Finances can be a tricky subject in any church or nonprofit organization. However, without adequate funds, your church can’t continue to minister effectively. In a previous post we discussed some of the rules of financial management for churches, stating that the right financial management plan is key to your church’s success. Your first order of business when it comes to financial planning should be to purchase a Connecticut Church Insurance policy. The next step to managing your church finances is to create a budget and stick with it. So how do you go about this?
A church budget, according to FreeChurchAccounting.com, is a great tool for allocating financial resources and for planning and controlling their uses. The website offers the following seven tips for effective church budgeting.
- Establish a projected level of income. This can be determined by reviewing your church’s tithing history and examining if it’s increased in the last few years or declined.
- Determine expenditures for the budget year. The largest area of expenses is actually compensation to the church’s staff- both salaries and benefits. When determining your annual budget, it’s a good time to review compensation packages.
- Allocate funds for operations. This is typically the second largest area of expenses for a church; mortgage, utilities, maintenance, repairs, and your Connecticut church insurance policy.
- Determine variable costs. Check to see what the going rate is for your utilities to see if any costs have increased, so that you can either plan for that increase or make a change.
- Get everyone involved. Involve all ministries of the church. You may find that your church staff has some great fundraiser ideas.
- Build reserves. If you are able to, budget a bigger increase. This way, your expenses won’t be as high and predicted and you can set aside some or all of the unspent amount to being the process of building a reserve for your future budgeting efforts.
- Restrict funds. If a donor wishes for their funds to be used for a specific purchase, it’s vital to the integrity and legal responsibility of your church to follow these wishes.
At Sinclair Risk and Financial Management, we understand the extreme importance of a solid financial plan, and the role it plays in your overall Connecticut church insurance package. When you partner with us, our team of seasoned and talented professionals will gain a full understanding of your Financial Management philosophy, goals, and individual risk tolerance. Contact us today at (877) 602-2305 for more information.