How has the budget development process gone in your congregation this year? Was there plenty of money to go around? Or, once again did you lower soft or flexible costs like program support and missions because hard or fixed costs like utilities and health insurance went up?
Did you delay routine building maintenance or not replacing a staff vacancy? Did you downsize staff? Did you ask ministries that use your buildings to start paying for their space?
During tough economic times, congregations accelerate a pattern that has impacted them for many years. I call this Budget Creep. This is when the fixed costs of the congregation become an overwhelming percentage of the regular, undesignated budget, and flexible costs get squeezed.
Feeding Budget Creep is no way to do congregational ministry. It results in your budget becoming a straitjacket.
To figure out if this is happening in your congregation you should do a special analysis of your budget. Take your annual undesignated budget and divide it into four categories.
Category One—Staff Leadership: In this category place all direct and indirect costs for personnel. This would include the senior or solo pastor, any ministerial or program staff, and administrative or support staff. Do not include service or maintenance staff. This will come later. Direct and indirect costs include salary and bonuses paid directly to staff, travel, business and administrative expenses, plus benefits paid on their behalf to government agencies or private organizations.
Category Two—Buildings and Equipment: In this category place all direct and indirect costs for the church buildings and grounds, and major equipment. This would include facilities debt payments, rental costs, utilities, maintenance, equipment, facilities services like security, and all the direct and direct costs of maintenance or service personnel or an outside contract service that cleans and maintains the buildings and grounds.
Category Three—Missional Formation: In this category place all direct and indirect costs of programs, ministries, and activities carried out by the congregation focused on people being attracted to the congregation, and for people in attendance at congregational events. This would include costs for planning, marketing, carrying out, and supporting the programs, ministries, and activities. There are often material and equipment expenses, and perhaps some event-oriented staffing costs.
Category Four—Missional Engagement: This is where to place expenses such as contributions to denominational funds, mission projects and trips, and various ministries supported by the congregation. Placed here are all direct and indirect expenses for carrying out the Great Commission and the Great Commandment. People and groups who are the focus of these efforts are not likely to become regular attenders of this congregation.
What percentage of your annual undesignated budget is represented by these four categories?
The total combined cost of staff and buildings should be no more that 70 percent of the congregational budget. When it is higher, funds available for missional formation and mission engagement are too small to creatively carry out these essential areas of ministry.
If the cost of staff and buildings reach 75 percent of the budget the congregation is strangulated in its ability to do missional formation and missional engagement, and is making brick without straw. If the cost of staff and buildings ever reaches 80 percent or more of the budget, the congregation is like a boat whose engine has stopped working and it is dead in the water and going nowhere.
At 80 percent for staff and buildings, the real work of a congregation—missional formation and missional engagement—must be altered, limited, or funded from other sources. The congregation now spends its time working on economic survival rather than being a missional movement.
The congregational budget is a straitjacket. It will squeeze the life out of the congregation if undesignated receipts are not close to 100 percent of the budget. Unfortunately some congregations may also experience a situation where 80 percent of their budget goes to staff and buildings, and they are only bringing in 80 percent of the undesignated income needed to meet their budget.
Next: Rebalancing Your Congregational Finances for Missional Ministry