Exploring Church Budgeting Alternatives

When it comes to discussing church budgets, it’s often a difficult process. No one really wants to talk about money and the ones that do often seem to have only one way to budget.

What if Budgeting could look different? What if budgeting could be centered more around how to use the financial resources to accomplish the goals of the organization rather than simply paying bills and making ends meet? There’s four basic types of budgets that are worth exploring.

  1. Zero-based budgeting
    Every ministry of the church starts with zero and must justify every single expense. No expenses are automatically okayed and every budget must go through a cost containment analysis to weed out the extras and focus on the essentials. It’s basically a bottom-up budgeting and is extremely time-consuming.

    There are a few churches using this, but because it is so demoralizing and it restricts the budget so significantly, it’s not used widely. Only in cases of a restarts and other restructuring efforts is this appropriate.
  2. Incremental budgeting
    We spent X amount on children’s ministry last year so we’re going to spend X amount +/- a % amount (determined by last year’s income) on this year’s children’s ministry. This is how most churches seem operate. It’s good and it’s bad for a variety of different reasons.
  3. Activity-based budgeting
    We want to have a really good worship experience and to accomplish that we need to invest in our creative team and their needs. That’s going to cost the church XXX amount of dollars and so that’s how we budget for it. Again – lots of churches operate this way – for good and bad reasons.
  4. Value-based Budgeting
    We want to have a church that is focused on connecting with the community. Because of this – every item in the budget must focus on the community. No single item should cost more that the value it adds to the community. Every budget item should be focused on the community. And because the community needs are ongoing, every effort must be made to avoid unnecessary expenditures that don’t deliver value for the community.

If you’re goal is to set a 3-5 year budget – then you really need to consider value-based budgeting. It’s provides the only option that, in my opinion, a healthy mission-centric church should consider. Money isn’t the focus – accomplishing the vision according to the values (mission) of the church is.

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