Creating a Financial Vision


Most churches engage in a depressingly familiar annual drive for sustaining gifts — rooted in the context of developing a budget for the upcoming year.  First, the committees are given reports on how they have spent money in the past year and are asked to estimate their requirements for the next year.  Someone meets with the minister and staff, perhaps, to get an idea about what they will want.  The Treasurer guesses how much income will come from monthly commitments based on current membership and giving trends.

With all this input from different sources the Finance Committee (or, the Board in smaller congregations) adds it up, finds there is a shortage, cuts some of the requests, increases some of the revenue items, and comes up with a budget that is “balanced”.

This budget is presented to the congregation which debates the proposal in an open meeting, often full of rancor over the various “cuts” or “waste” or the “lack of realism” in the revenue estimates.  The budget debate focuses on the smallest expense categories, such as whether a second telephone line is really needed.  At the end of the evening the budget is adopted, everyone goes home feeling, at best, unenthusiastic.  Then, we kick off the annual stewardship drive to get the financing needed.

What’s wrong with this picture?  I can think of four things; perhaps you see more.  First, the process encourages members to consider their gift level as a function of the church’s needs for the following year; we are supposed to become more motivated in our giving because we see that the church needs more supplies, needs to purchase insurance make retirement plan contributions.  We do not engage this paradigm with other charities.  The Sierra Club, Red Cross, Planned Parenthood, Ducks Unlimited, and National Public Radio receive our generous donations without our questioning their fiscal plans.  We “know” what they will do with our money, and we support them grandly in order that they can do more.  The more generous our gifts, the more uplifted we feel as we become part of the force of good because the organization will do good for us, with us.  While we are always concerned that our gifts be used wisely, we presume that the leaders (whom we often do not even have a voice in selecting) will continue to further our interests as they have in the past.  Any church stewardship process initiated in consideration of a traditional budget does not foster a similar presumption.

Second, the community squabbles over a “fair” allocation of resources among competing line items rather than encouraging the support of diverse interests.  The process easily gives itself to petty divisiveness, a perverse way of kicking off the drive to encourage sustaining gifts.

Third, the notion of a “balanced budget” mistakenly leads members toward small thinking – completely at odds with the reality of our communal enterprise.  In the case of governmental agencies, for example, there is an estimated level of revenue within which the agency must live.  The revenue usually derives from some tax base; and estimating it for the upcoming year is usually beyond the power of the agency to control.  This reality contrasts quite strongly with that of church communities.  In our churches the flow of revenue is, quite literally, by the design of the members themselves.  The members of a church determine for themselves how much they will both provide and receive communally — how quickly they will fix the roof, hire the Youth Advisor, or set up the homeless shelter.  Our relatively small and homogenous group is the only thing standing in the way of moving toward our dream.

Fourth, the focus is on tinkering with the spending pattern of the past, adjusting prior programs, rather than dreaming nobly of what can be in the future.  We engage in patching up what we guiltily have left undone in the current year without much beyond a passing thought about where our path will take us three or five years from now.  In truth, many members want the leadership to “not change things much around here; just do it better.”

In thinking about our stewardship efforts in this way, we can begin to see that there are two approaches to raising money in churches.  One is “rationalistic.”  It is a paradigm in which we look for reasons for giving that are embedded in a budget which will improve on what we know now.  It looks for stewardship commitments designed to satisfy demonstrated spending requirements.  It looks for evidence that budget items have “met the test” by being examined and trimmed appropriately.  It primarily focuses on the reasonableness for any suggested increases to spending over the prior year.

The other approach we might refer to as “visionary” or even “spiritual.”  A visionary paradigm asks that we call forth our own dreams for the future and makes us instrumental to their realization within our church community.  This approach to seeking gifts does not look to an annual budget as the basis for giving.  Spiritual giving asks instead that we wrestle with our own internal devils, examining our attitudes about scarcity versus abundance in our lives; that we embrace generosity and gratitude as an approach to living in our chosen community; that we consider that we are in a lifelong relationship with our church community (much like marriage) in which continual performance appraisal is detrimental.  It sees open-hearted devotion of time, money, and energy as part of the spiritual practice of melding oneself into relationship with a community of faith and values in order to manifest meaning in one’s own existence.

