Removing the Mysteries about Church Finance

By Jerry L. Johnson

Church has nearly the same finance and management requirements as a for-profit enterprise. The main difference is churches don't usually have to pay taxes, unless they are engaged in business enterprise activities. We can help your church sort this out and set up proper accounting.

• Language: English
• Publisher: Tablo Publishing
• Release date: Feb 25, 2021
• ISBN: 9781649695833

Book preview

REMOVING THE MYSTERIES about CHURCH FINANCE

2 Timothy 3:7 Ever learning, and never able to come to the knowledge of the truth. 

Proverbs 17:27 He that hath knowledge spareth his words: and a man of understanding is of an excellent spirit. 

Churches need to understand the principles of finance in order to use their finances effectively. That involves many steps, which this book will teach you, beginning with plans you make before receiving any money, through disbursement of funds. Complete transparency about finances should be practiced for the entire congregation to view. 

This book will show you fundamental steps to biblically handling the finances entrusted to a church, or ministry. It will show you how to increase the value received by the church and work within that amount. This book in no way suggests that business planning and business models can or should replace God’s guidance. Quite the contrary: God’s guidance should be infused with every step you take, no matter the endeavor. 

All scriptural references in this book are taken from the King James Version 

Jerry can be contacted at: 

WWW.AlphaDelta.BIZ 

WWW.TheChurchFinance.com 

Copyright © 2020 Jerry L Johnson 

All rights reserved. This book or parts thereof may not be reproduced in any form, stored in any retrieval system, or transmitted in any form by any means—electronic, mechanical, photocopy, recording, or otherwise—without prior written permission of the publisher, except as provided by United States of America copyright law. 

For permission requests, write to the publisher at (email address here) 

ISBN paperback 978-1-63684-374-2 

ISBN ebook 978-2-63684-375-9

Dedication

For Donna, the love of my life, the wind under my wings 

Foreward

Organizations, whether a church or a law firm, must manage their operations to produce positive financial results. It can be debated (and often is) that a church is not a business enterprise; it unavoidably must use many of the same tools, techniques, skills and methods that any business would use. Either one cannot operate indefinitely without positive financial results. 

A Pastor asked me to look at their accounting processes. That led me to many additional questions. Since the church did not have a business manager, per se, I created that position, which turned into a full-time volunteer position. This was two of the most fulfilling and challenging years of my life. 

Successful organizations, a church or a trucking company, large or small, should not flounder in pursuing their mission and fulfilling their purpose. To the many who are floundering, this book is for you. If you are a small church, and you feel you are stuck where you are, this book is for you. Whether you are a business or church and just want to polish your operations, this book is for you. 

Floundering will not happen when you are doing the right things right, as you will see in these pages. If you are not sure that your church is doing the right things right, there are steps you need to take now, starting with a season of prayer involving the entire membership. 

ACKNOWLEDGEMENT

My wife, Donna, and I were sitting in Sunday School. The topic was about how churches in general handle finances. Donna whispered to me, this is a book that you have to write. I was taken aback, and as you might guess, resisted the notion. Yet, I hope I have done just that. 

Donna not only gave me that initial nudge, she encouraged me all the way with love, insight, and Bulldog persistence. 

PREFACE

Matthew 24:6 - And ye shall hear of wars and rumours of wars: see that ye be not troubled: for all these things must come to pass, but the end is not yet. 

2020 will be remembered as a tumulus year beginning with the COVID-19 travel ban announced on February 2 for all non-Americans traveling from China. These are the days that call for strong leadership, especially from our churches. To serve, churches need to survive, yet many don't. Churches need to be ready for critical situations, yet many are not. Depending on their location, they need to have a survival plan for a range of natural disasters, tornados in the mid-west, hurricanes on the Gulf Coast and East Coast. Survival is the critical need for all of us; churches that don't survive are forgotten, left in the dust of the past, along with their deeds, plans, hopes, and benefit to anyone. 

Churches in a range of sizes will over time close their doors for reasons unconnected with any type of natural disaster. Does your church survival plan expand for unexpected exogenous conditions? How big is your plan? Are you ready for a worldwide pandemic? Probably not, but good for you if you were. Now you can help others. 

