When rethinking church budgets in a post-pandemic world, one old-fashioned rule still applies: Every situation is unique.
While some church leaders may be tempted to seek ready-made formulas to guide their new-world budgeting, that’s never been a great idea, according to some pros in the field I recently consulted.
I have a keen interest in this because I spent 17 years deeply immersed in the details of church finance. I’ve read all the books, heard all the consultants, taken all the courses. But all my experience was before COVID-19 changed the world.
To recap the big picture here: Most churches in America held on better than expected in the first year or two of the pandemic, thanks to PPP loans and extreme generosity from their members — not to mention radically reduced expenses from not opening the doors to the building.
But in the second to third year, as in-person attendance began to be more normative and not everyone came back, many churches realized their pre-COVID giving levels also were not coming back. Giving in these churches may not be as reduced as weekly attendance, but it definitely is reduced. Yet in other churches, giving not only has rebounded but continues to grow.
This is all such an evolving story that we don’t have hard numbers to report and are mainly reliant on anecdotal accounts to fill in the blanks.
So in this post-pandemic world, what’s to give in a church budget? Where are churches nipping and tucking to balance expenses with income? And what are they doing to be proactive while the pandemic is fresh on everyone’s minds?
I asked three consultants with vast experience on such matters to weigh in on this. They quickly found themselves in general agreement on several things, even if they didn’t feel they had a complete picture of what’s happening everywhere.
Up, down and all around
“Data is all over the map coming out of the pandemic. Up – Down – Even,” said Phill Martin, recently retired leader of The Church Network, a national association of church business administrators. “The metrics we need to pay attention to are shifting and hard to peg. Trying to define engagement is not the old nickel and noses.”
And here’s the money line from Martin: “Many want a clear target, which is not a fair discussion. The answer has to be contextual, and ‘It depends.’”
That assessment is shared by Mark Tidsworth, founder of Pinnacle Leadership Associates, a church consulting firm: “Anecdotally, we are seeing churches all over the income spectrum — up, down, the same as before. There is a lot of variety, it seems.”
Matt Cook, director of the Center for Healthy Churches, said he’s actually working with more churches with increased budgets than decreased budgets right now. “It’s about 20% decline, 20% holding steady (which with inflation still high is decline but doesn’t tend to set off the warning bells in every congregation), 60% trending upward.”
Personnel as a percentage?
Even in churches not facing budget shortfalls, the pandemic has prompted new questions about the largest expense in any church budget — personnel. No matter how you slice it, the typical church in America spends more on personnel — salaries, benefits and such — than on any other thing. And that portion of the budget pie has been inching up for several decades.
“No matter how you slice it, the typical church in America spends more on personnel — salaries, benefits and such — than on any other thing.”
As someone who is definitely not a fan of old-school denominational formulas on church budgeting, I was curious whether my consultant friends were seeing any return to a 1950s rule-of-thumb wisdom. I was curious, in part, because lately I’ve heard rumblings of such from lay leaders here and there.
My own knee-jerk reaction is against the old saw — perpetuated by the Southern Baptist Sunday School Board and others in the 20th century — that personnel expenses should not exceed 50% of a church’s budget. I debunked that Eisenhower administration advice in a previous BNG column where I explained the vast difference in both volunteer availability and congregational expectations in 2020 compared to 1950.
In the Ozzie and Harriet days, churches could operate with less staff because volunteers were abundant and performance expectations were lower. These days, church members and prospective members expect to show up and have things ready for them. And what was left of regular weekly church volunteerism also took a hit from the pandemic.
And yet, there’s an upper limit to the personnel beast of a church budget too. Doing church requires having money to maintain the building, pay for electricity, provide supplies and do missions work beyond the walls.
“What once was 60% of the budget could suddenly be 65% of a post-pandemic budget.”
Churches experiencing decreases in total giving post-pandemic may not have increased their personnel expenses but those same expenses may now be a larger portion of the budget. What once was 60% of the budget could suddenly be 65% of a post-pandemic budget.
