Budgeting for non-profits

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Faith-Based Non-Profit Budgeting Tips: What Should You Include in Your Church Budget?

Budgeting is a central part of church accounting. Non-profit budgeting gives your church clarity and guidance as it navigates paying for everything from payroll to Christmas services.

There are many ways to set up your church’s budget for success. Before you start creating plans, gathering data, or making forecasts, there’s one question that you have to answer: what should you include in your budget?

Common Church Budget Items

Every ministry’s budgetary needs are different. Size, vision, and mission are major factors here. Nevertheless, there are many elements that can be found from one faith-based budget to the next. Here are a few of the most common items included in a church budget.

Faith-Based Income Items

Every budget starts with income. This is simpler than expenses, but there are still many elements to consider. For instance, income could include:

  • Tithes and offerings
  • Fundraising campaigns
  • Individual donations
  • Income from investments and endowments
  • Grants
  • Revenue from a church coffee shop or bookstore

It’s important to consider all of the ways your church receives income. If you have multiple years of income (three to five years is ideal), you can look at past averages and use them as a baseline for your budgeted income.

Faith-Based Expenses

Expenses are where a budget can get tricky. There are a lot of things that churches spend money on throughout the year. Here are some of the things that frequently show up on church budgets as an expense:

  • Staff: Personnel, salaries, freelancers, and other payroll expenses are typically some of the biggest parts of running a church.
  • Operational overhead: Administrative and operational costs are recurring expenses such as office equipment or software.
  • Debts: Mortgage payments are the big one here, but if your church has any other loans, that should be on your budget.
  • Building costs: From new buildings to maintaining facilities, utilities, and equipment, this covers the cost of maintaining your church’s home base.
  • Savings: Most churches have multiple funds for different future initiatives. Factor these into your budget.
  • Ongoing outreach and programs: These are the ministries that are actively soaking up your church’s budget at the moment.
  • Emergency funds: It’s wise to maintain reserve funds for any slumps in giving or unexpected expenses that may arise.

These are some of the most common items. Other additions, like traveling expenses, marketing, and continuing education, occasionally show up, too. 

The way you choose to add each item to your budget can vary. What matters is that you take these income and expense factors into account. If everything is on your budget, it gives you a genuine big-picture perspective of your church’s projected financial activity.

What Else Goes Into a Good Church Budget?

Adding up the income and expenses associated with your ministry is an important part of non-profit budgeting. Just because you don’t pay taxes the same way as a for-profit business doesn’t mean you should skimp on your financial management. A simple thing like adding the right items to your budget can help you flesh out a thorough understanding of your church’s financial health.

Of course, gathering the above information is just one step in creating a good budget. You also want to invest in:

  • Assessing current church financial health: What is the state of your church right now? If you’re unsure, a faith-based financial consultant can help you.
  • Setting goals: Good financial goals give you an attainable objective that can help you move your ministry’s finances in a positive direction.
  • Choosing a budget format: Churches use different budgeting formats, such as line-item budgeting or zero-based budgeting — again, a professional consultant can help you decide which of these is best suited for your church’s budgeting needs.
  • Gathering past financial data: It’s hard to budget for the future when you don’t know what income, expenses, savings, investments, and other financial activities have occurred in the past.
  • Forecasting future financial activity: Using past data to project future needs is an essential part of any faith-based non-profit budgeting activity.

A budget may feel like a simple element of your church’s overall financial responsibilities. But it is a critical one, all the same. It deserves thoughtful investment and attention to set up and maintain.

Using Your Church Budget to Improve Your Church

A thorough budget is the foundation of healthy finances. This is as true in a non-profit setting as it is in business or personal life.

Take the time to invest in your church’s budget. It will give your ministry a deeper understanding and confidence with each decision that your team makes. It is also easier to maintain financial transparency when you understand the resources that your church is stewarding.

If you’re struggling to come up with an effective budget for your ministry, Chaney & Associates can help. Our team of Christian CPAs are seasoned accountants, financial consultants, and Bible-believing professionals who can bring a Godly and informed perspective to your church’s financial activity. Reach out, and we can begin the process of transforming your church’s budget for the better.

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