6 Ways to Maximize Your Budgeting Process

Some people believe a budgeting process is a waste of time. I don’t mean the people who have a visceral reaction to budgets and strategy, but there are prudent and wise leaders who view a long budgeting process as bad stewardship. They say things like:

We don’t even know how this year will end.

“We are using this year as a starter for next year, and this year’s story is still being written” is not an unwise or untrue statement.

My budget is irrelevant the first day.

Because things are changing, this is true. Budgets are based on a forecast of the future, and financial forecasters even articulate that the first rule of forecasting is that they are wrong. So why in the world would one invest inordinate amounts of time in a budgeting process?

I agree with their sentiment. A long and complex budgeting process with layers and layers of meetings and communication is overdone and a waste of important time. But before you go overboard with that statement, understand that I am not willing to abandon the budgeting process all together. Instead, I would rather maximize it, make it fruitful, and ensure it is helpful to the team. Here are some thoughts on how not to waste your budgeting process:

1. Start with mission and strategy.

Jack Welch declared that strategy is merely resource allocation, meaning a budget is really a reflection of your strategy. It shows what you value and where you are putting emphasis and focus. Connect any strategic planning you do to your budgeting process. Disconnecting strategic planning from budget planning is not wise. Make budgeting about strategy, not finances.

2. Identify the biggest opportunities for growth and impact.

As you plan, look for the biggest opportunities for growth. Set goals in connection with those opportunities, and plan to finance the biggest opportunities generously.

3. Find waste and re-invest it.

If you and the team have gotten stronger, there is always new waste to pull out of the spending. If you use the budgeting time to uncover expenses that could be better used elsewhere, you are often able to finance the big opportunities. Budgeting lesson: Take funds from what is less fruitful to fund what could be more fruitful. To do that, you must read the next item:

4. Don’t straight-line.

A common mistake in budgeting is to take what you are currently spending in a category and project that for the next year (called straight-lining). Basically, current expenses are copied and pasted as next year’s expenses. But there may be some unwise spending and waste within the category. If you straight-line, you may be straight-lining bad stewardship.

5. Use the time to learn and re-learn.

I learn something new every budgeting cycle. Because people are focused on the type of questions that budgeting raises, the conversations are quick and helpful. Approach budgeting time as a time to learn and re-learn how resources are allocated in light of your strategy.

6. Form a contingency plan.

For the last decade, I have used budgeting to form growth plans. But I have also learned to use that time, the time when everyone is looking deeply into the finances, to form a contingency plan. What will we do if we need to cut 10% from our budget? The plans can be high-level and even on just one page, but I would rather think about a challenging scenario before the chaos of the scenario hits. File the plan away and hopefully you will never need it.

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ABOUT THE AUTHOR

Eric Geiger

Eric Geiger

Eric Geiger is the Senior Pastor of Mariners Church in Irvine, California. Before moving to Southern California, Eric served as senior vice-president for LifeWay Christian. Eric received his doctorate in leadership and church ministry from Southern Seminary. Eric has authored or co-authored several books including the best selling church leadership book, Simple Church. Eric is married to Kaye, and they have two daughters: Eden and Evie. During his free time, Eric enjoys dating his wife, taking his daughters to the beach, and playing basketball.

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comment_post_ID); ?> Thank you for this information. I'm going to use this article to improve my work with the Lord.
 
— Abel Singbeh
 
comment_post_ID); ?> Thank you Ed for sharing your insights into the Church Growth Movement. I have my reservations with Church Growth models because it has done more damage than good in the Body of Christ. Over the years, western churches are more focused on results, formulas and processes with little or no emphasis on membership and church discipline. Pastors and vocational leaders are burnt out because they're overworked. I do believe that the Church Growth model is a catalyst to two destructive groups: The New Apostolic Reformation and the Emerging Church. Both groups overlap and have a very loose definition. They're both focus on contemporary worship, expansion of church brand (franchising), and mobilizing volunteering members as 'leaders' to grow their ministry. Little focus on biblical study, apologetics and genuine missional work with no agenda besides preaching of the gospel.
 
— Dave
 
comment_post_ID); ?> Thank you for sharing such a good article. It is a great lesson I learned from this article. I am one of the leaders in Emmanuel united church of Ethiopia (A denomination with more-than 780 local churches through out the country). I am preparing a presentation on succession planning for local church leaders. It will help me for preparation If you send me more resources and recommend me books to read on the topic. I hope we may collaborate in advancing leadership capacity of our church. God Bless You and Your Ministry.
 
— Argaw Alemu
 

Clarity Process

Three effective ways to start moving toward clarity right now.

When Vision and Discipleship Meet the Budget

The church budgeting process does not rank high on the list of the most motivating and inspiring experiences in a minister’s life. Pastors will line up to deliver a message, shepherd the hurting, pray for wayward, and lead the body forward. However, if a pastor lies awake at night dreaming of the church budget it is usually for the wrong reasons.

Let’s take a look at a popular budgeting process. It begins with ministry leaders submitting their annual requests for funds. Sometimes that number will be inflated because they expect to not receive their request, other times it can be rather under-prepared. Then the long vetting process begins. It is usually shaped more by fixed expenses and relational loyalties than most admit. Tough decisions are always present which either result in hurt feelings or a stressful extension of reasonable financial limits. By the time the budget is complete the process has gone on too long and fear or disappointment can be present among the team. Finally, it is concluded with a church approval process where it’s secretly hoped few show up to participate.

