Do you know if your church is financially healthy? What about that charity you support? Do they use your capital responsibly and in a manner that reflects your values?
Financially healthy churches or charities all share important characteristics. Whether you are a Christian, Atheist, or any other belief, I think we all want to know that the money we give is going to a good cause. We should want to know exactly how our donations are spent – where it’s going and who it’s going to. There are some indicators that will show you that your favorite charity or church is using your money responsibly, so let’s investigate. Note: Any time you read the word church, you can easily replace it with charity to apply the lessons.
Does Your Church/Charity Have a Budget
Have you ever been a part of a church that does not talk about money? Many people today lament those times they have visited a house of worship, only to hear from the pastor that they should be putting more money in the collection plate. This tends to turn them off to the message and the church. Be cheerful the next time your church talks about money. It’s an important topic and it matters to God what you and your church does with it.
The church or charity you give to should set and publicly disclose what they spend money on. The standard should be that the congregation (or for a charity, the board of directors) votes on the annual budget sometime during the year. One practice I’ve seen is that the pastor will hold a budget meeting in place of a Sunday evening service, when usually only regular attenders and members attend. This meeting should be announced 3-4 weeks prior to allow everyone to set time aside to attend. Church members should receive a line by line accounting of where their tithe is going to fund the following year. Building funds, salaries, outreach programs, supplies, missions donations, should all be covered. I have to say the church I currently attend does not do this, despite having promised to do so. It’s a less than ideal situation.
Are the Salaries of Executives Reasonable
You should be able to approach your church or charity’s budget director or CFO and find out what your pastor and the staff are being paid. That might seem rude, but think about it. How many stories have you heard of misspending charities or rotten preachers who have lived lavish lifestyles to the detriment of their organization? 67 charities pay more than $500,000 in compensation each year. Is this too much?
Consider what your charity does and how many people it serves. A large organization that takes in $1 billion a year in donations needs a high quality CEO that devotes all of his/her time to ensure it has the greatest impact. A charity that takes in $10 million a year should probably not have a CEO with a salary of $500,000. Research your favorite organization and find out what the boss makes. If it seems high, ask them about it. If you can’t get a good comparative snapshot to prove that they should be paid that much, it might be time to find a new cause. Charity Navigator is a good place to start.
Does the Church Provide Regular Financial Updates
Churches should be honest about what they are taking in from month to month. A good practice to look for is having budget variances published in a bulletin at least once a month or quarter. One example I’ve seen is a weekly bulletin having this tracker published on the back (numbers are an example):
- Budget Requirements as of 1 June 2015: $323,567
- Total Donations Received as of 1 June 2015: $307, 122
- Total Variance +/-: $-16,445
This is a quick and easy way for the church to communicate their budgetary needs. It lets you know if your congregation is above or below where it needs to be based on the budget that everyone agreed on. If the organization is behind on giving it should let you know. As we say at work, “Bad news does not get better with time.” No one will help with a giving problem if they don’t know about. Make sure you communicate to your cause that you want to know when they are hurting for donations.
Does Your Church Take On a High Debt Load to Fund Projects
A cornerstone of a financially healthy church is prudent projects. A church can absolutely take on debt (a mortgage) to build an upgraded building to house a larger congregation or classrooms. The leaders of the church should address the following questions.
Did the congregation get to vote on the project? The congregation should get to vote on major spending projects. If your church is making decisions without input from the congregation or at least a board of elders, that’s a red flag. The answer should never be “it’s not the business of the congregation,” because it absolutely is.
Is it necessary for the church to grow and serve the congregation? If your church isn’t nearing capacity each week it may not be time to expand. If there isn’t a thriving after school program or some other community outreach, the best idea may be to wait until the program is up and operational before taking on debt to build a facility. Focus on growing the program first, then building a special project to house it.
Will a building fund be started prior to execution? It’s wise to raise capital over time through regular giving – this allows the church to get the best deal when it seeks out financing for a project.
Does the church have a dedicated portion of the budget for this project? Your new church gymnasium should be a line item on this year’s budget. Repairs, maintenance, and mortgage payments are all going to come out of your giving. Expect your church to provide a roll up of those costs (and start saving for them) in the annual budget.
Will the project put an excessive financial burden on the church?
Consider how much your church receives each year in donations. Does the church take in $1 million a year in tithes? A $3 million building project is reasonable if it comes with a detailed financial plan that accounts for times of financial hardship (reduced giving by the members). A $3 million building for a church that takes in $100,000 a year might not be so wise. Leaders must account for contingencies and create a plan that does not put excessive strain on the budget. A wise church may look at their budget and say “Can we afford this if we lose 10-20% of our giving next year?”
Time to Move On
If you can’t get a straight answer on money from your charity or church it’s time to consider leaving. Talk to the charity or church leadership to find out how they use your donations. If you know what’s happening with your money you can ensure you have the greatest impact on the world and those around you. Consider moving on or volunteering your time and advice if:
- The church refuses to provide a budget to the congregation.
- The charity spends a large amount in expenses and salaries. This will vary with personal preference.
- The organization continually makes bad financial decisions. (Or volunteer to help them manage them!)
- The cause has no accountability to leadership on how they choose to spend.
A healthy church or charity does the following:
- Sets and sticks with a Budget.
- Has a reasonable salary plan for its leadership.
- Provides regular financial updates.
- Takes a prudent approach to debt for special projects.
So what do you think? Is your church or charity healthy or unhealthy when it comes to finances? Leave a comment and share your story. Thanks for stopping by.