ECCU Blog

The way a ministry builds its budget has significant impact on how successfully the ministry lives out its mission. For larger ministries, the need for budgets to be built strategically and aligned missionally is crucial. The question is how. How do you build this kind of budget? 

I know this question is on ministry leaders’ minds because so many of them signed up for ECCU’s recent Advanced Budgeting webinar. So I’m looking forward to presenting an educational session on advanced budgeting at the upcoming Christian Leadership Alliance (CLA) 2013 National Conference in Anaheim, California. And I’m thrilled to be co-presenting with Caryn Ryan, whose credentials couldn’t be more impressive.

Caryn is the managing member and founder of Missionwell LLC, a full-service accounting, finance, and virtual office solution that exclusively serves nonprofits. She has extensive experience in major industry settings like Amoco Corporation and nonprofit settings like World Vision International, where she served as CFO.

To set the stage for our session at CLA, I asked Caryn a few questions about budget building.

Mark: Caryn, what are some strategic steps budget planners of large organizations should take to ensure that the process heads in the right direction?

Caryn: The most successful budgets have senior executives driving them. If the budget is a finance/accounting department effort only, it’s going to be less successful. Beyond alignment with the strategic plan, it’s helpful to have clear goals or business imperatives for the budget for the coming year. Examples might be absorbing new activity without affecting fixed costs, taking a deeper dive into the effectiveness of specific programs, freeing up funds to establish an operating reserve account of $XX without disrupting operations, or even starting a critical program when funding is at 60%.

Mark: Many ministries experience tension when it comes to aligning money and mission. What are some guiding principles or best practices to assure that a ministry’s budget reflects priorities?

Caryn: Aligning money with mission sounds easy, but is surprisingly hard to do! Start by listing out your strategic objectives/priorities, then translate them into strategic goals. Next, lay out multi-year strategies to achieve the goals. This is where the budget starts to come in. Each strategy (program or activity) requires direct resources, whether people and/or program dollars. Identify the direct resource (people and/or dollars) for each strategy at the level required in the budget year to achieve the longer-term goal.

Now the fun begins! Start a conversation to help answer these and other questions:

• Are resources available to fund all strategies?
• Do goals need to be adjusted?
• Are fixed costs and overhead affordable?
• Do programs or activities seem to move the organization towards its goals quickly enough?

The heart of the budget is to move the organization toward its goals efficiently.

Mark: What are some keys to assuring that a budget serves the organization well after it is approved?

Caryn: The simplest way to keep a budget alive is to consistently report actual results compared to the budget. Color coding variances can highlight the ones that are significant and require attention. Focus staff and teams on those variances. Also, keep in mind a budget doesn’t have to be completely financial. For instance, you can budget the non-financial elements of your balanced scorecard and report against those variances, too.

Budgets die after approval if they are not used as accountability tools!

If the organization doesn’t have a system of accountability, that should start with the board. The board negotiates with the president/executive director on what elements he or she will be held accountable. This may mean employing a flexible budget/agreement on what is and is not controllable in the year, or a range of acceptable outcomes around key line items. Pay increases, bonuses, and other rewards should be linked to achieving budget goals.

Another part of the accountability spectrum is staff—paid or unpaid, outsourced or direct employees. Once strategies have been funded in the budget, then people can be linked to the strategies. Typically, this is expressed as a percentage of a person’s time against an annual performance goal. The budget stays alive for the individual through their team meetings and meetings with supervisors as they compare actual performance to objectives aligned with the budget.

When I visited the Rock Church in San Diego a few years ago, the first person I met was their receptionist. After she greeted me, I asked her to tell me what they were all about. “We’re a do something church,” she quickly replied. Are they ever! A year ago they invested the equivalent of 100 full-time people (235,000 volunteer hours) serving their city.

How do they do it? Next month, Senior Pastor Miles McPherson and his team will tell their story at the Do Something Church Summit on Friday, March 8. To see and hear more about the Summit, watch this video trailer:

To get more of an idea of what the Rock Church has learned by getting serious about serving, I emailed a few questions to Miles. Here’s what he said.

MBG: San Diego has experienced the love of Jesus through the Rock Church. How have people in the city responded to that love?

Miles: The volunteer work of the people of the Rock has fostered many relationships and partnerships with community-based organizations. Once they see that we are there to serve, ongoing partnerships are fostered that result in continued open doors for service.

MBG: What are some hurdles pastors typically face when presenting their congregations with the vision of becoming a Do Something Church?

Miles: Pastors will feel burdened to organize all of the ministries with their staff, feeling like it can get messy using volunteers to lead the efforts, but this is the beauty of the model. There are so many high capacity volunteers waiting for the chance to get in the game. If their efforts were unleashed, the amount of ministry they could accomplish would grow exponentially.

MBG: What’s one significant way that being a Do Something Church has changed the Rock Church?

Miles: It has created a culture of service among our congregation. People are now trained to look for and address practical problems facing the people of our community instead of just walking by and praying for them.

MBG: Besides a customized plan for their churches, what are a couple major takeaways people can expect by attending the Summit?

Miles: They can expect to take away a whole new philosophy on outreach. The Summit will provide them with a complete plan of action for how to launch dozens of volunteer-led ministries in their church. They’ll be equipped to plan church-wide community service events in partnership with community leaders—including their city’s mayor. And they’ll take away new resources and tips to expand their reach through technology. This is going to be an event you don’t want to miss!

