How To Trim the Sails on Your Church Budget

by Dick Hardy

We are facing an unprecedented time in the history of our nation, at least since the Great Depression. Very difficult challenges lie ahead for our national leadership. Corporate greed has reared its ugly head all the way to the committee rooms in Congress. Bank and financial institution failures mirror 1929. GM, Chrysler, and Ford are in crisis. And when those things happen, people lose jobs, the housing market shrinks, credit slows, and people get jittery about doing anything.


Confidence in the American economy has stumped investors on Wall Street. The mom and pop store on Main Street wonders when the next shoe is going to drop from their line of credit or from suppliers that are directly or indirectly affected by everything from Detroit to AIG to Merrill Lynch. It all trickles down, all the way to the church.

For years, we have operated our churches the same way business and industry have operated. We make budgets based on trends unique to us. We provide cost-of-living adjustments to employees. We build buildings to keep up with growth or we maintain our existing buildings in exchange for increasing ministry expenditures.

But then came fall 2008. Things changed, even for the church. We began to see people in our congregations lose jobs we thought they would have until retirement. We watched stalwart companies in our communities close their doors. The ripple effect was more than we had experienced since the 1930s.

Today, we are still in this economic turmoil. The prescription to full economic health does not seem to be a quick fix. It is going to be long-term in nature seems to be the mantra of economic healing.

Less I confuse you, I am an eternal optimist. Tithes are down in most places, but that will not be forever. The mission God has given us is too great for us to fail. With Him we will not fail. So what should a pastor do about his church’s budget?

Some will say the following suggestions cannot work. Everyone you talk to will communicate in the clearest of terms that it cannot be done; maybe that includes you. When you read each of the following recommendations, several reasons will race through your head as to why it will not work.

From the outset, I implore you to pray. Prayer is the instrument God gives us to take things that confound men to the One who is never confounded. While it may feel nonspiritual, the fiscal health of the church is critical to the accomplishing the greatest mission on earth — to reach lost people with the gospel.

We have all heard it said: “Some people make things happen, some watch things happen, while others sit around and wonder what happened.” On the issue of the church budget — in economic times like these — you cannot watch, sit around, and wonder. You need to be fervent in your connection to what God wants you to do. With Him you must make something happen. In other words, you must act.

That statement may look great on paper, but when the rubber meets the road, it is difficult to fulfill. Do not expect anything you do will create easy-street solutions for you and/or the church. It is flat out hard work. You need to see what needs to happen and then take the necessary steps to make it happen.

It is my hope that you will gain one or two handles in making that happen through the suggestions below.

While examining these items, I will categorize my recommendations in short, mid, and long terms. Let’s start where budgets always start, with income.

Developing Short-Term Income Potential

A short-term increase in tithes is hard to accomplish. If you have not been preaching tithing on a systematic basis for the last several years, you have short-changed the church. But I will address preaching on tithing in the long-term of income.

For now, preach a short series on giving. The challenge might be whether people perceive this series comes from your wrong motivations. They may believe you are preaching not to advance the spiritual well being of the Body, but you are preaching this because the church needs money. You are doing the latter, but hopefully not at the expense of the former. If you need a quick infusion of cash, you must preach this short series — one to three messages.

Examine where you are at year-to-date (YTD) compared to budget and compared to last year’s YTD. Presumably you did not get carried away creating an aggressive income growth projection for 2010. If you did, you need to modify those projections, unless you are meeting or exceeding them. You simply cannot play a game with projecting income. You need to budget income at or below what you think you will receive. It is better to be surprised to the good than to the bad.

Do not think about your expenses while adjusting your income projections. These two functions are entirely separate. If you keep focusing on what you feel your expense obligations are, you may never come to grips with the amount of money that will be available through tithes and offerings. If you have fallen behind in tithe income, face the facts and make mid-course income adjustments accordingly.

Developing Mid-Term Income Potential

In the mid-term, you can increase general fund income by planning out adjustments in its classification. Hopefully, your focus on tithes from your preaching series will by then begin to show some affect. Further, you may be able to raise designated funds for expenses the church had previously covered strictly from tithes. You must be cautious, however, in your approach to raising these kinds of dollars. You must not set yourself up for donors to shift their giving from tithes to designated giving. All funds raised for this mid-term income increase must be new dollars for it to be effective for the church.

