

10) Not carrying sufficient or appropriate insurance coverages

Regardless of the size of your church, your investment merits protection. Every church is unique and carries specific risks. These risks and levels of risk change over time.

A good review of insurance needs by a professional other than the church’s insurance broker should be done at least once a year.  In a smaller church, ask a member who owns his or her business to help in this regard.

> Read more from Dan


 

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ABOUT THE AUTHOR

Dan Reiland

Dan Reiland

Dr. Dan Reiland serves as Executive Pastor at 12Stone Church in Lawrenceville, Georgia. He previously partnered with John Maxwell for 20 years, first as Executive Pastor at Skyline Wesleyan Church in San Diego, then as Vice President of Leadership and Church Development at INJOY. He and Dr. Maxwell still enjoy partnering on a number of church related projects together. Dan is best known as a leader with a pastor's heart, but is often described as one of the nations most innovative church thinkers. His passion is developing leaders for the local church so that the Great Commission is advanced.

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COMMENTS

What say you? Leave a comment!

Recent Comments
What happens when u dont have a meeting place any more. And u was forced out because the buliding wasnt available any more.
 
— Debra
 
If someone wants entertainment they're going to the wrong place. Church is not a place for entertainment...or in my opinion a barrage of coffee and donuts. Why are churches today bringing the world INTO them? Then there's the thing with children...age appropriate??? These little guys can pick stuff up in service. Besides Jesus said Suffer little children, and forbid them not, to come unto me: for of such is the kingdom of heaven. Mt. 19:14.
 
— Laurie
 
I love the intentionality here as well as the challenge to look at the data. That's missing so many times. I would like to offer a contrarian's take. Church members and regular attenders have so many ways to get information: Announcements, bulletins, social channels, relationships, and email being among the options. But brand new people are likely going to check out the website and that's it. It might be wiser for churches with limited time and resources to focus their website almost exclusively to guests. This group of people isn't looking for a calendar of events but wants to know about regular programs. They probably aren't interested in watching all of the messages but instead may want to preview one of the services. For the times we need church members to go to websites (sign up for camp, join a group, etc), we're probably better off designing and promoting a specific page rather than cluttering up the homepage.
 
— Michael Lukaszewski (@mlukaszewski)
 

Clarity Process

Three effective ways to start moving toward clarity right now.

Checking the Vital Signs of Church Financial Health

I have seen many churches in financial distress. It is a sad situation to witness.

They are worried how they will pay their staff. They are worried how they will pay their bills. The ability to do ministry has dwindled.

And they are not sure how they got to this place.

So what happened? As we hear the stories of churches that find themselves scraping the bottom of their checking account, worried if they will financially survive, you tend to uncover some common themes.

  1. Failed to preach and teach stewardship. Maybe the pastor was afraid he would be considered a church leader that abuses his platform for personal financial gain. Maybe the church leaders were afraid of reducing attendance. Whatever the reason, financial stewardship was not taught.
  1. Took on too much debt. The church overextended itself. They built too much or too quickly. And a huge chunk of tithes and offerings were sucked away by the debt payment.
  1. Was not transparent with finances. They hid their finances from church members. Skepticism grew. And giving declined.
  1. Used very few dollars to reach and minister to the community. They focused on themselves. Little went toward outside efforts.
  1. Did not have multiple options for giving. They dismissed online giving and other nontraditional methods of giving, reducing participation from younger generations.
  1. Did not constantly evaluate how funds were spent. The church was not a good steward of the money they received. There was significant waste, preventing forward movement in the budget.
  1. Never took wise steps of financial faith. Budgets were not based on reasonable mathematical projections, but staff wants. And it was just assumed that the money to pay for these wants would be provided.
  1. The church relied on a few big givers. And when these givers either died or left the church, the church’s financial viability died or left with them.

It’s sad to see a church in financial disarray. It’s sad to see the staff struggle. It’s sad to see the ministry struggle.

Especially, when you know it could have been prevented.


To learn more about preventing financial disarray in your church, connect with an Auxano Navigator.


> Read more from Art.

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ABOUT THE AUTHOR

Art Rainer

Art Rainer

Art Rainer serves as the Vice President for Institutional Advancement at Southeastern Baptist Theological Seminary and is a cofounder of Rainer Publishing. He has written three books, Raising Dad , Simple Life, and The Minister's Salary, and lives with his wife, Sarah, and two sons in Wake Forest, NC.

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COMMENTS

What say you? Leave a comment!

Recent Comments
What happens when u dont have a meeting place any more. And u was forced out because the buliding wasnt available any more.
 
— Debra
 
If someone wants entertainment they're going to the wrong place. Church is not a place for entertainment...or in my opinion a barrage of coffee and donuts. Why are churches today bringing the world INTO them? Then there's the thing with children...age appropriate??? These little guys can pick stuff up in service. Besides Jesus said Suffer little children, and forbid them not, to come unto me: for of such is the kingdom of heaven. Mt. 19:14.
 
