The previous post looked at some biblical passages of interest in relation to using a church's resources. This post is about budgeting and the finances of a church.
1. In the denomination to which I belong (The Wesleyan Church), the "fiscal year," the finance year, the budgeting year, runs from May 1 to April 30.  A church's finances should thus be audited yearly thereafter, in May or June. In smaller churches, the books are usually kept by a volunteer treasurer. In larger churches, there is usually a paid staff member who keeps the books, a "director of finance" or "chief financial officer" (CFO).
One source suggests that the process for approving a church budget for the following year should begin at least four months before the next fiscal year.  In the church to which I belong, the board mostly voted on next year's budget in February, which some follow-up discussion in March.
The bulk of the budget planning can be done by a special budget committee or, in the case of the church to which I belong, a standing finance committee. In the church to which I belong, of a size between 1000 and 1500, the finance committee works with the director of finance to propose a budget that the broader board then adjusts or approves. In a smaller church, the board might play a more detailed role and the drafting of a proposal entrusted to the pastor/treasurer.
2. Most church boards will want to receive a monthly report that gives a sense of where the church is in its spending. This usually includes a breakdown of basic categories (a complete line item is probably overkill, although the treasurer should be able to provide it), the proposed budget for that category and the "year to date" expenditure in that category.
A good treasurer will know the typical ebb and flow of giving over the course of a year. So a church usually receives more in December than January because people are wanting to get some last minute charitable giving in so they can take it off of their taxes. Many churches in Florida lose a sizable portion of their congregation in the summer, as retirees head back north to Michigan and other places. So a good treasurer will know that the summer will be lean giving months and the winter much fatter.
A majority of church goers do not tithe. If 20% of your church attenders tithe, you are doing well. Personal giving information should be kept in strictest of confidence and pastors should resist the temptation to shame a congregation. Very few individuals should be privy to individual giving information. In some cases, a pastor may not want to know so that it does not interfere with relationships.
If the spending gets well beyond what it should be to date, expenses should be tightened. If individual ministry areas have a budget, each area might be asked to cut their budget by a certain amount. Financial expenditures can be curbed by cutting any number of corners (e.g., office supplies).
3. In 2015, churches of less than 200 in attendance had an annual budget of between $100,000 and $300,000.  Churches from 200 to 500 attendees ranged mainly between $300,000 to over $750,000 in budget. Churches of 500 to 1,000 ranged mainly between $750,000 and $2,000,000. Churches of over 1,000 tended to have a budget of over 1.5 million.
The percentages spent on various areas seem to be fairly consistent regardless of church size. The biggest expenditure of a church budget is often the salaries and benefits of the pastoral staff. A typical church might spend 45-50% of its budget in this area. This amount includes everything from base salaries to housing allowances to insurance to pension.
A number of resources suggest that a healthy ratio of church staff to church attendees is 76:1.  For every 76 people attending your church, you have one FTE or full-time equivalent of a staff member. A full-time equivalent (FTE) adds up part time staff. So if you have two part-time staff at 29 hours each, you might consider that the equivalent of one full-time person. 
The typical pay raise each year for the top-staff at a church is around 3%.
4. About another 20% of a church's budget might typical go for expenditures having to do with facilities and the debt thereon. So hopefully a church is not paying more than 10% of its yearly income on a mortgage and debt service in general. Then another 10% might go to utilities and maintenance of property.
5. Most churches have ministry related and outreach expenditures. This can include giving to missions far away or missional projects closer to home. The typical church spends at least 10% of its intake toward outreach or mission in some form or another.
The Wesleyan Church has a rather large (and complicated) expectation for contributions of local churches toward the denomination at large and its educational institutions. For the first $500,000 of a church with normal status, 2.75% goes to the denomination at large and 3.25% goes to the denomination's educational institutions.  The district in which that church is located then takes a cut as well. As such, a local church in the Wesleyan Church can find itself paying 10% of its income to the denomination.
6. The typical church has at least 2% of its budget in cash reserve. Perhaps it would be more ideal for an organization/individual to have at least a month's worth of reserve (a little over 8 percent).
7. When setting budget for the next year, there is a balance to find between realism and optimism. On the one hand, if a church never pushes itself to give more, it is unlikely it will. On the other hand, one personality segment of your church is likely to get frustrated if a church is always failing to reach its giving goals, even if it manages to end every year in the black.
Know thy congregation. Not every year needs to be a stretch year, but not every year has to end in budgetary defeat either.
Next Week: Pastor as Leader 39: Capital Campaigns
 Here is an annual report for a local church reporting attendance, income, and giving to the larger denomination of The Wesleyan Church.
 D. Martin Butler, Foundations of Church Administration: Professional Tools for Church Leadership, B. L. Petersen, E. A. Thomas, and B. Whitesel, eds (Kansas City, Beacon Hill, 2010), 67-79.
 "How Churches Spend Their Monday: An Executive Report," Church Law and Tax Store, 2014.
 E.g., "Salary, Staff, and Budget Trends of Large Churches," Church Law & Tax.
 While the Affordable Care Act is law, it is conventional to keep part-time staff under 29 hours so that an organization is not legally required to provide health care for them. In that sense, two part-time staff at 29 hours each is not really the financial equivalent of one full-time employee.
 Monies used for loans, received by bequests, given to missions, and so forth are subtracted from the income number. Income beyond $500,000 is then graded in the percent on which USF-EIF (United Stewardship Fund-Educational Investment Fund) has to be paid. From $500,000 to a million in income, the 6% total goes down to 4%. From 1 to 2 million, it goes down to 2%, and there is no assessment on funds over 2 million.
Leadership in General
- The Mission, Great and Small
- Identifying Mission
- Casting Vision
- Vision Statements
- Thinking Missionally
- Evaluating Strengths
- Identifying Core Values
- Setting Goals
- Leading Change
- Evaluating Progress/Resetting Goals
- Managing the Church
- Leadership in the Early Church
- Leadership Structures in Church History
- Church Position Descriptions
- Leading Healthy Teams
- Good Communication
- Hiring, Recruiting, and Firing
- Causes of Conflict
- The Third Mark of the Church
- Basic Conflict Resolution
- Leadership and the Gentile Mission
- Navigating Disputable Issues
- Athanasius: No Compromise!
- Zwingli: No Compromise?
- Tillich's Protestant Principle
- Preventing Group Exit
- From Out Group to One Group