By Rickey Letson, CBF Congregational Stewardship Officer

My wife and I had our annual financial review recently. Our advisor has worked with us for years and the hour-long meeting had a very natural, conversational tone to it. Over the course of the call, we moved between three major topics. We started by discussing our careers, current salaries and monthly needs.  Then we transitioned to college tuition for our children and other possible larger purchases on the horizon that would require funding outside of our monthly budget. Finally, we ended by chatting about retirement accounts, IRAs and planning for the day when our full-time work would be over. In the end, we covered three major discussion points – our monthly needs, short term major needs and end-of-life needs.

I wish someone had helped me learn to think in this holistic way about church finances when I was a pastor. Unfortunately, I focused so much energy on our annual church budget and the management of monthly income and expenses that I struggled to pay the needed attention to the other two critical areas of church financial health. These other two areas are large short-term needs often connected to capital expenses and long-terms needs focused on endowments and end-of-life giving. It is when a church, like individuals doing personal planning, gives energy to all three that they begin to fully cover the bases of church financial well-being.

First, churches need to give significant attention to monthly and yearly needs that we commonly refer to as the annual budget. While this area of congregational finances cannot become our sole focus, it demands our time. Since the primary source of income for the budget comes in the form of tithes and offering, stewardship and budget work are linked. Further, budget work requires not only understanding the nuances of generosity in our context but also getting our arms around expenses, needs and strategies for managing both.

Second, leading churches financially also means focusing on larger, inevitable needs that often must be funded outside of the budget. These are often capital needs but can include other large purchases too.  Major repairs to the HVAC unit, a new church bus or painting project in the sanctuary are always on the horizon for every congregation. Churches that fail to anticipate and plan for these inevitable expenditures often find themselves with mounting deferred maintenance. While you can never anticipate every expense, the more a church can plan, develop strategies for saving funds for these purposes and create a schedule for planned projects, the healthier the church will be on multiple levels.

Finally, focus on end-of-life giving and the role of endowments in the financial strategy of congregations is the third critical financial area for church and pastoral attention. This is a growing area and one where many churches have unfortunately failed to do much work in the past. Endowments are long-term investments where the principle remains intact while a significant portion of earnings are spent annually to support missions, ministry and capital needs. In churches, endowments are funded in large part by gifts given by congregants through their wills. These legacy gifts are often the largest one-time gifts that individuals make to their church.

Today, several respected books on church finances point to these three areas as the critical sectors for a well-rounded approach to church finance. I could not agree more. Churches that meet or manage the annual budget well should be applauded. But churches and pastors with a focus on all three of these areas, not just on the budget, truly exemplify what it means to be a financially healthy church today.  Which of these three areas is the strength of your congregation? Which area needs the most attention?

(This article is based on one of the suggestions offered in the new resource Twelve Best Practices for Church Budgets that is available for download at www.cbf.net/church-finance-resources. Two books, in particular, greatly influenced this article. They are Not Your Parents Offering Plate by J Clif Christopher and Generosity, Stewardship and Abundance: A Transformational Guide to Church Finance by Lovett H. Weems Jr. and Ann A. Michel.)