by Franklin Dumond, Director of Congregational Ministries

Fiscal fitness and financial health are not only important for individuals and families they are also very important for local churches.

Here are a few measures of church fiscal fitness.

1. Income to Expense Ratios. Does total annual income meet or exceed total annual expenditures? If expenses occasionally exceed income this may be a sign of health as when a building program results in a major expense one year with funds generated in the previous year. Unfortunately, if expenses routinely exceed income by substantial amounts the church cannot remain solvent indefinitely.
2. Income History. Is the church plagued by a feast-or-famine mentality of giving to special needs at the expense of ‘routine’ ministry? If the folks respond only when the coffers run low this is not healthy.
3. Income Sources. Do estate gifts underwrite the operating budget? This is not wise! Are a few generous members providing a large portion of the operating budget? Fiscal fitness comes from a broadly supported ministry.
4. Income Percentages. Churches should expect to spend 40-65% of budgets on employee costs. Factory and retail managers cringe at this since in business the lower the salary percentage the higher the profit.

Educational institutions cringe because, in their model of high-touch personal connections to students, up to 90% of the budget may be personnel-related.

A church spending too low a percentage on staff probably underpays or expects over performance.

A church spending too high a percentage on staff may under serve by reducing program ministry and mission outreach to cover salaries.

Newer churches or newer facilities often have mortgages. Fiscally fit churches generally spend 15-25% of income on regular mortgage payments.

Fiscally fit churches will give 10-15% to missions. In some cases, more will be given. Although there are exceptions, if a church gives more than 20% of its general income, much needed local ministry often goes undone.

When preparing a spending plan every General Baptist Church should consider three broad categories of expenditures:

• Our Work in the World — Missions
• Our Work in the Community — Local Church Ministry
• Our Work in Facilities — Buildings and Grounds

I. Our Work in the World—Missions

Within this category, General Baptist churches should identify their mission giving through the denomination, association, and local projects. Denominational mission giving through the church should be targeted for Unified Giving. Ideally, every church encouraging tithing by its members will in turn tithe to Unified Giving as a means of participating in the larger mission of the Church.

Other mission offerings and mission projects may also be included in this category and should then be funded by special offerings rather than the general giving of the congregation.

Association and Local Mission Projects are developed based on local needs and local traditions.

II. Our Work in the Community—Local Church Ministry

Within this category, General Baptist churches should identify the ministry targeted to the local community. Early in this list, there should be a fair level of compensation for the pastor and staff ministers. Compensation guides based on years of experience and education for the full-time pastor and based on hours of employment for the bi-vocational pastor are readily available from several sources

Professional expenses and personnel benefits should be fairly computed and listed as line items separate from base salary, housing, and self-employment tax.

Other local church ministries such as Sunday School, youth and children’s ministries, church office expenses, and worship needs will be included in this section.

III. Our Work in Facilities—Building and Grounds.

Within this category matters such as utilities, insurance, custodial services, maintenance, debt retirement, and property improvements should be considered. It is also prudent to develop a reserve fund to allow the church to accumulate the dollars needed for occasional high ticket items such as heating/air conditioning equipment upgrades, parking lot repair, or roof replacement.

A final section of the budget should include projected income. Tithes and Offerings should support the general work of the church. Special offerings or project income should support the special needs of the church.

The following parameters, presented on the Evangelical Council for Financial Accountability website, can be useful guidelines when reviewing local church budgets.

Salaries/Wages and Benefits — 45%
Facilities — 20%
Ministry/Program — 22%
International Missions — 6.5%
Domestic Missions — 4.5%
Addition to Cash Reserves — 2%

Ready for the next step? Then download our e-book “YEAR AHEAD PLANNING: GETTING READY FOR 2021“. YEAR AHEAD PLANNING is a Church Talk Publication designed to help stateside General Baptist leaders cope with the “new normal”.