Budget Development – Step Two

The purpose of Step Two is to allow church ministers and lay leaders to know “how much they will have to work with.”   This is extremely important on two levels:

If ministers are given too low a figure, they may become discouraged even before the fiscal year begins.  They may begin to think and mull questions like these in their minds:

“Do they think I am a miracle worker?

 “This is an impossible task.”

“What’s the point?”

“I think I may be at the wrong church”.

On the other hand, if the ministers are given an unrealistically high amount to work with they will most assuredly become discouraged during the fiscal year.  This is a frequent occurrence with the “dream big” budget method.  Often, the ministers do exactly what they were asked, dream big.  And usually, the dreams are bigger than the resources.  The inevitable result will be failure which may breed discouragement. Dissension may not be far behind. 

The best way to avoid this is to start with what you’ve got!  Try to project what the church’s revenues will be for the upcoming year.  Do not simply increase last year’s budget as things might have changed significantly since then. Try to use “real” giving numbers. 

Just like the investment advisor’s standard warning, “Past results do not guarantee future results”, what happened in previous years may not happen in the next year at a church.  But, past giving activity is a good place to start.  First, take a look at the church’s receipts over the last three years or so.  Also, take a good look at attendance levels to see if any noticeable trends are present there as well.  Combine these two data points to make as good a prediction as possible of what the church expects to receive in offerings in the next year.

Next, the church should turn its attention to the expense side of the ledger.  The first step in this process is to calculate the cost of simply “keeping the doors open”.  In most churches this will consist of personnel costs, facilities costs, and denominational commitments.  Deducting these costs from the projected revenues results in a more realistic estimate of the dollars the church has available for ministry.  Ministers then should have a realistic idea of how much money they have to work with to carry out their particular part of the church’s mission.

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