The devotion of most people is to rationality, undiminished particularly as it relates to giving away money.  The rational approach to the church stewardship drive, however, is a way of continuing in a place of spiritual stagnation, for “wrestling with the devil” has always been hard work.  In my own denominational history the fixation on finding a reason for making gifts to our church may arise out of our humanist traditions.  Or, it may be that an entire generation of “come-outers” (in which so many have left the faith tradition of their parents) is frightened of anything that seems to take us back to an unpleasant childhood context.  Or, perhaps the generation of “boomers” only understands money as a medium of exchange and cannot turn loose of theirs without a clear understanding, even agreement, about what is coming back.

All of these have been offered as explanation.  Of course, it does not matter which is the more accurate causal statement.  The result is clear:  Unitarian Universalists have the highest incomes of any major denomination in the U.S., and the lowest percentage level of stewardship both in our churches and in charitable giving generally.  We are not effective in inviting generous behavior.  Perhaps we should change our perspective.

It is helpful here to think of people as falling into either of two groups:  those with a wage earner mentality, and those with an entrepreneurial mentality.   Wage earners understand their income as regular, predictable, limited.  Wage earners get a paycheck and pay their bills.  Life, for the wage earner, has inflexible income boundaries; planning starts from that reality.

The entrepreneur has a different reality.  The entrepreneur decides first what it is that is to be attained, and only then begins to work on what is necessary in getting from the present to the future.  Income, for the entrepreneur, is not fixed; it is one of many variables to be managed in bringing a vision into being.

Unfortunately, most of us are wage earners, and it is difficult to acknowledge and move beyond that frame of reference.  Our churches, however, are small entrepreneurial enterprises that can be shaped and grown to be whatever we jointly decide to make them.  We could spend time creating a widely held vision of how we want to be in community together three to five years from now, of what our church program would include, of how we could respond to a doubling in size.  Such an envisioning requires an understanding of our individual place in the community independently of the particulars of spending in the next year.  This is spiritual work.

The annual stewardship drive is driven by our common vision.  The budget becomes a description of our first steps down our path together, reflecting community values and lighting our communal gathering place.  The purpose of the vision budget is to inspire the community, a distinctly secondary purpose is to control future spending.  We want to know, for example, that the congregation agrees that it wants a minister in the future, or an associate minister.  We want to know that our staff will be supported with compensation packages that are both competitive and fair.  We want to know that the community supports the development and training of both paid and volunteer staff.  We want to know that the carpets will be cleaned and our building will be painted when needed without creating a financial crisis.

Behind our efforts to describe our community of the future, there is the notion that financial stability can be achieved, that we can attain a level of giving which adequately supports the desired service and outreach levels.  Further enhancements to our ministry come from growth in membership more than from additions in the average pledging level.

Budget Development Prior to the Stewardship Drive

Let’s be clear:  We do not need to present a full blown budget prior to the annual budget drive.  We do need the best thinking available about the cost of important increases or new initiatives for next year if the drive is successful.  The presentation of a full budget prior to the drive however is distracting and confuses the discussion you want to stimulate.  Here is my suggested calendar of activities prior to the annual stewardship drive.

1)               Program planning is iterative.  Ten months before the beginning of the next fiscal year, the board of trustees will discuss how the freshly started year is proceeding and observe changes in the church which could impact the budget over the next few years.  By this I mean, the Board should set forth its own notion of expected trends in giving, expected demographic changes, and other matters that could impact on the resources available or the demand for additional services.  These planning parameters get reviewed each year and communicated to committees and staff.

2)               Six months prior to the new fiscal year the primary staff and major committees will get together for sharing plans.  Each gets an opportunity (and has a responsibility) to say what specific changes they hope for over the next three to five years.  This is an opportunity for synergies and complementary program operations to be clearly articulated.    Rather than saying that a better youth program is needed, for example, one might say that a quarter-time person will be required in two years since we can identify 15 middle school kids in existing families already.

3)               Each staff person or committee head goes back to develop the ideas in greater detail and to draft a three to five year program and budget projection based on the discussion.  These get submitted to the finance committee.

