With the arrival of the year 2023 in two months, that means many church elders and board members will soon be voting to approve church budgets.
Bob Santy, Executive Pastor of Operations at Sunridge Community Church in Temecula, California, recommends that churches finalize a budget two months before the church fiscal year.
Budgets reveal church priorities. Here are several critical questions that can guide a church leader on voting to approve a church budget. The same questions can also help concerned donors evaluate their financial support for a church:
Discipleship: When Jesus gave the Great Commission to His followers, Jesus told them to make disciples. This is the purpose of the church. Is the church effectively making disciples? If the church is declining, does the church need new leadership or to change its financial priorities by investing more in discipleship programs?
Program Services: How much does the church spend on its stated mission? By subtracting administrative and fundraising expenses, a concerned donor can determine how much is spent on program services.
Salaries: According to executive search firm Vanderbloemen, “The average church uses 52% of the church budget on compensation.” Often the highest paid church employee is the senior pastor. Is the pastor paid too much? Does the pastor receive an outrageous housing allowance? If the senior pastor were paid less, would the church be able to hire another employee? Are the church salaries reasonable?
The IRS website asks an important question: “How do we know whether the compensation we’re paying to our officers and key employees is reasonable?” The answer: “Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances.”
Transparency: Is the church refusing to disclose big ticket expenses? If a church refuses to disclose pastor salaries, there might be excessive compensation. If the church has been sued, is the church disclosing attorneys’ fees?
Donor responsibility: In response to the infamous Jim Bakker/PTL scandal, Congress held a hearing in 1987. Pastor D. James Kennedy testified, “I would think that if a person is going to give money to something, that they have … a responsibility to learn where it is going.”
Donor responsibility should serve as a check to prevent the church from straying from its mission to evangelize the world, make disciples, help the poor, the fatherless, the stranger and the widows. If the church primarily operates as a social club for its members, then donors should take their money elsewhere.