Developing Long-Term Income Potential

Creating long-term stability in your church’s giving requires regular and systematic development of a giving culture. You do not want to be in the position of having to constantly address the need for short-term jump-starts to giving. You want your congregation to know and understand the spiritual component of giving and the blessing it brings. You may find yourself thinking, Yea, I know all that stuff, but my church needs money now. That’s fine, but I would be remiss in addressing the short- and mid-term issues if I did not do all I can do to set you up for success on the long-term.

Preach and teach giving, both financially and otherwise. Then be sure your church is delivering the goods. Do you have a good church where things are done really well, or when it comes to church, is the quality mediocre at best? That is a tough question to ask, but it is worth an answer. People will certainly obey Scripture, but the ability to give out of the abundance will be much easier if the church is doing what the church should be doing, and doing it well.

While you do these things, give regular testimony of God’s goodness in supplying the needs of individuals as they step out in faith and begin to tithe. Your job as pastor is to be a faith-builder. Testimonies, both live and video, can powerfully impact those in the congregation who are sitting on the sidelines.

Model giving. You need to be Johnny-on-the-spot with your own tithes and offerings. As the leader of the church, it is critical that you lead by example. Paul said, “Follow my example, as I follow the example of Christ” (1 Corinthians 11:1, NIV).

Expense Reductions — Where the Rubber Meets the Road

In large part, what we have discussed so far will not produce much change in the short or mid term. The real action on your part will take place with expenses. This is where you may be tempted to say, “It can’t be done in our church.”

I am sympathetic to the pain associated with the following recommendations. At the same time, I am a firm believer that successfully executing the mission of the church trumps all fiscal and human pain relative to budget reductions.

I know you have this question so let me give you the answer. Yes, we will talk about laying off employees, including pastors, but it will not start there. Any pastor or leader should never take this lightly when they deal with the human component of jobs and security. Leaders do, however, bear the responsibility to be the guardian of the mission of the church. Mission outweighs everything, particularly in the church.

My focus at this point will show how to gain short-term improvements in the church’s expense budget. These are things you can consider as you move to creating a positive margin between your income and your expenses. And again, if you want true short-term gains, do not forget that your focus needs to be on the expense side of the ledger, not the income side.

Keep in mind that in the best of all worlds, you will not see real dollar change in your cash flow for 60 days. This is the normal time frame you should expect to stop spending and to receive and process the most immediate expense invoices or requisitions already incurred.

So here we go. These recommendations are not listed in any priority. You need to pick and choose those that will most quickly be of value to you and your church. Also, beware that the reasons for not doing these budget adjustments will enter your mind at the speed of light.

1. Debt. Gather all debt information to make sure you are getting the best interest rate and have the optimal payment schedule in place. Do not assume that because you have a rate at one level you cannot get a lower rate. You find out only by having all of your information and then asking your financial institution about a lower rate. What’s the worse he can say? Ask for the lower rate, and when appropriate, ask for an adjustment in the length of the debt service. Be careful with the length of your loan. You do not want to build in longer-term obligation than will benefit the church.

2. Departmental and Ministry Budgets. A church must approach these line items with great care. I do not recommend broad, across-the-board cuts to departmental and ministry budgets. That can happen minimally, and is the easiest to do. You think, We are doing the same thing to everybody. Unless you have crafted each budget perfectly with no fudge factor or no built-in shortfall, across-the-board cuts inherently have a built-in inequity. This may be the least of your worries as you consider these and other cuts. Make sure you do these adjustments with your eyes open. Departmental and ministry budgets cuts carry the greatest risk of moving the church away from mission. Be careful that you do not sacrifice mission to get a black bottom line. That kind of adjustment is disastrous over the long haul.

Further, from a departmental standpoint, consider reducing any subsidies you provide for children and youth to go to camps and events. You may ask adults to pay all of their way for any ministry of the church. You may need to reduce or eliminate continuing education initiatives for you and your staff this year.

Consider buying co-ops with other churches or entities in your community. A church can save on office and janitorial supplies through a co-op.

