How should church finances be handled?
Pastors are charged with serving as the shepherd of their flock. This means that pastors are to care for, guide, nourish, and help direct those that they serve. Undoubtedly, this translates to having some involvement in how the church allocates it's financial resources.
Pastors are charged with serving as the shepherd of their flock. This means that pastors are to care for, guide, nourish, and help direct those that they serve. Undoubtedly, this translates to having some involvement in how the church allocates it's financial resources.
How the church should handle its money. Those who lead in spiritual matters should also lead in financial matters (Acts 4:35,37; Acts 11:29,30; 1 Timothy 3:3,8). Money should be handled in such a way that is defensible against any accusation (2 Corinthians 8:21). Money stewards should be trustworthy people.
A Church's Board of Directors has a Fiduciary Responsibility
The reason the ultimate responsibility of financial oversight lies with the board is, all boards of non-profits have a fiduciary responsibility for organizational oversight.
- Underestimate your church's income and overestimate your spending.
- Build a budget based on a percentage of last year's income.
- Consider a shorter budget cycle if needed.
- Make sure your budget accounts for cash flow, not just total giving.
A general rule of thumb is to budget off of 80% of the church's income (tithes and offerings) and put the rest in reserve. But as a leader, you may be called to dream outside financial comfort zones. Ask yourself, what has God placed in your heart to do, what do you need, and what's the gap?
There are valid pastoral, spiritual, and developmental reasons why pastors, and sometimes other key church leaders, should know what people give. But money can be a touchy subject. And people might be upset if they assume their giving is unknown to the pastor or others and then find out otherwise.
By being open and transparent with the resources God has provided your church, you will experience a freedom to talk about money, encourage giving, and reduce the opportunity for those within or outside your church to talk about financial mismanagement or malfeasance. Transparency can truly be liberating.
So while there isn't a legal requirement to provide financial statements for many donations, doing so is largely beneficial for both the church and the donor.
The book of Proverbs is full of much wisdom concerning money and its uses, but one proverb that is helpful for church leaders crafting a budget is Proverbs 22:7 (ESV) which says, “The rich rules over the poor, but the borrower is the slave of the lender.” This proverb is a good reminder to budget within your means.
Can the pastor be the treasurer?
It is generally not advisable for a pastor to also serve as the treasurer of the board of a church, as this can create a potential conflict of interest and may lead to concerns about financial transparency and accountability. But there is no law against this.
For a sovereign church, the Pastor and Board Secretary must sign. The Pastor and Sectional Presbyter must sign for a dependent/mother church.
Annual debt service less than 33% of general (unrestricted and undesignated) income. Annual debt service plus personnel costs not more than 65% of general (unrestricted and undesignated) income.
Ideally, your church should have 3-6 months of operation expenses set aside in a rainy day fund. Each month, set aside 5-10% of your church's income into the emergency fund each month to build it up. If you get to the 6-month goal, consider building it up to 12 months!
Your bylaws may require audited financial statements annually, which would indicate an audit by a public accounting firm. However, if your bylaws only require a review of your finances on a regular basis, this could indicate a review by qualified businessmen and -women in the organization would suffice.
Churches rely on donations from their congregation to operate and carry out their mission. However, it can be difficult to balance the needs of the church with the financial constraints of the congregation.
Planning Principles. There's no shortage of philosophies about how much reserve cash a church should hold. A common approach is to consider what it costs on average for the church to operate each month and then build a savings goal using that metric. Opinions vary, but two to three months' worth is a common guideline.
They discovered that churches with less than 200 in weekly worship attendance had an average budget of $219,370 with a median of $173,370. For those with 200-499 worshippers, an average budget of $675,290 and a median of $628,720 was reported.
It should be debt free. At all costs. They equate taking on debt with a lack of faith and trust in God's provision. But I've found that rigid rules and policies against debt are usually far more harmful than helpful.
One of the most common barriers to generosity is spending too much in other areas. If you don't have margin in your budget, it's difficult to be more generous in charitable giving. In other words, your consumption rate is too high.
Is it necessary to put name in the tithes envelope?
Although Kamugisha agrees that writing one's particulars on the tithe envelope is not mandatory, he maintains that it's good. “It shows that such Christians are faithful and committed to their church,” he says.
Some of the duties of a pastor may include: Leading religious worship services. Providing counseling to parish members, including comforting them when they are distressed, visiting those who are sick or offering advice in important decisions. Performing religious ceremonies, such as baptisms, weddings and funerals.
While the Bible does not explicitly call debt a sin, it's not necessarily a fan either. Congregations considering taking on church debt need to apply wisdom to their decision-making. A congregation can be handcuffed by debt. But being debt-free isn't necessarily unquestionably good for a church.
Matthew 6:19 “do not store treasures up on earth.” Luke 12:33 and Luke 14:33 “Sell everything you have and give the proceeds to the poor.” Matthew 6:24 “you cannot work for God and money at the same time, you have to choose who your master is.”
As a best practice, your annual church budget should provide for a positive cash flow (more money coming in than going out). Subtract total expenses from total revenue to ensure you have some money to set aside. Use these funds to build your cash reserves.
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