Facility Management

Key Steps to Starting an Annual Budgeting Process

If your church hasn’t formalized an annual budgeting process, here’s a simple method to help you get started.


Deborah Ike  ·  May 15, 2018

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Step #3 – Consolidate

As each department leader submits the budget, consolidate those into a full church budget.  Add any line items not covered by department leaders (mortgage payments, etc.). 

Step #4 – Analyze

Carefully analyze the budget to see if the numbers are reasonable based on your experience and prior year trends.  Here are a few things to consider:

Review how much each line item differs from prior year actuals.  What is the logic behind that variance?  Does that explanation seem reasonable?

Determine if the totals add up to a gain or loss for the year.  If it looks like the church will lose money, you’ll need to decide what expenses to cut or see if the income estimates make sense.

Does the budget take into account any significant changes you plan to make in the upcoming year (building renovations, equipment upgrades, adding personnel, hosting a new event, or other big activity)?

Step #5 – Review with leadership

The process for this step depends on how your church leadership is structured.  You may need to review the budget with your finance committee, the elders, or other groups.  For these discussions, it’s important you provide more than a spreadsheet of budget figures.  Start off the conversation by highlighting the process you used to create the budget, what drove changes from prior year’s actuals, and how the budget supports the church’s vision for the coming year.  Once you’ve established those factors, then provide as much detail on the budget as each group wants or requires.

Step #6 – Revise or Finalize

You might receive feedback that leads you to make changes to the budget during the review process.  As that happens, make the necessary changes and resubmit per your church’s approval process. 

Finalize the numbers once each group has reviewed and approved the budget.  This may include entering the budget figures in your accounting software so you can run reports in the coming months to compare the budget versus actual totals for each line item. 

Budgeting can be a long and controversial endeavor as everyone has an opinion on how to manage money.  There’s one step you’ll want to weave throughout this process, and that’s prayer.  As a team, ask God for wisdom, direction, and unity as you seek to determine how best to manage the finances He entrusts to you.  Pray, do your due diligence as a team, and adjust the process as needed to make it optimal for your church.

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ARTICLE TOPICS

Facility Management · Operations · Blogs & Opinion · Budgeting · Finance · All Topics

ABOUT THE AUTHOR

Deborah Ike
Deborah Ike (formerly Wipf) is the President & Founder of Velocity Ministry Management; a company dedicated to vision implementation for church leaders. Over the last ten years, Deborah worked in the corporate arena to discover how to leverage business principles for ministry vision. She worked for Deloitte Consulting in their Strategy & Operations group and most recently, for Williams, as a project manager and risk manager. Deborah has a bachelor’s degree in Computer Information Systems along with the Project Management Professional (PMP) credential from the Project Management Institute. She’s the author of The Volunteer Management Toolkit (Church Edition) and you can find her articles on sites such as Pastors.com, XPastor.org, WorshipFacilities.com, and via The Church Network.
Contact Deborah Ike: deborah@velocityministrymanagement.com ·  View More by Deborah Ike


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COMMENTS

By Caitlyn Kate on May 18, 2018

Nice instruction. I love to follow your steps. You write very well, Deborah. hotmail log in