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Financial planning in a church setting is both unique and necessary. This article explores the benefits and provides tips for planning a ministry's finances.

Churches are Christ-centered, faith-based organizations. A healthy church prioritizes Kingdom Building concepts — and rightfully so. Nevertheless, every ministry needs to consider the financial activity required to remain in operation.

This isn’t easy. From running capital campaigns to keeping the lights on, the nuances of church finance take a lot of expertise to execute effectively. Overseeing the complex and overwhelming monetary ebb and flow of a church can be confusing, which is where planning comes into the picture.

Church financial planning is a key concept that is just as important in a building with a sanctuary as it is in one with corporate offices. If you’re unsure what it looks like to plan out your money management activity in a church setting, you’re not alone. 

This resource can help you understand what the term means, the benefits that come with proper financial planning in a church setting, and some tips that can help you plot out a fiscally healthy future for your ministry. Let’s dive in.

Table of Contents

  • Church Finances 101: What Is Church Financial Planning?
    • What Does Financial Planning Look Like in a Church Setting?
  • 5 Benefits of Church Financial Planning
    • 1. Church Financial Planning Enables Informed Decision-Making
    • 2. Church Financial Planning Inspires Confidence
    • 3. Church Financial Planning Maintains Transparency and Clarity
    • 4. Church Financial Planning Prepares for Inconsistency
    • 5. Church Financial Planning Encourages Healthy Investments
  • The Spiritual Component of Church Financial Management
  • Consultants for Church Financial Planning
    • The Importance of Working With a Faith-Based Accountant
  • Additional Tips for Financial Planning in Your Ministry
    • Don’t Skimp on Financial Planning as a Church
    • Stay Up-to-Date on Laws and Regulations
    • Maintain Reasonable Financial Policies and Reporting
    • Make Your Finances a Church-Wide Factor
  • Embracing Church Financial Planning

Church Finances 101: What Is Church Financial Planning?

On a surface level, financial planning is as simple as it sounds. It is a comprehensive approach to finances that considers both where you are at the moment and where you want to be in the future. 

To put it another way, a thorough financial plan is a roadmap. It considers your current location, your final destination, and the stops that you’ll hit along the way. 

On an individual level, financial planning includes things like setting goals, identifying next steps, and creating long-term investment strategies tailored to your specific financial objectives. These can span the gamut, from saving for short-term education to preparing for retirement.

On a corporate level, these basic concepts still apply, but the specific goals change. For instance, a business financial plan might start with an overview of its current financial status, including key data such as cash flow projections and, if a business is new, a break-even analysis. From there, it could include forecasts for financial activity, such as sales, expenses, and profits. End goals typically revolve around profitability and growth, as well.

What Does Financial Planning Look Like in a Church Setting?

When you apply financial planning in a church setting, many of the same guiding principles apply. However, there are distinct differences.

For example, a church financial plan is for a non-profit organization. That means it naturally shouldn’t focus on profitability. At the same time, it should factor in increased cash flow from donations that come from forecasted growth.

Church financial planning can also detail a variety of financial responsibilities. Who is responsible for church finances in a particular organization at the moment? Will they remain in charge of managing church finances as your ministry grows and works toward its financial goals?

Speaking of goals, financial planning can also detail what these are. Common church financial goals include things like hiring new staff, investing in a new ministry, or paying for a new building.

A financial plan can also help define how a church will manage its finances. One example is choosing a budgeting method. Zero-based budgeting is a popular method that many churches use to make sure all of their costs remain addressed on a cyclical basis. 

Accounting methods are also important to consider. For instance, general accounting methods focus on profitability. Non-profit organizations like churches tend to use fund accounting as a more suitable alternative for running an organization that isn’t focused on profit and financial growth.

Along with setting up guidelines for church accounting and budgeting, church financial planning can help with:

  • Reporting on finances: From annual reports to your congregation to W2s and payroll taxes, how should your church report on your finances, both to your attendees and the government?
  • Donation management: Are you collecting donations through multiple giving channels? How are you managing them after the point of collection?
  • Fraud prevention: Church administrative teams can oversee millions of dollars in cash flow each year. Are there safeguards against fraud and embezzlement in place?
  • Targeted fundraising: From managing endowments to overseeing an effective year-end giving campaign, what plan should you have in place to guide your church’s fundraising efforts?
  • Setting financial goals: What are the financially focused goals and objectives that your ministry is aiming for in the short, medium, and long term? What benchmarks should you hit as you work toward them?
  • Creating long-term vision: Financial stability and purpose create a baseline of confidence for many different church-based activities. Where does God want to take your ministry? What vision is your church leadership team working toward? What financial elements will help?

