Managing a Church’s finances is a very important, and sometimes overwhelming task. There are different ways to go about it, with some Churches choosing to have a finance committee, made up of members of the Church to oversee all the finances. Other Churches simply hire one or two staff members to take charge of the finances. Whichever way your Church does it, those who have the responsibility have quite a bit of pressure on them from the several different ministry teams your Church probably has. While I believe they should be smart in managing a Church’s finances, I do think it’s possible to be too conservative. Here’s what I mean.
I’ve been involved with, and have heard of Churches who have what is commonly called a financial “cushion”. It’s usually a relatively large amount of money set aside for emergencies or other unexpected expenses. In theory, this is a great idea, and can assure that the Church always has the money to pay the bills even if an emergency occurs. In practice, however, I wonder if sometimes we lose sight of what we’re called to do in favor of making sure we have enough money on hand, just in case __________ happens. To me, it seems that if we’re always concerned with saving money, instead of spending what God calls us to, we don’t really have much faith that He will provide for the Church’s needs.
Again, I want to reiterate that I don’t think having some money on hand for emergencies is a bad idea, but I do think allowing that to get in the way of God’s plan for a Church is a bad idea. We’re called to have faith that God will provide the money and other necessities for us to further the Gospel.
What do you think? Does your Church have a cushion?
[ref: 3 Reasons Why Churches Are Behind the Technology Curve]
[Image via uncoverage.net]
Matt Steen says
I am glad that you are asking this, but I am also frustrated that you are asking this. People from each camp will read this and say “See!”
I advocate a church setting aside an emergency operating fund that is large enough to cover three to six months worth of expenses. This is generally enough to withstand any major crisis AND gives you a little bit to tap into if you have an unexpected opportunity develop that does not fit into your budget (very rare situations, and only if there is 3 months worth of expenses left after the new initiative is pursued).
In my experience, the camp that needs to read this and say “I really need to think through why we don’t have any kind of reserve” are going to say “See! He agrees with me! Everyone else just needs to depend on the Lord to cover our bills!”. The camp that needs to say “I really need to rethink why we are hoarding all this cash” are going to say “See! He agrees with me! Everyone else is too irresponsible to think about our future needs!”
ECCU is actually doing a webinar on this stuff today at 1pm… might be worth checking out: http://www.eccu.org/resources/events/2011/september/2011-budgeting-webinar
Alex Humphrey says
I agree with this post. The issue isn’t “Should there be a fund”. God calls us to wisdom. The question is “how much is too much”.
Some churches (not many) have a very big “emergency fund” which is just greed playing itself out. They save and save and save just for the sake of saving. Their security is in the money, not in Christ. They should have an emergency fund, but after 6 months worth of expenses, an emergency fund can get out of hand. Time to support some missionaries or something.
On the other hand, Have $0 dollars in the bank and “trusting in God” is the same greed on the other foot. The ideas is “as soon as we have money, we should spend it!” But even Jesus didn’t do that with his money or his miracles. The Bible is clear that we need to be wise in our dealings with money and part of that is preparing for emergencies (which are inevitable in a fallen world).
Matt Steen says
I think you just said exactly what I wanted to say, just better and far less cantankerously. Thank you for that.
Chase Livingston says
Thanks for the comments guys, this is exactly the type of discussion I was hoping to incite with this post 😉
Greg Simmons says
Adding to this same thread, I echo the sensibility of 3-6 months of expenses set aside. I have been a part of too many churches where finances were managed mainly through prayer – praying that enough money would come in to pay the utility bill THAT week.
Also, I’m sure some churches in Joplin, MO wished they had set aside a cushion after the devastating tornado. Expenses still occur after an event such as that; mortgages, salaries, taxes, fees, etc – regardless of the lack of tithe income while people rebuild.
To borrow a verse often used by Dave Ramsey:
“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” – Proverbs 21:20 NIV
Travis Williams says
I believe that this is good management of God’s money. He doesn’t want us to be reckless with our finances.
Chase Livingston says
Agreed, though as I said in the article, I think it’s possible to be too careful as well.
Daryl says
Thank you for asking this… interestingly the question initially sparked the question in my mind – “there are churches that have large cushion funds?” I guess that tells you where my church falls (at least from my perception, not being on the financial board). I think of this a lot in my personal life as well. We aren’t told a whole lot about Jesus’ personal finances, but it sure doesn’t seem like he worried about them much or thought highly about having with “good” finances. I think the challenge for us whether we’re blessed with enough for a cushion fund or not is to never for a moment think money is where we should look for security or ministry resources. It’ll become our master, and it’ll be our source of pride & fear. Trying to learn to live as if God knows, cares and provides and wants us to have impossible faith and love like Him. So in other words to answer your question… I’m not sure. 🙂
Chase Livingston says
Great point, and I think I agree with your answer as well 🙂
Adam Shields says
I am not on the financial board currently at my church. But I have been in previous churches and on a couple of non-profits.
I think it all depends on what type of church (or organization) it is. Look at your long term trends. Most churches have giving slumps in the summer. Some churches get a significant amount of their giving around Christmas/End of year.
In my mind, your emergency fund should be about two or three times your largest slump in giving. I actually think that for most churches 3 to 6 months of full expenses is too much. Churches, unlike individuals, rarely have complete giving stops. If the economy slows you may have short term giving drop, but it is unlikely to get to be a full stop on giving.
The way giving usually slows you should be able to monitor it and see slow downs coming and adjust your spending.
Smaller churches probably need a larger cushion because they have fewer givers and small changes will feel bigger. Larger churches probably should have less as a percent because more givers probably mean less overall fluctuation.
But the reality is that small churches often do not have enough to ever build up much cushion and large churches are often very conservative, have business people that may be thinking of churches as a different type of organization on the board and then get too large of a cushion.
Austin Lee says
Instead of picking an arbitrary number of months to hold in reserve or estimating a summer slump you have to have the entire picture of the church’s financial landscape to best determine how much is enough.
Each church should start ANY discussion about finances with this question, “Who are we called to be as a church?” Then you should act accordingly with regards to reserves, staffing, missions, administration, buildings, lights, cameras…you get the picture.
Some churches that are involved in building campaigns are required by their bank to hold a large amount of money in cash reserves as a condition of their loan. (This is also true of some mortgages on existing buildings, insurance policies, service providers, etc as churches are NOTORIOUS for defaulting on financial commitments.)
As churches plan for potential new campuses or absorb failing churches they might beef up their reserves to cover unforeseen expenses related to these changes.
As someone that works with church finance everyday…I can assure you there isn’t a right answer to the question, “How much should a church keep in their reserves?”
Austin Lee says
Full Disclosure: My company provides outsourced accounting to 8BIT. (But we don’t get paid for comments on their blog!)
Chase Livingston says
Thanks for sharing your insight, it’s good to get your point of view since this is something you deal with on a daily basis. It’s good to know that I was on the right track as well 😉