Models for Budget Building

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Churches use a variety of budget building models. No one model or combination of models is right for every church. What approach might best fit your situation?

You do not want a budget that is doomed to fail because the goals were out of reach. On the other hand, you do not want the budget to be so modest and unchallenging that it will not stretch the congregation.

Begin with a blank slate.

Beginning with a blank slate is often called “zero-based budgeting.” This approach is extremely time-consuming and, therefore, rarely used. It assumes there are no items or dollars in the budget. Then you build back, item by item. It rarely accomplishes what people hope it will. Even after all the time and effort, the resulting budget generally looks very similar to the previous year’s budget.

Begin with last year’s budget.

It is relatively easy to begin with last year’s budget. This is very common in smaller churches. You simply compare previous budget figures with actual expenditures and make changes based on history and anticipated changes. The new budget results from known expenses for the coming year, such as salaries, and projected figures, such as utilities.

Begin with budget requests.

This approach is quite common in mid-size and larger churches. You ask some person or group responsible for every section of the budget to look ahead to the next year and prepare a budget based on anticipated needs and expenses.

Begin with income projections.

Here you project income from all sources based on trends over the last several years, what is happening in the current year, and expectations for the coming year. Are there any past income sources that will not continue in the next year? Are there any anticipated increases to take into account? This income projection sets the total within which the budget is built.

No one model or combination of models is right for every church. What approach might best fit your situation?

A variation is to receive pledges first, and then set the budget in light of the pledges and the historical relationship between the amount pledged and contributions from other sources. For example, if pledges typically are about 80 percent of total contributions, you can safely estimate anticipated income on that basis.

Begin with a strategic plan.

An overarching plan for the coming year emerges out of a planning process that begins with the church’s mission and values, moves to what God is most calling the church to do in the coming year, and then develops a plan to implement that vision. Budgeting involves attaching cost estimates to all those ongoing and new efforts. This method requires beginning well before the budget takes effect.

Use a combination of models.

Realities normally require using several of these models, rather than one alone. There is always a dynamic interplay between financial limits and ministry needs. For example, when submitted budget requests exceed projected revenues, there must be a back-and-forth process to make adjustments. That kind of interplay is quite common.

A wise goal is to project a challenging vision, but not deal in unrealistic dreaming. You do not want a budget that is doomed to fail no matter how hard everyone works or how much people give because the goals were out of reach. On the other hand, you do not want the budget to be so modest and unchallenging that it will not stretch the congregation.


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About Author

Dr. Lovett H. Weems, Jr.

Lovett H. Weems Jr. is senior consultant at the Lewis Center for Church Leadership, distinguished professor of church leadership emeritus at Wesley Theological Seminary, and author of several books on leadership.

Generosity, Stewardship, and Abundance book coverBook by Lovett H. Weems Jr. and Ann A. Michel
Generosity, Stewardship, and Abundance

Dr. Weems and Dr. Michel present the Bible’s redeeming and transforming message of generosity, stewardship, and abundance in this comprehensive guide to Christian financial responsibility. Generosity, Stewardship, and Abundance: A Transformational Guide to Church Finance provides practical advice to pastors and church leaders tasked with funding ministry and inspiring others toward responsible stewardship and greater generosity. Learn more now.