— Laurie
 
I love the intentionality here as well as the challenge to look at the data. That's missing so many times. I would like to offer a contrarian's take. Church members and regular attenders have so many ways to get information: Announcements, bulletins, social channels, relationships, and email being among the options. But brand new people are likely going to check out the website and that's it. It might be wiser for churches with limited time and resources to focus their website almost exclusively to guests. This group of people isn't looking for a calendar of events but wants to know about regular programs. They probably aren't interested in watching all of the messages but instead may want to preview one of the services. For the times we need church members to go to websites (sign up for camp, join a group, etc), we're probably better off designing and promoting a specific page rather than cluttering up the homepage.
 
— Michael Lukaszewski (@mlukaszewski)
 

Clarity Process

Three effective ways to start moving toward clarity right now.

The Pastor’s Church Finance Checklist

A consistent theme I have seen in many churches is in the area of church finances. Many church leaders operate out of a mode of scarcity instead of abundance. While I realize that churches cannot and should not spend foolishly, too many church leaders just don’t recognize that God has provided more than they think.

Often the issue is not lack of funds, but unwise choices of church expenditures. There are many reasons for this reality; I plan to address them in a future post.

A Checklist for Your Consideration

For now, I offer a checklist of questions. As you answer these questions, I hope you will be motivated to think how your church might look at its expenditures and budgets in a different light.

  1. If you were to start your church’s budget from scratch, how differently would it look than your present budget?
  2. Do you have programs and ministries that, if they were discontinued, would have little negative impact on the church or the community?
  3. How much of the church’s expenditures reflect “the way we’ve always done it”?
  4. Are there clear lines of accountability for spending at every level?
  5. How much of the church’s funds are used to impact the community?
  6. Is the church spending its personnel dollars in the most effective ways?
  7. Who are the true decision makers on how church funds are spent?
  8. Do some of the expenditures reflect preferential treatment toward some of the members?
  9. Is debt hindering your church from doing effective ministry?
  10. What are the potential unintended consequences of making significant changes in the budget and expenditures?
  11. Do you know clearly how church funds given to support missions are being used?
  12. Does your church spend too much or too little on physical facilities?
  13. Does the church have adequate funds for training and development of staff and laity?
  14. Does the church’s budget reflect faith, futility, or foolishness?

An Attitude of Abundance

If we really trust that God will provide for our churches in all areas, including finances, we may realize that we do not have a money problem; we may have a stewardship problem. These fourteen questions can be a starting point to help you move toward a realistic and faith-based approach to church finances.

> Read more from Thom.

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ABOUT THE AUTHOR

Thom Rainer

Thom Rainer

Thom Rainer is the president and CEO of LifeWay Christian Resources.  Prior to LifeWay, he served at The Southern Baptist Theological Seminary for twelve years where he was the founding dean of the Billy Graham School of Missions and Evangelism.  He is a 1977 graduate of the University of Alabama and earned his Master of Divinity and Ph.D. degrees from The Southern Baptist Theological Seminary. In addition to speaking in hundreds of venues over the past 20 years, Rainer led Rainer Group, a church and denominational consulting firm, from 1990 to 2005. The firm provided church health insights to over 500 churches and other organizations over that period. Rainer and his wife, Nellie Jo, have three grown sons: Sam, Art and Jess, who are married to Erin, Sarah and Rachel respectively.  The Rainers have six grandchildren: Canon, Maggie, Nathaniel, Will (with the Lord), Harper, and Bren. He is the author of twenty-four books, including Breakout Churches, Simple Life, Simple Church, Raising Dad, The Millennials, and Essential Church.  His latest book, Autopsy of a Deceased Church, was released in 2014 by B&H Publishing Group.

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COMMENTS

What say you? Leave a comment!

Recent Comments
What happens when u dont have a meeting place any more. And u was forced out because the buliding wasnt available any more.
 
— Debra
 
If someone wants entertainment they're going to the wrong place. Church is not a place for entertainment...or in my opinion a barrage of coffee and donuts. Why are churches today bringing the world INTO them? Then there's the thing with children...age appropriate??? These little guys can pick stuff up in service. Besides Jesus said Suffer little children, and forbid them not, to come unto me: for of such is the kingdom of heaven. Mt. 19:14.
 
— Laurie
 
I love the intentionality here as well as the challenge to look at the data. That's missing so many times. I would like to offer a contrarian's take. Church members and regular attenders have so many ways to get information: Announcements, bulletins, social channels, relationships, and email being among the options. But brand new people are likely going to check out the website and that's it. It might be wiser for churches with limited time and resources to focus their website almost exclusively to guests. This group of people isn't looking for a calendar of events but wants to know about regular programs. They probably aren't interested in watching all of the messages but instead may want to preview one of the services. For the times we need church members to go to websites (sign up for camp, join a group, etc), we're probably better off designing and promoting a specific page rather than cluttering up the homepage.
 
— Michael Lukaszewski (@mlukaszewski)
 

Clarity Process

Three effective ways to start moving toward clarity right now.