4)               About five months prior to the new year the finance team prepares a “base budget” designed to carry on operations only as we currently know them.  This base budget is usually slightly larger than the current budget by the amount of changes not under the control of the board and any minor errors in the current budget.  For example, increases in health insurance costs or utilities would be included in the base, a COLA would not since it is entirely under the control of the board as to amount and timing.

At times a board member will argue that since an item was already considered by the board and deemed important it is therefore “part of the base”.  If the prior discussion deferred implementation to the future however, it is not in the base budget.  Even though it sometimes seems that a spending need has already been agreed to for next year, in budgeting it needs to be treated as one idea on a list of many identified new needs.

5)               This base budget will not be adopted by anyone outside the finance team.  The only public reference to at this time might be to indicate that the base budget will require X new dollars.  Developing a base budget prior to the canvass is important for a single reason:  it will help the finance team sort through the new ideas and price out their incremental costs.  In my experience any effort to get “buy in” on a base budget at this point in the cycle leads to pointless observations about what might need to be cut next year in order to fund some other item.  Since one cannot have a meaningful discussion about spending without knowing what income level will support it, the time to bring the detailed base budget to the board is after the completion of the stewardship drive.

6)               What must be discussed prior to the canvass is a listing of all the new programmatic items developed earlier by the finance team.  This listing might include a proposed COLA from the personnel committee and other compensation changes appropriate to the salary and benefits policy.  It might include a needed new dishwasher, or an increase for several new curricula for the religious education program.  Each item gets an annual cost estimate.  The board places these incremental decision packages into three groupings:  Category 1 includes only those items which are immediately necessary or vital to sustaining the current ministry, programs, and facilities; Category 2 consists of items which will best advance the current ministry if undertaken immediately or in the very near future; Category 3 includes items which are important in the five year horizon but can be deferred without jeopardy or can be financed through other sources.

These groupings give the leadership and the members a focus for discussing first steps for what lies ahead, and all can see what will be accomplished at various levels of increased giving.  Here is an outline of what we say about the budget during the canvass:

“Simply continuing our current spending level but including the following unavoidable increases identified by the board (list all category 1 items) we will need to increase income by about 2%, or $7,000.  In addition, the Board has identified a few items which offer important improvements to what we do now:  (List category 2 items.)  These will require increases in spending of another 3%.  We also have longer term initiatives we would like to move on, but can do so only if financial commitments exceed the 5% we’ve already addressed.  (List the most important of the items in category 3.)  Whatever we can raise beyond the approximately $17,000 already identified will be devoted to moving forward on these initiatives.  We will seek your approval of them during our membership meeting in June when we adopt the budget.”

The Vision Budget

After the completion of the annual budget drive the finance committee can make a reasonably accurate assessment of where current year spending will end and how much will come in during the next year.  Based on these two key pieces of information, it is fairly easy for the Board to determine whether they are focusing decisions on the Category 1, 2, or 3 listing developed a few months earlier — and to agree to a final budget to put before the congregation.

Even at this stage however it is important to be thoughtful in our communications about spending.  Let’s first agree that there are different ways to present a budget.  The two most common are referred to as the “line item budget” and the “program budget”.  Each of these formats works well depending upon the organization’s dominant need.

Large organizations, particularly government agencies and large non-profits, need control and accountability over current spending.  Voters, elected officials, unions, trustees, managers and stakeholders all ask:  “How did the money get used?  Was any of it spent inappropriately?  How can we limit the amount paid for salaries?”  The parties need to be answerable to each other on such questions. In such organizations “program budgets” have never gained traction because they do not address the organization’s dominant financial questions.  Because “line item” budgets tend to have more sharply defined spending categories they serve to control expenditure outcomes better.

Churches and most non-profits are smaller, more homogenous; the interests of the constituents are not nearly as diverse. While controls in small organizations are more informal, they are also probably more effective politically.  Current spending is questioned less, despite the occasional budget arguments.  Issues of control take a second seat to issues of meaning and mission.  More often, the dominant issues center on raising more money so that we can better support our religious education program, our outreach ministry, or our pastoral services.

The most important financial questions facing small not-for-profit organizations are “What are we about?”  “What do we need to do?”  And, “Where is the money coming from?”

