Budgets

Income-driven budgeting is when you work out your expected income and so adjust your expenditure accordingly. It might be that you know that you are going to be getting a fixed grant of £5,000 for Messy Church, and so the budget becomes income-driven and you try to ensure that the expenditure is £5,000 or less. 

We see this in the Bible with the story of Joseph in Genesis 41, where Joseph interprets the Pharoah's dream. Through the interpretation, they learn there will be 7 years of plenty followed by 7 years of famine, and so budget that 20% of the resources from the years of plenty will be put aside in order to prepare for the years of famine. (This also demonstrates the importance of reserves!). The knowledge that their income will increase and then decrease was the defining factor in their decisions, and so the expenditure in the first 7 years was decreased in order to put some food away for the future. 

Expenditure-driven budgeting is when you work out your expected costs and so try to make your income fit into that amount. It might be that you want to repair your roof, which will cost £20,000, and so the budget becomes expenditure-driven as you try to ensure that the income for the project is £20,000 or more. 

We see this in the Bible with the story of Noah in Genesis 6, where Noah is ordered by God to build an ark of certain dimensions. As the ark is to have at least one pair of every animal, bird and creeping thing, Noah will need to make sure that the ark is a certain size to fit them all in; the size of the ark (income) is driven by the number of animals (expenditure). Likewise, if we know we have to keep two elephants in hay to eat for 40 days and 40 nights (plus the time for the floods to decrease) - our expenditure - we can therefore work out how much hay we need to bring in. 

The Ministry Share Scheme is an example of an expenditure-driven budget for the Diocese. We know the cost of ministry for each Minister, and so need to make sure the income is equal to this amount, either through income we are already expecting or through the Ministry Share request. 

In most cases, you may need a mix of approaches depending on your situation and the projects you want to undertake. There will be some projects that require a certain amount to keep them running, so you will need to look towards where income can be found, and there will be some projects where you know your income is static, so need to amend your expenditure. 

The first stage of preparing your budget is to pray. Spend some time with God thanking Him for all that you have received over the past year, and offering Him your plans for the next. Think about some of the Bible passages where Jesus talks about money and planning and how these can relate to your church.

You may like to look at:

Matthew 19.16-30

Mark 12.41-44

Luke 14.15-24

Luke 15.8-10

The next step is to gather information about the past few years (it would help to have at least one, but three complete years is really helpful). From this you can set up a table of how much was raised or spent through each category. For example, you can see whether insurance has increased, decreased or remained mostly flat. To make this easier you could use the same categories as you find in your accounts or on any accounting software that you use. Some software will even provide this information easily for you. 

You should also be able to gather 9 months' data for the current year. This can then be used to predict the figures for the full year. 

Go through each category and find the figure for the end of September. Divide this by 3 and multiply by 4, which will give you a rough estimate for the year. 

Then look through each category again and see if you know anything more that would change that category. For example, you may have a big Christmas Tree Festival, which increases your fundraising total dramatically in the final month, and so 'fundraising' can be predicted to be higher than previously calculated. Likewise, you might have paid all your Ministry Share already, so know you will not be paying any in the final three months. 

Now you know your finances for the past few years and this year, you can start looking at the future. In general, it is best to expect expenditure to increase slightly, and for income to decrease slightly. This will give you some rough figures. 

The next thing is to speak with the other groups in the Church to see what they are expecting, the fabric committee may be wanting to replace the hot water boiler, the Youth Group may be wanting to send a minibus to a Christian festival, you may be looking at doing a stewardship campaign. Finding out what you want to achieve over the next year as a church will help direct the budget. You might also have other documents which will help in predicting this information, such as a quinquennial inspection, which shows what needs to be done to the fabric of the building, or a Mission Action Plan (MAP), which highlights the areas you want to focus on in your ministry.

Following this stage, you will have a draft budget and can then begin chatting with the various groups to negotiate what can be possible.

If your budget does not lead to a surplus, you will need to chat with the various groups to see if they can pull back on any of their plans, or find additional sources of income. This can be tricky and should definitely be done with your incumbent so that they can hold the bigger picture and direction of the church. 

The other option would be to dip into your reserves, which may be necessary for special circumstances, but is not a long-term solution. 

You may also want to contact Chris Ottershaw, the Diocesan Stewardship Officer, to get advice as to where you might be able to make additional savings or find revenues

Now you have a completed budget you need to get it approved by your PCC. This is important to ensure that your whole PCC, and so the whole congregation, take ownership and responsibility for it. 

Now you have an approved budget you should communicate it to the congregation. This is important because it gives the congregation confidence that you are caring for their donations, it helps the congregation feel a sense of ownership over the church's finances, and it raises awareness of any financial difficulties, which may mean they are able to reassess their own giving and help with the problem. 

You may want to add something to your website about the budget, produce a poster, or put something in your newsletter. Just remember to keep things simple and clear and focus on one clear message.

Your budget should be a living document to help you with your finances. You can use it to mark where you should be throughout the year compared to where you actually are and where more work needs to be done. It can also be adjusted through the year (and helps you to see where you need to make changes) as events occur.