3 Church Budget Mistakes You May Be Making . . . and How to Avoid Them

Are you responsible for your church budget . . . and wish you weren’t?

That’s the case for many pastors, particularly in small churches. Research shows that 66% love teaching and preaching, but nearly 20% of the same group said that the church budget is the most stressful part of their job. And chances are, most pastors who handle the budget would cut finance from their role entirely if they could.

But the budget is actually a friend—if you frame it right.

With a healthy church budget, you can open up opportunities to expand your ministry. You can alleviate financial stressors like unexpected building repairs or drops in giving during the summer months. You can spend more time pastoring and planning for the future.

Here are three church budget mistakes your church may be making—and how to avoid them.

1. Keeping your church budget flat

It can be tempting to use an annual budget like a strict set of rules to keep everyone and everything on track financially. And as the saying goes, making changes to the budget can feel like “robbing Peter to pay Paul.”

But just like there are ebbs and flows in giving, there must be flexibility and movement within the budget itself.

In fact, a changing budget is a sign of a healthy, responsive church.

For example, let’s say for three years you’ve allocated x number of dollars to a certain ministry, but that ministry has remained stagnant or even declined in attendance or effectiveness. Meanwhile, another ministry is gaining momentum in the church and could be helped by some funds. It may be wise to consider reallocating funds, even in the middle of the fiscal year.

This rule also applies to revenue or how much money comes in through gifts, tithes, and other income streams (like renting out your building). If you see a sudden surge or dip in giving, do you have a plan for how to respond?

For example, many churches will see a significant increase in giving at the end of the year. Nearly 30% of all donations made last year were in December. In fact, 11% of all donations came in just the last three days of the year.1 Conversely, there’s usually a decline in church giving during summer months. If you structure your budget month-to-month (that is, June’s giving affects July’s spending), then your VBS could suffer. But if you build your budget anticipating these trends, a low June is no concern.

A healthy church budget is flexible. It’s used as a guideline throughout the year to balance things like excess of funds from end-of year giving and to re-allocate them as needed—including a possible summer slump.

Plus, the longer a church operates within a healthy budget, giving trends become even more defined—resulting in a more balanced budget. And let’s not forget, with options like recurring and mobile giving, summer slumps could be completely avoided.

Free Guide: 5 Proven Steps to a Predictable Church Budget

2. Relying on Sunday morning giving only

The days of people carrying cash are over. Most church members work, pay bills, and give from their mobile devices.

If a church accepts only cash and checks, they’re missing out on the donations of an entire generation that carries neither. Research has shown that nonprofits can increase giving 126% by simply having a mobile-responsive website.

In this era, mobile giving is a must.

But this is incredible news for churches to understand and act upon. With mobile giving, it only takes seconds to give—and isn’t limited to Sunday mornings.  It’s a cinch to set up recurring gifts, which means you’ll have a more predictable budget. Plus, givers can choose to cover the transactional fee themselves, freeing up funds to invest in your ministry.

3. Lacking oversight and accountability

Although we’d like to assume no one in the church is dishonest, we simply can’t. When it comes to church finances, you need to guard against foul play.

When it comes to your financial processes, every church needs a clear system of checks and balances throughout the giving process. Who’s doing the collecting? Who’s counting the money? A few steps can make the collections process secure:

  • Have two people present when the money is counted.
  • Have both of them sign a sealed envelope along the seal.
  • Separate duties between the counting team and finance manager.

On top of that, you need many sets of eyes on your church budget—and not just an exported spreadsheet. For example, if you use an accounting software like QuickBooks, multiple people (with accounting expertise, when possible) should have access to see the full data and drill down into specific transactions.

You also need accountability structures in place for those interacting with the bank or handling the church finances at a higher level. A survey showed 46% of church financial managers had no written whistleblower policy.

A whistleblower policy is intended to encourage employees to report suspected fraud, corruption, or other improper activity. There are several sample policies available online that can be adapted to fit your church’s needs.

Not only does having a system of checks and balances throughout the collection and processing of gifts keep the money where it should be, it protects staff and volunteers from unjustly being accused of mishandling money. It also protects them from any temptation they could face if left alone in the process, and it honors the giver.

Create your unique church budget

Now that you know common mistakes to avoid, it’s time to start building your church budget. We’ve created a free guide that leads you through 5 proven steps for a predictable, healthy church budget.

Download the guide now.

Free Guide: 5 Proven Steps to a Predictable Church Budget

  1. Caryn Stein, “A Quick Look at Year-End Giving Data,” networkforgood.com
Written by
Jess Holland

Jess Holland is a marketing and communications copywriter for Life.Church. She was previously a writer on Faithlife staff.

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Written by Jess Holland