The annual stewardship drive and the interlaced process of determining what services will be provided involves asking members to focus on their thankfulness for the community relationship they have, to clarify what they want additionally in that experience, and to bring that to fruition through their generous participation in the process.  As we have seen, prior to the stewardship drive the staff, major committees and the board have all been identifying and prioritizing important initiatives and decision packages.  These should be sufficient to engage members in fruitful discussion on the future.  That is precisely the kind of conversation you want to engage people in as you ask them to consider their financial gifts for the upcoming year.

When the drive is completed it will be time to show the membership a proposed budget.  It is an opportunity to showcase a set of targets for congregational services for three or four years into the future that reflect, in part, what was heard during the canvass.  If the stewardship drive went well some of those plans can be launched in the upcoming year.  If the drive ended up short of the goals it is still a time for looking forward and presenting specific plans out three or four years into the future.  The presentation of such plans and their longer term financial implications shifts the congregation’s attention from considering the spending request for next year to seeing how their individual concerns have been blended into a larger picture of where the congregation is heading.  This is a “Vision Budget”.

An uplifting congregational vision of itself for the future needs a catalyst to start it and support by leadership to carry it to fruition.  Even processes that seem to involve the “entire congregation” are successful only when the leadership is energized by the plans and focuses attention on them over a long time.  Revisiting the vision budget each year in a process similar to the one described will help the leadership bring that focus.  So, here are some guidelines for presenting a vision budget.  (See the sample budget in Appendix 3.)

1)         Focus expenses on the major areas of ministry for your church.  We want the membership to “own” the changes we talk about — to find energy in discussing them.  Suppose we organize a vision budget around the major growth needs driving the church.[1]  Consider these examples:

                      Worship, Spiritual Growth and Exploration

Organizational Services and Leadership Development

Community Presence and Denominational Support

Pastoral Support and Membership Growth

These categories represent what is sometimes referred to as a “mission budget” rather than a more organizationally oriented budget.  They virtually scream out the necessity to describe why we are in community.  The leadership needs to provide worthy attention in each of these areas — to show in greater detail the aspirations for your congregation.  For example, “Worship, Spiritual Growth, and Exploration” might mean a year around ministry for children or additional emphasis on laity ministry.  It might mean developing four or five regular services during the week, each targeted to a particular interest.

2)         Present a vision budget which is adequate to the community.  Too often churches limp along without the ministerial or other staff support they need, without an annual installment on the building repair fund, or without sufficient funds for religious education supplies.  Good leadership presents a vision budget to focus attention away from the discouraging present and toward the place we want to be within the foreseeable future.

I do not believe that any congregation can say with integrity that it enjoys a fullness of spiritual meaning in all of the four areas of energy suggested above if the average giving level is below $100/family/month.  This represents a commitment approaching 2% where congregational monthly incomes average $4,000 to $5,000.  The vision budget needs to show what the church could be with a growth of average gifts to the 3-5% range.

The presentation of a vision budget should bring forth excitement about the opportunities facing the congregation.  Develop the vision budget to get both the board and the committees to share their observations and their dreams.  They are the core of the congregation and their common purpose for the future is building community.

3)         Include a multi-year forecast.  Show that the leadership has heard what the members want, that such a church is available in the future although perhaps not next year.  Members understand that programs take time to launch; they need to see movement toward objectives.  They will support growth with a vision that fits their own, doing what can be done today while moving toward tomorrow.

4)         Show the number of members or giving units currently and into the future.  Growth is important in most congregations, and the vision budget should elevate this discussion.

5)         Put the entire budget on a single page.   Leave lots of white space on the paper and do not reduce the type size.  When you have done this, you have a budget that is comprehensible to those not familiar with it.  Again, the purpose of the vision budget is to increase excitement and commitment.  We who are church treasurers often lose sight of this objective.  We default to thinking the purpose of the budget is to present numbers, and more is better.  In the vision budget, fewer is better.

6)         Do not show the congregation numbers with more than four digits.  The membership will not absorb numbers with length, or at least not an entire page of them.   A budget totaling $150,000 – $250,000 can express $435 as “.4” while a budget of $500,000 should round to even thousands.

