12 Best Practices In Church Finances

I am stunned when a church applies the best practices in church finances and sees a 400% increase in an area of their income.

I will never forget the day when a pastor I was coaching shared with me the exciting news they had increased their mission’s pledge giving by 400%.

I consulted with the church and recommended they make a significant change to their approach to raising funds for missions. They considered my idea and then went about implementing our strategy with diligence and hard work.

They reaped the rewards of a 400% increase.

This is a remarkable result and an outlier.

I rarely see a quadrupling of income within one year.

However, if you follow best practices in church finances you will sleep better, enjoy ministry more and avoid a fiasco in your church cash flow analysis.

These twelve best practices in church finances will help you grow a healthy church when they are diligently applied.

The Collision of Financial Worlds

Your church has a financial world.

Everyone in your church has a financial world.

It is the coming together of these worlds that make the stewardship of resources one of the most challenging and stressful realms of ministry.

Wrestling with diverse attitudes; juggling faith and wisdom; battling discouragement and stress; asking and receiving.

There are few arenas as intimidating, as demanding in the world of pastoral leadership as this one.

Some pastors avoid preaching on money. They approach money with a fear-filled mindset and lack the courage needed to disciple their church

Thus it requires us to be prayerful, knowledgeable, and discerning as we lead our churches into Christ honouring best practices in church finances.

1. God Is Your Provider

The bedrock foundation of a church’s financial world is trust in Christ as your provider.

While there should be multiple sources of income that will flow into your church a discerning pastor and Christ-honoring church will attribute their provision to Christ.

The Scripture is replete with a wide array of provision stories ranging from manna in the wilderness for Israel’s journeys to inherited lands for Joshua’s generation through to Jesus multiplying the fish and loaves and a coin in a fish’s mouth.

God delights in providing for His children and expects us to trust Him and look to Him as our ultimate provider of the resources that we will ultimately steward.

Some people morph this truth of provision into a self-focused grab for everything. Creflo’s Dollar’s controversial campaign to raise millions for a jet shows us that you can take this truth to ridiculous levels.

Nevertheless looking to Christ as our provider is the number one when it comes to best practices in church finances.

2. Steward Your Resources

Another best practice in church finances regarding the use of resources is the principle of stewardship.

Stewardship is defined as the entrusted management and care of resources that belong to someone else.

David declares:

The earth is the Lord’s and everything in it Psalm 24:1

In reality, we do own nothing but are stewards of the resources Christ has placed into our hands.

As Job succinctly noted:

Naked I came from my mother’s womb and naked I will depart Job 1:21

Stewardship not only points us toward the rightful owner, it also alerts us to the question of accountability. If all the resources we manage belong to the Lord then one day we will give an account to Him of how we utilised those resources.

As leaders in Christ’s church, we will give an account for not only the stewardship of our private resources but also of those who moved through our church.

This sobering principle should awaken in us a deep resolve to be prayerful leaders of integrity, innovation, and faith as we steward the resources God has given us in our church.

My gorgeous wife Dianne has occasionally reminded me that when we are spending church funds we are spending tithes and offerings given by widows, solo mums, and people who are battling to make ends meet.

Her words are a stark reminder to me that all church funds are to be stewarded with care, diligence, and reverence for Christ the owner.

I think that’s sufficient reason for me to believe that no Christian leader needs to own a $65 million jet!

3. Financial Intelligence

Every pastor and Christian leader should seek to become financially intelligent for two main reasons.

Firstly, there is a clear connection between the character needed to order your financial world and that needed to order your leadership world.

People with poor financial habits who mismanage their finances and lack financial integrity will never succeed over the long haul in leading a church to its ultimate fruitfulness.

Secondly, money plays a significant role in the lives of the people you shepherd.

When you can lead your people to better financial management and increased financial intelligence you are discipling them into Christ’s image.

Therefore, you should have a clear understanding of personal finance issues such as

• budgets
• savings
• superannuation
• credit cards
• interest rates
• shares
• investments
• various types of debt

Many years ago Di and I made a radical move. A move that no one should emulate. While this move has a message I don’t consider it a model for others to follow.

What was the move?

We sold our family home and rented for two years.

We then parked a significant portion of our equity at the bank for safekeeping and used the remaining portion to experience the world of investments.

We bought shares and jumped into the world of property investment.

We made money and lost money.

We realized our financial intelligence was low and we decided to do something out of the box to shift our mindset and establish new habits and beliefs.

The journey changed us and increased our financial intelligence.

While you should not copy us you could always do something simple like buying a few shares and experiencing the various emotions of fear and greed that accompany investing.

This will enable you to understand money and its power in a truly experiential way.

Either way, pastors and Christian leaders need to increase their financial intelligence.

4. Faith For Income

Some years ago I was sitting in Perth International Airport with Dr Phil Pringle, the founder, and leader of our movement of C3 churches.

I took the opportunity to ask him some questions about church leadership and in one of his answers he dropped this pearl of wisdom.

“John, you use faith for income and wisdom with expenditure and not the other way around.”

Those words have stayed with me ever since that day.

Faith works on the income side of the ledger.

You believe God to meet all your personal and church needs and you use faith to conquer the fear of lack and anxiety over shortfalls.

It’s essential that pastors and leaders put faith into action whenever they are raising money in your church. Each week you go to the house of God believing that people will give and that budgets will be met.

You also use faith to raise offerings for special projects, believing God to provide through the generous giving of His people.

God responds to courageous pastors and leaders who put their trust in Christ and believe He will meet the needs of their church.

