Discovering a path to financial security is a paramount concern for churches and religious organizations. In this post, we'll embark on a journey to explore the critical strategies, best practices, and essential steps that empower churches to navigate the complex landscape of financial management.

From fund accounting and tax compliance to budgeting, donor stewardship, and internal controls, this roadmap offers a comprehensive guide to bolstering financial stability while maintaining transparency and biblical stewardship. It's a long journey with a few stops along the way. So I've made this handy roadmap for you to take with you.

Let's go!

Starting Your Church Finance Journey

In this scenario, we'll assume that you're starting from scratch. Perhaps you're a church planter establishing your church's financial policy for the very first time. Or your church is established, but you're the new pastor or treasurer and need to overhaul the existing policy. Either way, you'll start your journey where all churches start: At the very beginning!

Without a church financial policy and plan, your church is adrift in a vast ocean with no way to navigate to port. So we'll cover your route toward a financially secure church.

Assemble a Team

You don't have to go on this journey alone. It's time to assemble fellow travelers to accompany you and help you along.

Ideally, you would have a church finance committee to manage all financial matters. There is more accountability in a team than if someone is flying solo. But at the very least, a dedicated treasurer or accountant is better than the pastor managing church finances on their own.

Grab Your Church's Mission & Vision Statement

"What does the mission and vision of our church have to do with boring stuff like how we implement a pledge campaign?"

I'm glad you asked!

Everything you do as a church has to be filtered through your mission and vision. Every decision you make, even as you craft a financial policy, must have your mission and vision as your guide. Otherwise, you're wasting your time and resources.

Remember: If it doesn't help you accomplish your mission or get you closer to seeing your vision fulfilled, it's not worth it.

Print out copies and give them to each member of your team as you craft a financial policy for your church. This will function as a compass helping you navigate on this journey.

Create A Church Financial Policy

Church funds are not investments intended to turn a profit. They are given to the church in faith that the church will use them to accomplish the work of the church, expressed in its mission and vision statements.

Therefore, it's incumbent on every church to have a policy for how monies are managed. While every church is unique, most churches will need to cover a few basic things in their financial policy.

Below are the 11 things you need to cover in a church financial policy:

The Biblical Foundation

"All the believers were one in heart and mind. No one claimed that any of their possessions was their own, but they shared everything they had. With great power, the apostles continued to testify to the resurrection of the Lord Jesus. And God’s grace was so powerfully at work in them all that there were no needy persons among them. For from time to time those who owned land or houses sold them, brought the money from the sales and put it at the apostles’ feet, and it was distributed to anyone who had need." -Acts 4:32-35

The responsibility of the church is to lead in both spiritual and financial matters.

General Offerings

This is the primary way members are encouraged to give to the church. While members are free to give designated gifts, undesignated and unrestricted donations are best.

Your church's financial policy must designate who has the authority to choose what the money in the General Fund is used for.

Establishing New Funds

Your policy must cover how new Funds are established.

Indicate who has the authority to create a new ministry Fund, what the procedures are for getting it approved, and who oversees the tracking and reporting of the monies in that Fund.

Designated Gifts

In your financial policy, state whether or not you want members to be able to designate how the donation is to be used. If so, you will need a procedure for how these donations are recorded and managed.

Budget Communication

State when the budget should be submitted and approved, who has the authority to influence the budget, and how it is communicated to the congregation.

Financial Records

How far back should financial records be kept? What kind of reporting does the leadership need and how often should you produce and review those reports? Your policy needs to answer those questions.

Financial Review

Whether your church reviews finances annually, bi-annually, quarterly, monthly, or by some other interval, your church financial policy needs to require such reviews and specify how often they should be performed.

Bank Accounts

Your policy needs to specify who can open or close a bank account for the church and who has access to the funds within.

Emergency Funds

State how much you want to have set aside in an emergency fund, what constitutes an emergency worthy of using the funds, and who gets to withdraw money from that fund.

Church Debt

Debt is an important subject to address in your policy. One of the most crucial decisions you will make as an organization is if/when/how to go into debt.

Your church finance policy needs to include guidelines around who can sign a contract to go into debt, how to decide on the terms of a contract, etc.

Church Credit Card Usage

Speaking of debt, many churches have a credit card to use by staff to make quick purchases. There must be guidelines regarding who can use the card, what it can and cannot be used for, how much your church is willing to have on a credit card statement at any given time, etc.

Accountable Reimbursement Policy

Sometimes a member or leader will make a purchase that the church needs to reimburse.