Quality church financial planning should touch on every area of your ministry (both present and future) that involves money. It’s worth reiterating at this point, too, that finances don’t need to be the focus of your ministry to make financial planning important. On the contrary, if you want finances to facilitate more important ministry goals (rather than hold them back), you want to put a plan in place to help guide you.

5 Benefits of Church Financial Planning

We already touched on a few of the benefits of church financial planning in the definition above. Here are a few more ways that proper planning for a church’s finances can have a positive impact on your ministry.

1. Church Financial Planning Enables Informed Decision-Making

It’s difficult for a large group of people to operate as an organization without understanding what your financial status is. Do you have money to cover an upcoming event? Can you afford to bring in a guest speaker? What can you spend on this year’s Christmas program? A solid financial plan helps you make informed decisions based on available monetary resources.

2. Church Financial Planning Inspires Confidence

It’s difficult to be confident while making day-to-day ministry decisions when you don’t know what you’re working with or where you’re going. The understanding of goals and resources that come with a good ministry financial plan makes it easier to act with confidence.

3. Church Financial Planning Maintains Transparency and Clarity

When there’s a clear path in place to collect, allocate, and spend your ministry’s money, it’s much easier to maintain transparency. Financial planning in church also establishes a sense of clarity about who should be doing what, when, and why. Everyone knows their responsibilities and where you’re trying to go as a group.

4. Church Financial Planning Prepares for Inconsistency

Church giving is anything but consistent. Financial planning establishes clean budgeting and money management parameters that, when followed, make it easier to work through the ups and downs of giving.

5. Church Financial Planning Encourages Healthy Investments

Churches don’t always receive cash gifts. When more complex donations, such as an endowment, are given, a financial plan can provide a long-term perspective on how to properly and ethically manage the investment.

The Spiritual Component of Church Financial Management

One of the most unique aspects of financial planning in church is the faith-based part of the equation. When you review the financial state and plan the future of your ministry, your line of reasoning is much more complicated than assessing profitability. 

You must consider how your finances can support your ministry’s calling and God-given objectives. This entirely changes how your accounting activity looks. In a for-profit business, leaders create policies and procedures to enhance revenue, growth, and profitability. 

Those same financial procedures and policies must be created in a church, but the emphasis is different. Rather than profits, you are seeking to align things like donation income and growth with a ministry’s values and mission.

In addition, someone managing church finances must consider a variety of moral imperatives and ethical filters as they make decisions. These go far beyond basic honesty and anti-fraudulent legal requirements. Church finances integrate things like generosity, giving, contentment, accountability, and integrity while still attempting to keep a church’s accounts in the black.

Fortunately, this isn’t a problem. It’s simply a mindset shift (albeit an important one), and a church accountant needs to look no further than the Bible for guidance on how to handle it. The Scriptures are full of inspirational and educational texts about how to handle money. In Luke chapter 12, Jesus warns against covetousness and the abundance of worldly possessions. The second chapter of Acts shows us how the early Church shared with and cared for one another. Paul teaches contentment in any financial state. Proverbs is chock full of financial stewardship advice.

These have powerful and meaningful applications when applied to modern bank accounts and balance sheets. This is why, if you choose to work with a third-party accountant (more on that in a minute), it’s important that you find an individual or agency that understands and is committed to accounting practices in a church setting.

Financial planning may feel like something exclusively reserved for individuals and businesses as they live out their secular, worldly lives. But that couldn’t be further from the truth. Fleshing out a church’s financial present and future is a critical activity that, when done well and within Biblical parameters, reinforces rather than undermines a faith-based approach to running an organization.

Consultants for Church Financial Planning

Understanding what financial planning is and how it applies to a church is a good first step. Seeing the benefits that it offers and how it can support a Biblical approach to running a church is also important. But none of that changes the fact that church financial planning is a complex and overwhelming activity.

Enter the church financial planning consultant. A financial consultant is an individual who is uniquely qualified to address both the smaller items and the big-picture elements of finance. They can take all of the smaller aspects of money management, such as balancing a budget, assessing cash flow, and tracking progress toward financial goals, and weave them into a comprehensive picture of your church’s finances, both now and to come.