God will be with you, with your church, and all who worship Him. Know this to be true. If God is with us, do we still have troubles, trials and tribulations? Yes. A pandemic is all that, and it is extremely costly. Can your church support itself during the Pandemic, perhaps during a prolonged curfew or lockdown? Does your church have a plan for all your essential expenses, what to do when your income is limited?

Because of the Pandemic, there will be periods when church members are out of work and contributions to church funds are not coming. Could your church anticipate such an event? Probably not a specific event like a pandemic. But that should not relieve you of the need to prepare, as though no relief in sight. 

Throughout the following pages is repeated the admonition to be frugal with church money, to set money aside, plan ahead, and to be ready for the unexpected. If your church was strong before, you have a good chance of a good recovery after COVID-19. If you were struggling before, barely skimping by, then recovery will be sketchy, slow at best. If your church is existing month-to-month depending on contributions coming in, this will be an especially hard period. This is not like ordinary disasters which, after it passed, is back to life as it was. We will get through this, but it will not be without new scars, and losses in many cases. 

Is the survival of your church based only on money, or how it handles money? Of course not, because the foundation of all Christian Churches is Jesus Christ. 

Review now how and where your church can tighten its belt, what can be put on hold, what is not essential. Your members will have gone through trauma, with family members struggling weeks or months with the virus, perhaps with deaths of family members and friends. This virus has no friends, it is enemy of us all. Identify electives that were nice to have but were not essential to the fulfilment of the commandment Jesus gave us. People (just about all of us) make decisions one way when resources are plentiful, but when resources are scarce, decisions are approached differently. (More about this later when you consider the OMR Model.) 

During this time, it is more important than ever to stay in communication with your congregation. Regular phone calls, with the leaders at the top of the call chain reassuring each person that the church network is working for them. Churches with a large senior population needs to take additional steps to keep them safe. Many will be more vulnerable to the virus. They may need medicine or other supplies, and food items. 

This is also an excellent time for churches to reach out to people who have visited your church in the past but did not join; this demonstrates that the heart of your church is bigger than merely increasing membership numbers. 

This is a time when the pastor must show superior leadership; the life of the church and many members will depend on it. Even with a worldwide Pandemic hovering over each house and community, it is important that no one falls through the communication gaps. This is a good time for church auxiliaries to step up. 

Temperature testing is of importance. The church should ensure that every member household has a thermometer. Other items such as hand sanitizer, trash bags and toilet paper can be scarce items. Include face masks as well. It is also an ideal time to talk (on the phone of course, skype or facetime) with other members you haven't spoken with in a while. (Enthusiasm is a force multiplier. General Colon Powell, United States Secretary of State) 

Churches that work together, create collations with other churches, will come through this and become a beacon in the virus fog. Be concerned about all, especially the weakest.

Be kind. Help each other. Jesus is with you. Church leaders need to exchange ideas how their congregation is coping. Is your church prepared to offer help to other churches? That says a lot about your church. 

The Emergency Preparedness Plan (EPP) for your church, to keep your congregation safe, is an important step in being a leader. The reason you have a plan is because you can develop the plan without the urgency or stress of the actual emergency. When you are up to your earlobes in a crisis is not the best time to formulate a plan. The following link has abundant information about preparedness, as does most other cities. The City of Titusville, Florida / Emergency Management / Emergency Preparedness 

INTRODUCTION

"What ever happened to that church that used to be here on the corner?  

Oh, I don’t know, it’s not around anymore." 

It is a sad situation when a church must close its doors. About 4,000 churches close their doors each year; some because they can’t pay their bills; with a smaller number being commissioned as replacements. That could represent as many as 40,000 displaced church members each year. Project that number out ten years and you see the population of church-going Christians melting. This is not acceptable and must be reversed. 

But before going any farther, the following question will overlay everything else: What is the purpose of the Christian Church? (There will be opportunity later to discuss the purpose of your own specific church. 

To fulfill the Great Commission as Jesus commanded in Matthew 28:18. This is sought to be fulfilled in thousands of ways, such as the goal of one Baptist Church to bring in at least one thousand non-English speaking members within five years. They greatly exceeded the goal. No one Jesus reached directly spoke English, neither did he, although he could have. 