3. Nickels and Dimes. Go line by line in your budget and look for every small item you can do without. Before you think this one will not make any difference, do the math and add up those nickels and dimes. You will be surprised. You will win in the little things. Taking care of this item strengthens your attack of the bigger, more visible items. You can confidently say you have turned over every stone in the budget adjustment process.

4. Staffing. This is a tough one. Unless you have a clear overstaffing or quality of work issue, this is excruciatingly hard. I do not care how many times you have to let a staff member go, even crummy ones, it is never easy. Do not expect this to be any different.

In all you do as senior leader you must do this with complete compassion for those affected. We are not corporate America. We operate with a sense of caring and compassion for those who give of themselves to serve us. Always exhibit compassion.

Start by looking at your ratios of staff expense to total tithes over the last few years. Unless you have attendance growth that keeps you ahead of the curve on your compensation to income ratio, you will see a pattern that dictates your need to trim payroll. If you examine the 3 previous years and see that on average you were spending 40 percent on staffing and now in 2009 you are tracking at 48 percent YTD, you need to seriously consider taking at least 8 percent out of your staffing line.

One way to do that is for everyone to take a cut in pay. In this example it would be 48 minus 40 or 8 percent. Many support staff members would prefer this if it helps them keep their jobs. Morale, though, becomes an entirely different issue. They also prefer this approach if it means their coworker can keep their job. If you choose not to do an across-the-board pay cut, then you will need to reduce staff. In this case, suppose you have a team of 12 people. If they were all making the same money (which they are not), one of them would have to go.

There is a negative ripple effect from this decision, but it is one of the larger parts of any church budget, and you cannot ignore it.

How does a pastor logistically make this happen?

Here’s your game plan.

  1. Enter this plan fully immersed in prayer. If not, all your plans will backfire. You need God’s help with this. Do it on your own and all bets are off. Do it with God, and you might be surprised what He can do.
  2. Discuss this issue at length with your board or the group with fiduciary responsibility for the church. Talk about all options.
  3. Discuss the nonstaffing-related issues at length with the pastoral and support staff. Talk about options. Talk very specifically about things they can do in their own departments to reduce expenses.
  4. Do not talk in terms of eliminating unnecessary expenses because no one feels they have any unnecessary expenses. Talk in terms of absolute, very important, and important expenditures. Which important budget items could they delay until next year or forego completely?
  5. Use the word adjustments to refer to any cuts or downsizing that might be necessary. Be smart in the way you couch your discussions.
  6. Prepare staff for the necessity of those adjustments and how the long-term health and viability of the ministry determines this necessity.
  7. Allow an administrator or other respected fiscal person to drive the implementation. When it comes to letting a pastor go, you will need to do the deed. The administrator should release the other staff to keep you in the position of still being the released staff member’s pastor. However, you must at all times support the person carrying the bad news to the staff member.
  8. Do not talk in the public worship services of these adjustments. These are internal actions driven by income. You are not taking a vote of the congregation. Talking publicly creates uncertainty and works against any hoped for short- or mid-term income increases. Remember, people do not tithe more because they think the church needs it. They tithe more because of their obedience to the Lord. So eliminate public talk of how poor you are.
  9. Make sure all key leadership are on board with you in these decisions. Leave no room for a board member or senior level staff member to pull the rug from underneath you. You have enough headaches. You do not need that one.
  10. Be diligent in implementing these adjustments. Talk individually with staff members you will release. Then call all the other staff members together to assure them of their continued employment. Do this in mid to late afternoon. Time it for the end of day. Do not leave the other staff wondering whether they are next.
  11. At all times and in all actions, pray.

If what you have been doing is increasing the fiscal strength of the church, then keep it up. If you are in need of some serious solutions, however, consider many of these suggestions. They may not all be for you, but if you will consider each one seriously, pray, and implement, you will not only survive this economic downturn but you may begin to thrive.

Our mission has not changed or gone away. We still have the greatest privilege on earth to be part of God’s enterprise to save the world. At the end of this budget journey, you will look back with gratitude for God’s leading in the fiscal strengthening of His church.

Dick Hardy is the founder and president of The Hardy Group Ministries, an executive consulting ministry for senior pastors.

Copyright © 2009 by Dick Hardy. Permission is granted for the free redistribution of this article. You may contact Dick at or visit the website