A financial consultant can look at your budget and suggest changes. They can help with risk management, identifying inefficient ministries, discovering tax deductions, and reviewing compliance. 

On a big-picture level, they can look at your growth goals and help align them with the necessary investments or expenditures required to reach them. They can analyze endowments and investments and ensure that they remain healthy assets.

A good financial consultant is also going to come equipped with experience and an up-to-date understanding of 21st-century finance. They can use this to improve goals and align them with short-, medium-, and long-term timelines.

The Importance of Working With a Faith-Based Accountant

A good CPA (certified professional accountant) is going to bring a wealth of knowledge, experience, and industry tools with them. They’ll know how to manage money better than anyone outside of their industry — and if they’re a third-party agency, they will be much more affordable than a full-time hire.

However, a good CPA isn’t enough. You also want to make sure you find an accountant who knows the church. Working with a Christian CPA has unique benefits, such as:

  • Stricter ethical expectations: Biblical standards should guide a Christian accountant.
  • Easier communication: Christian CPAs speak the language of the church already.
  • A stewardship mentality: A Bible-believing CPA will understand a stewardship approach to organizational leadership.
  • Kingdom-minded guidance: CPAs understand the unique Kingdom-building potential of a church and can pray and believe alongside you, even as they provide practical consulting and planning guidance.

Finding the right kind of third-party accounting advice is as critical for church financial planning as it is for any other aspect of running a ministry. 

This is why, at Chaney & Associates, we have exclusively focused on and invested in being the accounting firm for the Church. We want to provide quality church financial planning services that align with a ministry’s needs.

Additional Tips for Financial Planning in Your Ministry

There are many church finances best practices that go into proper financial planning for a ministry. While we covered many of them above, here are a few additional best financial practices for churches to keep in mind when considering how to go about planning for your church’s financial future.

Don’t Skimp on Financial Planning as a Church

The first step in maintaining healthy church finances is investing in making financial planning and execution a priority. If you want to tap into the benefits that come with properly managing a ministry’s finances over time, you have to take the time and invest in this area.

If you don’t have any financial planning measures in place yet, use your initial push to set the tone. Establish the basic financial policies of church for your organization. Use Biblical concepts and teaching to guide how your church will handle its finances — and then use that as a foundation to build on.

Stay Up-to-Date on Laws and Regulations

It’s tempting to see financial planning as a concept that is focused on the future. But remember that you’re also considering the present as you plan. One area of your current finances that’s important to address is laws and regulations. Are you staying compliant with things like payroll? 

Once you’ve checked for compliance in the here and now, a good financial plan continues to look for ongoing changes. This is where having a quality financial consultant, either on staff or as a third-party support option, can make a big difference in providing peace of mind.

Maintain Reasonable Financial Policies and Reporting

As non-profit organizations, churches don’t have to file taxes in the same way as for-profit businesses. But just because there is less to report to the IRS doesn’t mean all financial reporting should go to the wayside. On the contrary, it’s wise to consider what areas of financial management you want to report on a regular basis. 

Statements that report financial activity, expenses, positioning, and cash flow can be insightful. Adding certain financial updates to your ministry’s annual report can also help maintain transparency with your congregation.

Make Your Finances a Church-Wide Factor

As you work to integrate healthy financial planning into your church, look past your leadership. How can you make healthy finances a church-wide factor? This includes more than basic reporting and transparency.

Can you set up a financial ministry that helps teach your attendees about how to plan for and steward their resources in a Biblical manner? Financial education is part of a Christian lifestyle, and it can help with living a healthy, God-honoring life, both individually and as a ministry.

Embracing Church Financial Planning

Financial planning isn’t the same in a church setting as it is in a business one. Nevertheless, the organizational expenses and monetary interactions that come with running a ministry require a thoughtful, planned-out approach to how you handle your finances. 

Each church should build its financial roadmap using a Biblically founded, faith-based approach to finance. If you find you’re struggling to bring together the concepts of financial expertise and Christian stewardship, the team of Christian CPAs and consultants at Chaney & Associates can help. 

Contact our team today, and we can start the process of setting up a strong financial plan that honors your church’s mission and values while also helping you achieve your organizational goals over time.

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