5. Wisdom With Expenditure

Spending the money requires a different approach.

Wisdom is applied to the expenditure side of the ledger.

Wisdom teaches us that you should operate faith for income and then spend the money when your faith is shown to be effective and the money is in the bank.

It’s wise to prove your faith by receiving provisions and then spending the money.

Spending the money and then believing in the income can prove to be foolish and a sign of presumption rather than faith.

Wisdom is also seen when we wisely allocate the resources we have at our disposal. A vision-centered budget utilizes resources to fulfill vision and mission, achieving the purpose which Christ has for your church.

Wisdom also dictates that you inform your church about what their giving is achieving.

6. Special Offerings

It’s been my experience that churches respond well to special offerings for specific needs.

It may be an offering for a guest speaker, a mission project, an unforeseen building maintenance issue, or a community crisis need.

While churches should utilize spontaneous special offerings sparingly they should diligently conduct annual faith promise/pledge programs to raise money for buildings and missions.

Unfortunately, such programs are used all too rarely in churches or are conducted poorly.

When you neglect this element of best practices in church finances you not only deprive your church of vision-fulfilling funds, you also miss an opportunity to disciple your people into sacrificial generosity.

I’ve seen client churches increase their overall giving by over 30% when conducting annual giving programs.

As this infographic shows special fundraising necessitates a strategic approach with a clear focus on a team of committed people.

7. Generosity

A culture of generosity should be a hallmark of your church so refuse to expend your entire budget on your church and its programs.

Make sure you include local and global missions components in your budget.

Be generous to the poor in your community.

Be generous to members who are in genuine financial hardship by allocating an emergency fund in your budget for such purposes.

Be generous with staff remuneration and benefits. Ensure staff has an annual pay rise based on your nation’s wage price index. Church boards should proactively garner feedback from the staff as to whether they feel well-paid or poorly treated.

Be generous with guest speakers who leave the comforts of family and home to minister in your church.

8. Integrity

Financial scandals in any organization are damaging but in a church they are destructive and the antithesis of best practices in church finances.

When people give their tithes and offerings they expect your dealings to be scrupulously honest, moral, legal, and ultimately Christ-honoring.

Therefore, incorporate sound financial integrity practices such as:

annual audits by a reputable firm

clear explanations of where the money is being spent

all cash offerings counted by at least two people

ensure designated offerings are used for the publicly announced purpose, and

complete availability of annual financial reports.

9. Plan Your Finances

An excellent way to develop best practices in church finances is to develop an annual church budget. This should be standard practice and has many benefits and will help you:

clarify your resource allocation

plan programs and ministries

set faith goals

share with your team the burden of raising and allocating finances

allocate resources to your vision’s priorities

resist the temptation to just repeat last year’s program

I wrote previously about how to establish a vision-centred budget and it’s certainly worth checking out that post if you want to sharpen your budget process.

10. Develop Contentment

Pastors, like all people, compare themselves and their performance with others.

Healthy leaders however can protect their hearts from envy and covetousness by managing the juggle of being content with their resources while maintaining a dissatisfaction with the status quo.

This is no easy task.

It requires a prayerful and diligent approach to weeding out envy while maintaining a spirit of contentment and yet pursuing the future with faith.

May we all be like Paul who in the latter years of his ministry wrote:

“I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want.” Philippians 4:12

11. Trained Personnel and Professional Advice

Some movements manage the financial arrangements and procedures for the local church and the church, therefore does not need to separately engage trained personnel or professional financial services.

However, if your church does not have access to support services of this nature then it is imperative in today’s climate of complex and ever-changing legislation you use trained and skilled personnel to manage the finances and also access, as needed, professional financial services.

Incompetent management of your finances may lead to illegal and unethical practices and must be stringently avoided.

12. Policies and Procedures

As a good friend of mine says, a policy is a decision already made.

Sound financial policies prevent inefficiencies and uncertainty in your decision-making process. They prevent time-wasting repetitive discussions and automate recurring events.

For instance, a policy of automatic salary increases for staff, based on a nation’s wage price index, in a set month each year, helps boards avoid laboring over whether or not to increase salaries.

The policy makes the annual hand-wringing redundant and ensures staff salaries keep pace with the cost of living increases.

Likewise, established procedures for financial reporting, receiving offerings, counting money, handling cash, bank transactions and the like will make your financial management efficient as well as protect your church from fraud.

This can even cover smaller, often forgotten items, like a special thank you letter to online givers. Your policies and procedures should focus on all elements of the church’s financial world.

Correct policies will help you establish best practices in church finances.

Here is a sample set of policies

Concerning the actual, ongoing financial condition and activities, the Administrator shall not cause or allow the development of fiscal jeopardy or a material deviation of actual expenditures from board priorities

Accordingly, the Administrator will not:

1. Expend more funds than have been received in the fiscal year to date.
2. Use any long-term maintenance or savings reserves.
3. Fail to settle payroll and debts promptly.
4. Allow tax payments or other government-ordered payments or filings to be overdue or inaccurately filed.
5. Make a single purchase or commitment of greater than $10,000.
6. Transfer funds in excess of $20,000 to external bodies
7. Lend to, or borrow from, other organizations.
8. Acquire, encumber, or dispose of real estate.
9. Fail to pursue receivables after a reasonable grace period.
10. Purchase non-budgeted assets in excess of the contingency provided in the budget.
11. Allows cash to drop below a safety reserve of less than an amount equal to two months’ payroll plus monies given for designated purposes.
12. Fail to produce End of Month financial reports within 9 working days.