The best way to cure an illness is to prevent it from happening in the first place. Maintaining your ministry’s good financial health is the first step in preventing a “church financial heart attack.”
On Thursday, April 14, 2011, ECCU Ministry Development Officer David Lee will present a free webinar titled Church Financial Health: A Lender’s Perspective. We asked David to tell us more.
MBG: What can attendees expect to take away from this webinar?
Lee: The webinar is intended to equip leaders in the church to better understand some of the key metrics banks look at to determine their financial health. And if your church has a loan with a balloon payment coming due soon, it is critical that you understand how lenders are looking at your numbers.
MBG: What does a financially healthy church look like?
Lee: There are some general financial principles that all churches need to consider, like liquidity and key performance ratios; and yet we all recognize that not all churches look the same. I will provide some key metrics that churches can use as a goal.
How has your ministry assessed its financial health?
.Churches like other non-profit organizations must be accountable to the people whose contributions keep the church running financially. Especially in the financial arena the more open church leaders are the more trusting churchgoers will generally be. At the same time keep business in its place remember it was the apostles treasurer who betrayed Jesus and from a human perspective that was largely because he put financial concerns ahead of spiritual.
I have a question that desperately needs a solution.
I’ve been going to a church for many years and always gave generously. However, this year we have a new president and board that is about to financially wreck the church. They refuse to listen to my/our (I’m chair of the finance committee) financial advice. This new group has placed the church in a disasterous financial position with a very negative budget. Expenses vastly out pace expected revenue.
I refuse to aid this group in such reckless endeavors so I don’t want to give any more. (Sort of “let them wallow in their own misery”). On the other hand, I can’t let the Church (more than 50 years old) go down the tubes.
What’s the solution? Any ideas?
CHURCHFINANCEQUESTION@gmail.com
The solution you’re seeking may not be as simple as we would all hope. I know you’ve heard this before but I can’t emphasize this enough – seek wisdom and clarity of direction through prayer. Just based upon what you outlined, there appears to be a deeper dividing line among the leadership and what you’re describing could be a symptom to a bigger problem. However, assuming that’s not the case, try not to make this your own personal battle. There are members in the congregation who may or may not agree with you but one way to begin arriving at a solution would be to increase the financial transparency to the stakeholders (congregation) – share the basic income/expense numbers during an appropriate business meeting. If the church’s budget shows significant (very subjective) operating loss, it’s worth discussing how the church board plans to fill the deficit (via cash balances?). Could it be that the budget showing the operating loss includes depreciation and certain “one-time” expenses like capital replacement costs that would contribute to a higher operating loss than historical?
One question I will usually ask board/finance committee members is if they operate their personal finances in the same manner (spending more than income on a consistent basis). If the leaders in our local churches plan to not spend everything that they earn, then why would we subject the very churches they lead under a different financial principle?
If you indeed have a mortgage with a lender, you will want to have them speak into how they would view the budget – this may provide the “objective” perspective your board needs to hear and not sound like a “personal” opinion.
I know there are many who have or are experiencing similar issues – we would welcome your insights and wisdom.