Does a positive, rewarding, and visionary budgeting process exist? If so, what does it look like? 

Let me suggest an approach. One that can increase vision, disciple your people, and set you free from the bondage that sometimes accompanies money.

  • Begin with a season of prayer and fasting.

Scripture teaches that the tithe is holy to the Lord (Lev. 27:30). This applies both to the one giving and the one spending. God grants you resources to use for His glory and to impact lives. Your leadership needs to feel deep gratitude and responsibility before the process begins. Releasing of ownership will change the language of the conversation from the very beginning.

  • Recount how God has been at work over the past year.

Where do you see the fruit of His hand or the anointing of His Spirit? Seeing the hand of God can provide a good indication of what He desires to do in the future. Ultimately you need to align your resources to God’s work. Acknowledging God’s work will prevent personal agendas, subjective opinions, and ministry silos from occurring. Released resources and the Spirit’s leading create wonderful meetings.

  • Stand on the foundation of vision clarity and a well defined discipleship strategy.

Every church is not great at everything. Do you know what your church does better than 10,000 others? God places unique people in unique communities in specific eras of time. Your church is called to a very specific mission that is not to mirror the church down the street or compete with the congregation across town. You are free to be you. This level of focus actually causes your ministry to expand. It helps you say a powerful “yes” as well as a confident “no.”

  • Learn your ROI.

Do you know the impact of a dollar spent? Are you investing the proper amount to gain the desired result to accomplish your dream? The longer a church exists the more its budget grows. It is rare that a congregation actually evaluates an expense based on the return. We tend to continually fund ministries long after they have lost effectiveness. Every ministry line is not mission critical and not all ministries are created to exist forever. The vision to glorify God and make disciples never changes, but strategy does.

  • Allow strength and strategy to lead.

This may be a radical concept for most, but give consideration to each budget year starting with a blank slate and not encouraging each department to make their own financial requests. Instead, allow the activity of God, the vision strategy, and a few select financially gifted people to create a solid business plan. This does not mean collaboration and dialogue are removed. It simply means those with the giftedness should lead under the clear direction of the bigger picture vision.

  • Spend strategically, not simply less.

This might be the most shocking piece of advice. Create a spending plan that only spends 90% of your previous year’s undesignated giving receipts. (This may take a few years to accomplish.) Most churches increase their budget 3-15% annually. Why do we do this? “It’s faith based and visionary,” the pastor says. However, it tends to create a lot of stress and reduced spending throughout the year. In reality it is far from visionary. It can be careless, unfocused, and demotivating. It creates a crisis money culture instead of a generous culture.

  • Plan to be surprised.

Every year God will call you to become engaged in something you can not currently see. Of course, something will break which is not fun. Finally the next growth step has to be funded. Prepare for what you can not currently see. Nothing is more financially freeing than cash reserves. It is a sure way to tell God “yes” before He ever asks you to go. Now don’t step over the line and hoard cash reserves either. God gives you money to invest in His causes.

  • Inspire others with the vision investment plan.

This is the opposite of simply getting church budget approval. A well designed spending plan and presentation should bring glory to God, affirm those who have invested, validate what the leadership have said in the past, and inspire toward the future. It should raise generosity. Loyalty and confidence in the leadership should increase. A faith-filled expectation for the future inspires all.

Everything is a choice. As leaders we choose the financial culture we create. Every conversation can be both a vision and discipleship conversation. It all depends on how you lead it. For more resources on how to grow a generous culture you can check out my blog toddmcmichen.com or my book, Leading A Generous Church.

Want to know more? Start a conversation with our team. We’re glad to offer our input. Your vision is at stake, so let’s talk.

> Read more from Todd

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ABOUT THE AUTHOR

Todd McMichen

Todd McMichen

Todd serves at the Director of Generosity by LifeWay. His generosity roots arise from leading multiple capital campaigns for local churches that together raised over $35,000,000 for their visionary projects. Since 2000, Todd has been a well-established stewardship coach, generosity leader, author, and conference speaker.

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COMMENTS

What say you? Leave a comment!

Recent Comments
comment_post_ID); ?> Thank you for this information. I'm going to use this article to improve my work with the Lord.
 
— Abel Singbeh
 
comment_post_ID); ?> Thank you Ed for sharing your insights into the Church Growth Movement. I have my reservations with Church Growth models because it has done more damage than good in the Body of Christ. Over the years, western churches are more focused on results, formulas and processes with little or no emphasis on membership and church discipline. Pastors and vocational leaders are burnt out because they're overworked. I do believe that the Church Growth model is a catalyst to two destructive groups: The New Apostolic Reformation and the Emerging Church. Both groups overlap and have a very loose definition. They're both focus on contemporary worship, expansion of church brand (franchising), and mobilizing volunteering members as 'leaders' to grow their ministry. Little focus on biblical study, apologetics and genuine missional work with no agenda besides preaching of the gospel.
 
— Dave
 
comment_post_ID); ?> Thank you for sharing such a good article. It is a great lesson I learned from this article. I am one of the leaders in Emmanuel united church of Ethiopia (A denomination with more-than 780 local churches through out the country). I am preparing a presentation on succession planning for local church leaders. It will help me for preparation If you send me more resources and recommend me books to read on the topic. I hope we may collaborate in advancing leadership capacity of our church. God Bless You and Your Ministry.
 
— Argaw Alemu
 

Clarity Process

Three effective ways to start moving toward clarity right now.