April 27, 2018
Facing Financial Uncertainty, Testing and Re-testing the Budget
“Wait? This isn’t the last budget revision we’re doing?” our church’s treasurer recently asked at the finance meeting. To his point, he’s the one who plugs in the numbers. He did it in November, preparing for our December annual meeting. He did it in December, when the Vestry wanted to revise some areas. And he was doing it in January and February, when the finance committee started to take another whack at it.
Ascension and St. George’s, the two congregations I serve as rector, are doing a lot of amazing things and one of the most impressive things, I tell them, is that they’re facing financial uncertainty. A few years ago, before our collaborative sharing began, Ascension looked at their numbers and calculated they had three to five years left. St. George’s, too, recognized that the numerical and financial growth it was experiencing was, ultimately, insufficient to create a sustainable model of ongoing discipleship and growth. And each congregation, unto itself, faced those financial uncertainties. They stared financial uncertainty in its ugly, nasty, scary face. They wouldn’t let it dominate them. They didn’t run away and pretend it didn’t exist. They faced it, plain and simple, and they let that uncertainty take them to the limit of the old business model.
They also invited God into the process, honestly expecting light to shine into the darkness. We now ask, repeatedly: What is the core mission of the Body of Christ, and how is that showing up in our operational business model? How does that direct our budget?
That’s why we keep revising our budget. One year into our collaborative sharing arrangement with one another, Ascension and St. George’s are still working on those true ‘efficiencies of scale.’ It’s a slow process, but a holy and exciting one, through and through. We share roughly 60% of total expenses. Most of the things we thought we needed, when we were running two completely separate institutions, we can now share and, in some cases, we are learning we didn’t really need in the first place. But those realizations are emerging sketches. They’re not yet operating principles.
Emerging ideas become the component parts of a new business model when we let light shine into the darkness, budget line item by budget line item.
But simply saying this is not enough. In fact, I can only imagine the frustration of a colleague who sits at the vestry table, year after year, as budgets get prepared and ministries and salaries get swallowed up by the cost of health insurance and other fixed expenses. “Revise the budget regularly?!” this clergyperson or lay leader may hear me saying, and I would completely understand why s/he would immediately click “Delete.” Saying that we need to face financial uncertainty is necessary but hardly sufficient. In our case, two really big things kept us from doing so.
First, until Ascension and St. George’s entered this formal sharing, neither congregation needed to (or had the opportunity to) ask and address these deeper, vexing problems. It’s one thing to remind people that the definition of insanity is “doing the same things, year after year, but expecting different results,” but if there’s no way out of that continuous loop then it’s the wider church, itself, that needs a mental health check-up.
And, second, there aren’t many tools out there to analyze and dig deeply into the basic challenges and opportunities presented through a church budget. I recently discovered a great resource, put together by Dan Hotchkiss, senior consultant for the Alban Institute.
This document, a “Snapshot of Church Finances,” is a refreshing but hard look at the ways we finance mission.
- The vast majority of funds for your operating budget (at least 80%) must be “current giving,” it asserts – pledge and plate giving. Is that true for you and your community?
- It’s nice to let your building(s) generate some revenue, and fundraisers are okay, but you’re not a community center; you are a church. Anything more than 20% of operating income from building rental and/or fundraisers is a dangerous situation.
- Is your building working for you or is it costing you too much? The goal is less than 30% of operating income being spent on buildings and fixed assets.
- What percentage of the congregation’s expenditures are dedicated to projects that primarily benefit non-members?
The ‘Snapshot’ also offers the opportunity to set goals for the year and years ahead, and it might make sense to focus on one or two issues and slowly, and over time, wrestle them down. It’s not a perfect document, and I don’t agree that everything needs to be funded through the centralized operating budget, but it’s a good, albeit hard look at where the opportunities and problems are.
This is one tool, among many, to face financial uncertainty, stare it in its scary and anxiety-producing face, and let it take you to the limits of the old business model. Once there, you can also expect God, through his Body, the church, to invite you into God’s preferred future.