To learn more or register for the Summit, visit dosomethingchurch.org/summit. Cost is $99 per person, which includes a Thursday-evening dinner reception.

Have you discovered that serving your community opens doors for the gospel? Please comment and let us know how.

This is the final post in our series of email interviews with presenters for the upcoming 2012 Financial Forum for Ministries.

Dave Moja is a partner and national director of not-for-profit tax services with CapinCrouse LLP. He will discuss recent Internal Revenue Service (IRS), congressional, and court pronouncements. He’ll also talk about ministers’ payroll and unrelated business income as well as health care compliance issues. Here are Dave’s responses to my questions.

MBG: How will your presentation help attendees serve their ministries?

Dave: The tax laws affecting churches and ministries are constantly changing. And, in many cases, the accounting teams at these organizations do not have a central place—no “one-stop-shop”—where they can go to keep up with all these changes. This session will provide up-to-date information on tax and compliance issues that should be pertinent to attendees. They should leave better equipped to handle the continual onslaught of government requirements. We are most definitely in a “season of compliance.”

MBG: What are three important takeaways attendees will learn during your presentation?

Dave: The first thing attendees will take away is a summary of recent IRS pronouncements that affect their ministries. They will also receive practical insights and a list of the best methods for handling not-for-profit tax and compliance issues. A third takeaway will be predictive insight into what new requirements are expected in 2013 and beyond.

MBG: How will the format of the forum make it an even more valuable learning experience?

Dave: I will tackle the daunting task of keeping up with compliance issues by providing a number of handouts that should allow attendees to focus on the presentation and take valuable data with them for future reference. This kind of material is best explained in a give-and-take format, so attendees will have ample opportunity to ask questions.

Dave will present at the financial forum in Colorado Springs on December 4, 2012. Follow this link to learn more and sign up.

This is the fifth in our series of email interviews with presenters for the upcoming 2012 Financial Forum for Ministries.

Brian Kluth is former senior pastor of the First Evangelical Free Church in Colorado Springs, who commissioned him as a generosity minister-at-large to the global church, and founder of Maximum Generosity. He will appraise current funding realities in churches and ministries today and share best practices and resources that staff and leaders can use to inspire generosity and increase giving. Here are Brian’s responses to my questions.

MBG: How will your presentation help attendees serve their ministries?

Brian: Growing economic difficulties are leading to decreased giving in many churches and ministries. As a result, they’re having to adjust to a “new normal” when it comes to finances, fundraising, and budgeting. This session will help attendees discover practical and creative ways to move their ministries forward in the midst of tighter budgets and a challenging fundraising climate.

MBG: What are three important takeaways attendees will learn during your presentation?

Brian: Empty Tomb, Inc., reports a 40-year decline in the percentage of income that Christians in the United States donate. The first thing attendees will take away from this session is an understanding of how major national trends impact giving to ministries and churches. They will also discover ten ways God provides and moves ministry forward, including nine that are possible even when the budget says “no.” The final takeaway is a list of five key ingredients needed to make any fundraising and generosity initiative more successful in churches, ministries, and the work of missionaries.

MBG: How will the format of the forum make it an even more valuable learning experience?

Brian: A variety of valuable materials will accompany the presentation, including graphs on giving trends, lists of the 50 best practices to increase giving and 80 helpful websites, planning worksheets, and other generosity-related handouts. Attendees will return to their churches and ministries with many resources to share with staff, leaders, and committees.

Next up will be Dave Moja, a partner and national director of not-for-profit tax services with CapinCrouse LLP, who will discuss recent Internal Revenue Service, congressional, and court benefits. He’ll also talk about ministers‘ payroll and unrelated business income as well as health care compliance issues.

Brian will present at the financial forum in Colorado Springs on December 4, 2012. Follow this link to learn more and sign.

Would you like to learn about important ministry financial issues like the impact of ethics on accounting and how to stay informed on legislative changes affecting ministries? What about fundraising best practices or the challenging task of aligning your ministry’s money and mission?

You can learn about these topics and network with other ministry leaders at the 2012 Financial Forum for Ministries in Colorado Springs on December 4, 2012. For the fifth consecutive year, ECCU is teaming up with CapinCrouse LLP to offer this event.

This year’s presenters include John Thornton, professor and Leung Chair of Accounting Ethics at Azusa Pacific University. John will talk about the impact of ethics on accounting.

There’s no cost to attend this event, which includes lunch and allows you to earn up to 5 CPE credits¹ and 0.4 NACBA CEUs².

Two presenters at the Colorado Springs forum—John Thornton and ECCU Ministry Development Officer David Lee—are also presenting at the three financial forums in California this week. I introduced them in past blog posts. Joining them in Colorado will be Brian Kluth and Dave Moja, who I’ll introduce to you in the next couple of weeks.

¹ _{CapinCrouse LLP is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors through its website: www.learningmarket.org.}

² _{CapinCrouse LLP is a National Registered Continuing Education Provider (NRCEP) with the National Association of Church Business Administration (NACBA). This program is a premier comprehensive continuing education program related to administration in the local church. It is designed to enhance the ongoing professional development of NACBA members and other ministry professionals, through the offering of quality learning experiences. 0.1 Continuing Education Units (CEUs) will be granted to persons who properly register and attend one contact hour of a minimum of 50 minutes of lecture, presentation, or discussion on approved topics.}