Churches that close are not fulfilling the Great Commission and may have encountered a door that God closed. Maybe they were as the tree in John 15:2, "Every branch in me that beareth not fruit he taketh away: and every branch that beareth fruit, he purgeth it, that it may bring forth more fruit." 

Closures are not unique to churches, of course. In 2017, 6400 commercial stores closed, with another 3800 estimated for 2018. This parallel is drawn to emphasize the vulnerability of a church. There are approximately 3.8 million retail establishments in the USA compared to about 384,000 churches (all denominations). This comparison should be alarming: one tenth the number of churches produce roughly a number equal to retail closures each year. To put this in perspective, retail closing equal .16%, churches equal .98%. This should be alarming for churchgoers and leaders. (These comparisons were made before the COVID-19 Pandemic, which permanently closed approximately 100,000 businesses.) 

The deepest concern expressed in this book is how many of these churches failed because of financial or other non-ministerial reasons? A church has a business enterprise component, which should not be confused with the Great Purpose of the church. The business enterprise component supports and makes possible functions of the church, and as such, someone is responsible. A church with the roof falling in, bills overdue and unpaid is hardly a sterling testament to the Great Commission. The business enterprise component keeps this from happening. 

In reviewing the curriculum of several seminaries, and discussions with young seminary graduates, the core seems solid for the ministerial focus but with only a cursory understanding of business enterprise aspects. 

While pastors are the leaders of the church, they generally rely on knowledgeable lay persons for the technical aspects of finance. Many pastors are not prepared for or want the CEO functions. The purpose of this book is not to critique pastors but to save struggling churches before they reach the tipping point. It is the pastor who sets the direction for the church, sets the tone, and defines what the church is to be known for. 

2 Corinthians 9:10-12 

10 Now he that ministereth seed to the sower both minister bread for your food, and multiply your seed sown, and increase the fruits of your righteousness; 

11 Being enriched in everything to all bountifulness, which causeth through us thanksgiving to God. 

12 For the administration of this service not only supplieth the want of the saints, but is abundant also by many thanksgivings unto God. 

SECTION 1 – INTRODUCTION TO CHURCH FINANCE

LESSON OBJECTIVE – UNDERSTAND AND USE COMPONENTS OF A BUSINESS ENTERPRISE 

WHAT YOU WILL LEARN 

1. Non-ministerial reasons churches fail. 

2. How values are embedded and revealed in church culture. 

3. Comparison of managerial actions for churches and for-profit enterprises. 

4. Why a church is a business enterprise. 

5. Why the Great Commission is important. 

Among reasons churches discontinue operations may include the following, although more than one reason may be applicable. They are not presented in any order and are not necessarily directly dependent on money. Lack of financial skills however is more prevalent than the lack of money. 

1. Conflicting goals supporting a vague mission. (Either one of these items can derail your church.) 

2. Inefficient use of resources to support poorly researched decisions. (Abundance is often squandered; poor decisions spend money faster than it can be obtained.) 

3. Surrounding neighborhood or community in decline; shrinking in size. (Expand your vision.) 

4. Limited understanding of the numbers that describe the finances of the church. (Numbers are the language of business; can be critical for churches as well.)

5. Poor or non-existent cash flow control. (You must first understand what cash flow is.) 

6. Growth projects that are not adequately supported by the membership. (Keeping membership commitment is a hallmark of leadership.) 

7. Start-ups or spinoff churches that are under-capitalized with staff inadequately trained. (This work the same way for business.) 

8. Dissention among church leaders, i.e. pastor, deacons, others. (Learn the basis for dissention; Is it personal? Is it scriptural?) 

9. Conflict as to who is accountable for what, and what are the consequences. (More later about task definition.) 

10. Lack of interest within this church. (What happened to enthusiasm?) 

11. Membership turnover or ministerial turnover. (A key indicator of trouble; why are they leaving?) 

12. For branch churches, lack of support from parent church. (What did parent church promise? What does branch church expect?) 

13. Too many churches without distinction, competing for members (they all look and sound the same). 

What This Book Is About 

This book is filled with practical steps and easy to follow methods to manage the financial activities of a church using correct business practices and the biblical reason for doing so. 