7)         Show the congregation a budget which addresses general program concepts, not committees.  The funds provided to the church are never the property of a particular committee.  As much as possible keep everyone focused on the entirety of the community.   A program area showing where the congregation is headed with “spiritual growth for children and youth” is better than having a budget with a line for “Religious Education Committee.”   Even if a program area is the responsibility of a particular committee or staff person (and it probably should be), do not use the committee name in presenting the budget to the congregation.

Embracing the Vision

1)         Have the membership “endorse” or otherwise embrace the general priorities suggested by the vision budget.  After all, we want to focus attention on the future.  Some churches ask the congregation to adopt the annual budget.  If so, offer one at a somewhat higher level of generalization than the detailed level used for accounting.  In many of the budgets I have been asked to look over I would suggest consolidating at least a quarter of the separate lines for purposes of congregational adoption.  More important yet, include the next few years out.  Those future years do not need to be “adopted” but they could be “approved in principle.”  This will be understood as a starting reference for the next year’s budget planning effort.

2)         Be forthcoming with details if asked.  It should be clear that the one page vision budget is not an attempt to hide anything from the members.  When you present the budget at the congregational meeting, have the detailed numbers available.  You can even have some copies of the detail,10 – 15 pages stapled together.  Most people do not want to be confused with this much detail; but have it ready for the quantitative types who are not yet on the Finance Committee.

3)         Give the membership a chance to do the right thing.  It is important to remember that proposals from committees are explanations from our members about how they want to be in service to us.  Their view of ministry to the congregation should not be taken lightly.  Of course, sometimes groups get a little isolated and off track, but don’t quash the energy because you think the congregation simply cannot afford to dream.

Too many of our members have worked in large bureaucracies in which the financing ethic is entirely different.  Do not succumb to the notion that the Board is “not doing its job” unless it reduces the requests. The first job of the Board is to raise the resources necessary to make congregational programs successful.  The same groups that have put forth their plans for the future are the ones which need to be inspired to finance them.  Most experts in the field of church finance agree:  It is easier and healthier to help the congregation increase the level of gifts than it is to cut programs.  On the other hand, if a little paring back in the first year will produce an aura of a “consistent overall approach” or a “longer term growth curve” small adjustments are usually not offensive to anyone as long as the program is intact in the present and vigorous in the longer view.

4)               Use the vision budget to present real issues about the future of the congregation.  The budget for Community UU Congregation shown in Appendix 3 calls upon the community to extend its ministry both to a nearby retirement community and to the local junior college.  This budget gives a focus for open discussion and the possible adoption of a shared vision that will endorse or reject such plans.

5)               In presenting the budget, do not undermine the message of stewardship:  We are committed to this religious community and its spiritual growth.  We freely and generously support our congregation and all the basic programs that make it worthwhile.

When presenting the budget all those special fees (such as the extra add-on fee for religious education registration, the adult workshop fee, coffee donations, or even infant care) can be interpreted as failure of the congregation to support itself through general stewardship.  The same is true of revenue from special events such as an auction night where such income is necessary to obtain a “balanced budget.”  When a vision budget is presented showing an ongoing heavy reliance on such items, isn’t this a message projecting failure even before we start?  Some churches use all these other sources of funds to finance mission work.  Many churches that have begun the practice of “giving away” the Sunday collection to other designated groups find the practice carries over to effect generous impulses during the annual budget drive.

Fundraisers are an excellent way to show off the community to potential new members.  They are also a great deal of work and require the strenuous efforts of many people over a long period.  My personal preference (and I think it makes pragmatic sense too) is to not rely on such activities in the basic annual budget, but rather to fund basic programs through direct contributions.  The energy for organizing a fund-raiser will be more forthcoming, as will the cash, if it is for some special purpose.  For example, take the support of the Transylvania partner church or the local AIDS project out of the budget, and take the auction revenue out too.  Say in a budget footnote that the Board expects the congregation will hold this worthwhile fundraiser, not for the church but for the important mission of the other organization.

            [1] See Loren B Meade’s “More Than Numbers, The Way Churches Grow” referenced in the bibliography.  I recommend it for further development of these notions.

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