Every person, household, small business, and even a church needs to have a plan for how it uses its money. It’s not carnal to want to manage money well; it’s being a good steward (a church word for manager) and makes practical sense. But all too often, the term “budget” gets a bad rap. People unfamiliar with the benefits think that budgets are restrictive and keep people from enjoying life. Sadly, that perspective can even invade the church. Some may say that creating and following a budget can be viewed as a lack of faith or unnecessary because God will provide. Budgeting isn’t a lack of faith; it’s faith in action. In the book of Proverbs, chapter 21, verse 5 says, “The plans of the diligent lead to profit as surely as haste leads to poverty.” Even Jesus gave an example of budgeting in Luke 14:28-30 “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it begin to mock him, saying, ‘This man began to build and was not able to finish.’” Churches need a budget to fund the mission, demonstrate stewardship, and create trust in the congregation.
Types of Budgets
Since budgeting is a way to show diligence and planning with financial resources, which budget type is best? When it comes to church budgets types, it typically boils down to one of these three:
- Line Item: Sometimes known as an incremental budget, this budgeting type uses the existing church budget, making minor changes usually based on the percent of increase or decrease in giving. While this budgeting type can be a time saver, it also has drawbacks, like perpetuating inefficiencies by not evaluating each category.
- Value Proposition: In for-profit businesses, a value proposition budget weighs the value of the line item against the cost. A value proposition budget looks different for church budgeting purposes and usually requires fundraising for some budgeted areas. While this type of budget allows donors to have input into the allocation of money, essential functions of the church may get overlooked if deemed not spiritual enough or necessary.
- Zero-Based: The name speaks for itself. It starts each budget season with a zero and requires each area to build the budget from the ground up. While this budgeting style is more time-consuming, it eliminates lazy, copy-and-paste budgeting and allows ministry leaders to customize the budget to match the upcoming priorities of the year.
The Preferred Solution
Church financial experts, like the Evangelical Council for Financial Accountability (EFCA) team, highly recommend zero-based budgeting as the preferred solution for church budgeting. Although more time-consuming than a line-item budget, it places greater emphasis on church leaders making a zero-based budget the right toolset when creating a church budget. Zero-based budgeting promotes stewardship by evaluating each line item and its effectiveness in accomplishing the church’s mission. In the process, it accounts for every dollar and addresses the priorities for the upcoming fiscal year.
Churches ready to show their congregations their diligence and planning of God’s financial resources can start by building a zero-based budget each fiscal year.