This book will show you fundamental steps to biblically handling the finances entrusted to a church, or ministry. It will show you how to increase the value received by the church and work within that amount. This book in no way suggests that business planning and business models can or should replace God’s guidance. Quite the contrary: God’s guidance should be infused with every step you take, no matter the endeavor. 

Well-run organizations, whether it’s your local church or a major corporation, have a definable rhythm that comes from balance. Finances require a balance, as we will see. Sound business principles are applicable here, acquired from years of business experience, business school training, and biblical wisdom. 

Organizational Culture 

Social culture is the norms, habits, and traditions found in organizations, or communities and reveals how the people in that body work together, communicate within and without, and establish patterns that define what is acceptable to them and what is not. 

The culture of a church will affect behaviors and outcomes. We often do not associate a culture with a church, other than talking about how friendly everyone is, or some other topical observation. The culture of a church is its own, developed over time, and maintained in both subtle and overt ways. Even in church, where people sit suggests there are patterns to be maintained, and how people react when someone else occupies that spot. 

The esteemed professor, writer, and organizational behavior expert, 1Dr. Edgar Schein, has written of three levels of values in an organization. This is relevant in all organizations, including churches, and may be reflective of the church’s religious beliefs. The three levels have technical descriptions: Artifacts, Espoused Values, and Basic Assumptions. 

Artifacts

The Oxford Dictionary defines artifacts as an object made by a human being, typically an item of cultural or historical interest. 

According to Schein, the easiest level of values to identify, that is apparent to any observer, is artifacts. For a church, this level could include hundreds of physical items, like steeples, hymn books, pews, crucifix icons or pictures, choirs, and even the church building itself. What they are and the way they are displayed may indicate their importance to the members of that church. Photographs of past or current pastors prominently displayed can tell a story. Section 14 has a more detailed discussion of church artifacts viewed from multiple perspectives. Certain artifacts may be missing which you normally expect to see. Many churches no longer display steeples atop the main building, while others are set up in strip-malls where there is no place for a steeple. 

If certain artifacts are commonly used by a certain denomination, does their absence detract from the validity of that church’s status? An example might be the cross atop the church building. 

Espoused Values 

The next level of values is espoused values, church espousing their friendliness, their support of the homeless through food banks, meals, or youth programs. This value is important to the church, is talked about publicly and privately; they are proud of this. Espoused values contribute to the development of normal standards of the organization for how it conducts business now and in the future. Their espoused values are what they are known for, or want to be known for, what they want others to talk about, what they talk about among themselves. Perhaps it is their generosity, or their community outreach. One church has a singing Christmas Tree each year, another has a ham or turkey delivery each Thanksgiving and Christmas. These are espoused values the people talk about, and proudly point to. One church has a butterfly garden that attracts hundreds, maybe thousands, of butterfly’s each year; it also attracts many admirers. Another caters to senior citizens with trips, game night, and luncheons. 

While some churches offer a food pantry for those in need, others prepare meals, both in their own facilities or coordinated with volunteers to provide meals at a public location. The importance of this may be greater for the providers than for the recipients; it's something for them to talk about, to bring the church's focus to a common function. 

2Basic Assumptions 

Bion (1961) used the term basic assumption to designate that which, fundamentally, the individual must assume in order to be part of a group. Basic assumptions come into play at unconscious, apathetic, and affective levels. 

The hardest to distinguish, and hardest to change, are basic assumptions. This takes digging and pushing deep to get to the last why is that, with many denials along the way. These are not even recognized, they have become blended into the fabric of the church, indistinguishable of themselves. Even when challenged about this action, the response is always this is the way it has always been done. These assumptions compel behavior without their existence being acknowledged or even recognized. These are values that are taken for granted, and when challenged, always produce a big pushback. People establish norms without being aware that is what they are doing. 

These values are reflective of the behaviors of the membership, of how they communicate with each other and visitors. They are entrenched habits that are conducted usually without conscious plan. Is there a fellowship of reaching out warmly to visitors, or do they allow visitors to find their own way? People do not create Basic Assumptions through an intellectual exercise but rather by what they are used to, what is comfortable, what is familiar. Basic Assumptions do not encourage change. 

The reader is challenged to review these levels of values throughout this book and in their own church, and identify their own artifacts, espoused values, or