For those who want some guidelines, Martin offers these based on his years of experience:
- Personnel ‚ 50% to 60%
- Facilities — 15% to 20%
- Ministry/programs —12% to 15%
- Missions — 8% to 12%
“Ideally, alarm bells should sound if personnel and facilities combine for more than 75%,” he said. “Yet there are mitigating factors such as age of buildings and age of the church.”
Tidsworth recalled a college course he took in 1982 with information from the Baptist Sunday School Board.
“Their recommendation on church budgeting was one-third to programming, property and personnel each. I still remember since that seemed unrealistic then and has not played out in my experience since.”
Even the conventional wisdom of limiting personnel to 50% of budget is not talked about much these days, he said.
Some better measures
There are better ways to think about such things, he explained. For example, providing one full-time minister or program person for every 150 to 175 in in-person worship attendance.
“When a church employs one full-timer for 150 to 175, they are staffed for maintenance,” Tidsworth said. “They are staffed for growth when they have more, for burnout when they have less.”
And then this important caveat: “This excludes very affluent churches that excessively rely on staff to do the work of the church.”
“If most of your church members aren’t mowing their own grass, they likely aren’t going to volunteer to keep the church grounds either.”
Location and context matter. A lot. What works for even a large church in a rural area will be different than what works for a similar size church in an urban area. And the wealth of the congregants shapes their perspective on how church should operate too. If most of your church members aren’t mowing their own grass, they likely aren’t going to volunteer to keep the church grounds either.
There’s also an inherent danger in looking to averages for guidance, Martin said. “I like to explain ‘on average’ by saying put one foot in a bed of hot coals and the other on a block of ice, and on average, you should be comfortable.”
While from his analysis of church salary data reported nationwide among all denominations, the “average” personnel expense has been 53% to 55% of budget, that average ignores local context.
“To apply a specific number to all churches is not a good idea,” he warned.
Yet, there are some points at which personnel expenses should at least cause congregational leaders to ask hard questions. Spending too little on personnel can lead to staff burnout and hinder growth, while spending too much on personnel can prevent staff from having the funds to do any programming or ministry.
“When personnel cost is about 60%, it should raise the question ‘why?’ and, ‘Is that OK?’” Martin said.
In some cases, it may be OK. While in other cases, it may not be OK.
Overstaffed versus wrongly staffed
My own observation is that some churches today may appear to be overstaffed but in reality are just wrongly staffed. The problem is not the amount being spent but what the church gets for that expenditure.
“Some churches today may appear to be overstaffed but in reality are just wrongly staffed.”
It is exceedingly hard for most churches to reconfigure staff without the appearance of an economic crisis.
“We tend to replace what we have had before,” Martin said. “Staff structure has to follow vision and context.”
This resonates with Cook, too, who is seeing more churches engage in staff reorganization or realignment conversations post-pandemic. “That’s a definite spike for us at least in terms of the percentage of our overall work that is focused on staff reorganization.”
The shift in attendance patterns brought about by COVID “actually calls for more staff, not less,” he explained. “The staff doesn’t have an easier job with less frequent attendance, they have a harder job. It was so much easier to accomplish faith formation, foster connection, provide care and organize for mission when people came to church more often.
“The churches I’m working with now are focusing on how to shift some of their staff methodology to account for this accelerating trend. Everyone who is doing staff realignment right now is trying to figure out what will be the lasting staff commitment to streaming worship, using Zoom and building community virtually. That’s churches in all size categories and across the theological spectrum.”
There are no formulas to guide church leaders in the present moment. And that may be a blessing in disguise.
Five reasons your church probably isn’t spending too much on personnel | Opinion by Mark Wingfield
The present crisis for church staff | Opinion by Mark Wingfield
Remembering a staff colleague prompts questions about healthy church staffs | Opinion by Bill Wilson
Is missions giving ‘paying dues’? And what counts as ‘missions’ anyway? | Opinion by Mark Wingfield