We see new headlines every month. This church’s treasurer stole this amount. This pastor bought a plane. This person skimmed collection plates for years. It might make you wonder, “How do churches manager their finances?”
This is a difficult question to answer as various denominations and churches have different guidelines and rules. Smaller independent churches may have a pastor and a secretary managing everything including finances. Larger churches may have a whole team of financial experts, including outside companies, managing their money.
Some Presbyterian churches are required to provide a detailed annual financial report and budget to each member and hold an open church meeting to allow anyone to comment or question it. Other churches offer vague synopses of what comes in and what goes out. Big churches will proudly tell the world how much money they provided for missions, disasters and other charity work, but they will zealously protest information on personnel expenses and investments.
Ultimately, the only church that probably matters to you is the one you are donating to. You have the right to find out how your church is managing its finances. But how do churches manage their finances in general? There are some best-practices you might ask your church to follow.
To start with, every church must have and follow a firm budget. It must be realistic about projected income as well as provide guidelines for monthly expenditures. Someone should be charged with monitoring actual income and expenses to be sure the church is within its budget. Every quarter, the finance team needs to report the financial situation to the church leaders. Together, they should consider budget adjustments to assure the church does not run out of money before the end of the fiscal year.
Speaking of financial teams, your church should have one. If you do not have enough willing people in your congregation with financial experience to manage the task, then you should hire an accounting or management company. The main reason for this is to elicit trust from the congregation. If a small group of people is collecting, budgeting and spending church money, it lends itself to questions when the church comes asking for more.
In fact, the financial team should never handle any cash that belongs to the church. That is not part of the job. The two main money-receiving operations of a typical church are the collection baskets and mail. There needs to be clearly-written guidelines for managing the collection funds. This should include that no one is ever left alone with money.
Furthermore, there should be a quick delivery to a vault or secure office of all collections. Funds should be retrieved and counted by at least two people who verify the count and sign off on it. The counting team should be rotated at regular intervals.
The secretary receives funds through the mail and sometimes in person from walk-ins. There should be a simple procedure to assign receipts to walk-in as well as to immediately log and deliver all received checks to the vault. Some churches have a drop box next to the secretary that the counting team will access when they perform their weekly count.
A regular internal audit and an annual independent audit will assure nothing goes too astray and instill trust in the congregation and outside donors.
The best practice is that everyone involved in budgeting and spending church funds remember that they are stewards of the monies of single mothers, struggling seniors and their neighbors. Keeping that in mind helps finance managers make better decisions.
How do churches manage their finances? The vast majority do so very carefully and strive for transparency. But we all make mistakes and suffer from other human afflictions. That’s why it is best to have clear policies and procedures and roles for everyone. Contact us to see how we do it in our church.