Create a plan around what the church will reimburse, when requests for reimbursement need to be submitted, who approves them, etc.

This list is not comprehensive. Consult with your church leadership and a CPA knowledgeable on all relevant laws and regulations for your organization before finalizing your policy to ensure that you have covered all the bases.

Create a Church Financial Plan

Now that the foundation is laid with your policy, it's time to look to the future and make a financial plan for your church.

Set short & long-term goals

Every church's financial plan needs to include short-term goals. These are goals you want to achieve anywhere between 3 months from now to 3 years from now.

Long-term plans are crucial as well. Dream big! Plan where you want to see the church 3 years and beyond. Dare to dream about 10 years from now and even further.

Create a church budget

If you're a church planter and don't have financial records to help your projections, starting a pledge campaign will really help you out.

Check out our "How to Create a Church Budget: The Complete Guide" article for a deep dive into this step.

Start an emergency fund

Start with the goal of setting aside 3 months of operating expenses into an emergency fund, with the ultimate goal of building that up to 12 months of expenses.

Building an emergency fund at your church means you can face anything the future holds.

Pro tip: Your operating budget will change over time. Recalculate that budget once a year and adjust your emergency fund accordingly.

Launch a pledge program

A pledge program is crucial for your church's financial future. It encourages better stewardship among members and helps leaders plan ahead with more accurate data. A pledge campaign makes it easy to predict what your income will be because your members tell you exactly how much they plan to give!

Coordinate with your leaders and plan a pledge campaign at the beginning of next year. Consider preaching a sermon about your vision and goals for that year and launching the campaign that Sunday.

Plan fundraising events

In addition to a pledge program, plan regular fundraisers to do every year. These events can be enormously fun while also boosting your church's annual revenue.

Adding fundraising events into your church's financial plan helps you be more intentional about generating income for your ministry. Ask your church leaders to help you brainstorm new ways your church can engage the community, have fun, and raise funds.

Evaluate & trim what doesn't work

Learning to let go of old programs can be difficult. Especially if there has been an emotional investment in that program by you or someone else in your church. However, it's important to apply your church's finances toward what accomplishes your mission and vision.

Have a procedure in place to evaluate all of your church's programs and expenses and critically assess whether or not you should make cuts.

Make a spending plan and a funding plan

I don't know many churches that do this and I think it needs to be included in every church's best practices for financial management.

A spending plan is essentially the same as your budget. A budget is great at giving you targets to achieve while revealing maladaptive financial behaviors (like overspending).

However, many churches lack a funding plan. It's worth planning exactly how you intend to receive income and brainstorm creative ways to generate new income streams.

Regularly Review & Revise

I've mentioned this already a couple of times in this roadmap, but it's so important that I've made it a stop along the journey.

Even though crafting a financial policy and plan for your church takes a lot of work, it's not set in stone. You have to be ready to make adjustments and course corrections in the future.

Regularly review your policies and plans and make revisions. The best approach is to schedule time at the beginning of each year to review the prior year. Make an honest assessment of what worked, what didn't, and what needs to change. This will keep you from getting stuck in a financial rut, allowing your church to be flexible enough to continue sharing the Gospel.

Church Finance FAQs

How do you run finances in a church?

• Establish a finance committee
• Review 2–3 years of financial data to identify patterns in income and expenses and form a budget
• Set aside an emergency fund
• Talk about money with your church

Who controls the finances of a church?

A finance committee or board of directors is ideal. If you are a small church or church plant and do not have the manpower to create a large team, bringing on a church treasurer or finance secretary is a great start.

Should a pastor be in charge of church finances?

Ideally, no. While it may be necessary in the early days of building a church, the sooner the pastor can hand this responsibility off to someone else, the better.

The pastor should know how much money the church is spending and taking in and have a say in how money is spent, but they should not be tasked with managing the money.

What are the principles of church finance?

Money should be handled in a way that is fully defensible from accusations (2 Cor 8:18-24)

What to do when your church is struggling financially?

Step 1 - Create a spending plan and funding plan. This will help you see where you're spending too much as well as be more intentional about fundraising

Step 2- Evaluate and trim what isn't working. You may have to put funding on hold for some programs until your church is on better financial footing

Step 3 - Talk about money with your members. They can't take church finances seriously if they are unaware of what is going on

Should churches be transparent about financing?

Absolutely. Transparency avoids the appearance of impropriety. It also helps hold the church accountable and assures your supporters that their donations are being used wisely.

A Financially Secure Church

Following this roadmap will help you reach your desired destination: A financially healthy and secure church.

Travel safe!

Matt Church Engagement