Where to save in a shrinking church budget

July 20, 2009 | by Rebecca Barnes
The bad times are worse. The National Association of Church Business Administration (NACBA) updated a 2008 economic survey in February, 2009, and found more churches struggling in the economic downturn. Some 800 NACBA members who serve in administrative roles in U.S. churches shed light on how congregations are coping financially.

Last August, 14 percent of survey respondents said their church was definitely having economy-related financial difficulties. In 2009, that number rose to 32 percent.

Not surprisingly, more congregations are looking for ways to cut their budgets.

Some 47 percent said their church had frozen or reduced staff benefits, up from 18 percent in August. Some 20 percent said they had staff layoffs and 26 percent reported postponing a major capital project. Those were up from August as well.

Are staff cuts or capital project postponements the best ways to deal with difficult financial times and the resulting shrinking church budget? How else can churches survive the recession?

Slashing the budget strategically

Funding programs and ministries that have little, if anything, to do with a church's primary mission and vision can unnecessarily strain both financial resources and human resources. It can also lead to a decline as congregants realize that rather than paying for progress in the church’s mission to make disciples, they are funding an organization.

According to Steve Stroope and Dr. Aubrey Malphurs, before developing a budget churches must first identify their core values, the mission and vision steering them in a particular direction, and the strategy to accomplish the mission.

"Without a clear vision, values, and a strategy, you’ll not be able to develop a strategic budget," Malphurs and Stroope write in their book "Money Matters in Church."

They also caution churches against simply increasing the budget, despite a downturn in giving, under the mistaken assumption that people will rise to the occasion and make up for the previous deficit with newfound generosity. In fact, rather than relying on percentage increases in giving to set yearly budgets, Stroope and Malphurs recommend using the pattern of numerical increase only as a more conservative tool. For example, an annual budget of $200,000 that winds up with a $30,000 surplus would be used to increase the budget by $30,000, but only in the following year.

Saving by creating optimal staff size

The largest single budget item for any church is its staff. Paid ministry personnel eat up the largest share of a church’s funds. According to Your Church magazine, on average, salaries and wages comprise 38 percent of church operating budgets. When asked what options they have considered to reduce expenses this year, 20 percent of churches say they have implemented salary freezes, followed by hiring freezes, pay cuts and layoffs.

Are there ways to slim down this budget category without layoffs?

Larger churches naturally require larger staffs. According to Tim Keller, senior pastor of Redeemer Presbyterian Church in New York, New York, and leader of The Redeemer Church Planting Center, once a church reaches an attendance of 500 with 2-3 staff members, a new ministry staff position can be justified for every additional 100 congregation members, even if the church doesn’t have the money for it.

"This creates a great burden on large churches, because unless you have a wealthy congregation, you can’t add staff as fast as you need to," Keller writes. The answer, he says, lies in a competent volunteer recruitment, support and deployment program. A large and growing church must learn to depend more on lay ministry. This means more decision making is left up to the staff and more basic pastoral ministry, as well as shepherding, teaching, and discipling is in the hands of volunteers.

"In summary, in small churches policy is decided by many, and ministry is done by a few. In large churches ministry is done by many, and policy is decided by a few," Keller writes.

Considering both these guidelines is important when considering staff changes due to budget. Cutting a staff member in a smaller church may mean that a particular part of ministry will cease to exist. Cutting a staff member in a larger church may mean renewed emphasis on training lay leaders.

Trimming the fat

Cutting travel expenses, education, and conferences is a step some churches and ministry organizations have taken this year as they try to make ends meet.

According to Eugene Mason, who writes online articles for Ministry Communicorps, a lot of large church budget items can be cut before leaders are forced to cut staff. He suggests a hiring freeze, or even a retirement fund matching program freeze. He suggests encouraging staff members who can to shift to part-time, and moving five-day-a-week workers to a four-day week.

"Bonuses, pay increases, ministry budgets and flexible expenses should be cut first," Mason writes. "Capital spending should be reduced. If the budget adjustments must result in loss of personnel, it’s crazy to leave in money for new Christmas decorations at the expense of a person’s livelihood. Personnel should be the last cut on the list, because when you make those cuts, they’re going to leave wounds."

Mason also mentions one budget item that should not be cut—especially in a time of financial struggle for more people than usual—the benevolence fund. Instead, he says churches should encourage more giving in this specific area.

"Consider special offerings with the proceeds going to families in need in the church and surrounding communities," he writes.

Topics: Administration , Architecture and Construction , Church Growth , Consulting , Finances & Fundraising , Leadership , Ministry , Personnel & HR , Research , Vision , Volunteers

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