Step three involves the allocation of the available funds to various church activities as determined by the mission of the church. It must be stressed; there is no one way to do this because each church has its own specific calling and there is a wide array of ministry focus points among churches. But, in my opinion, there is a universal truth – The best practice is to assign the task of allocation to a combination of staff/laity/committees/teams. Don’t leave it to a bunch of accountants on the finance committee…
The following is one process many churches employ:
- Start with personnel costs. In one sense, churches are in the “service industry”. Like other service providing entities, payroll costs will normally be the largest budget allocation. Typically 50% of the budget will be allocated to salary and personnel costs.
- Next come facilities costs, which include mortgage or rent payments, insurance, utilities and routine maintenance. Historically, a healthy range has been 20 – 25% but in recent years, due to the economic slowdown, churches have been exploring alternate ways to provide meeting space. The largest alternative probably is the concept of satellite churches. Rather than building massive, mega church facilities many churches are instead opening “branches” in smaller lower cost facilities. (Refurbished strip malls for example)
- The next category, missions and evangelism (outreach) will vary greatly from church to church due to variances in missions and vision. Typically this includes foreign mission support, local community outreach and evangelism, and social needs (clothing, food, health care, etc.) 10% is common but churches using alternate ways of providing meeting space have been able to increase the amount they can spend on outreach
- The last category is local church programming (In reach) which are the primary ministry activities directed to church members. These include Sunday School and discipleship, vacation Bible schools, Christian education, recreational activities and day care services among many others. 20% is common.