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By Michael Castrilli

Which Church Financial Accounting Software Do I Choose?

“What is the best church financial accounting software?” If I had a dollar for the number of times I have been asked this question in a webinar or workshop, I would be rich! It is a great question and one that I like to answer as objectively as possible.

When you search Google for the question, over 87 million results are returned!  Sorting through this maze of results can be overwhelming, to say the least.

For the record, I receive no advertising dollars for this recommendation, but there is one resource where I always send people – Church Leaders – Church Management Software Guide.

What I love about this site is that it allows you to “click” all of the features you are looking for in church financial accounting software.  As you “click” through options, the list of available software options narrows based on the features you seek.

For example, are you interested in software that has Membership features? When you click Membership, the section opens a series of boxes that you can checkmark like, “tracks special events in the life of members” or “tracks attendance.” Maybe you are looking for website integration and you want to provide online giving, you can also select this option under Website Features. Ministry Tech by Church Leaders is also open about their disclaimer for those software companies that advertise on their site.

It’s a great resource! Check it out and let me know what you think!

https://churchleaders.com/church-management-software

St. Charles Borromeo Seminary

By Michael Castrilli

Using The Line Graph to Report Church Financial Information

We know that choosing the best visual is not a one-size fit all approach for church financial reports, so when do we choose the line graph?  We’ve already discussed the pie chart, the bar chart, and now it is time to talk about the advantages and cautions of the line graph!

The Line Graph

Line graphs connect individual data points and then connect the points with a line. These graphs are primarily used to display trends in data.

Advantages

  • Line graphs can quickly show data ranges, minimums, gaps, clusters or outliers.
  • Similar to the bar/column chart, the line graph can help readers visualize trends, bumpiness or patterns in data.The graph is useful when data contains evenly spaced values such as months, quarters, or fiscal years.
  • The graph is useful when data contains evenly spaced values such as months, quarters, or fiscal years.

Cautions

  • The line graph is less appealing to the reader than other visuals that can be used (i.e. bar/column charts) to display similar data.
  • Be sure to create a “Key” that distinguishes the various lines in the graph.
  • Ensure that the horizontal and vertical axes scales are right-sized given the range of data that is presented.

Next week, we dive into the Data Table!

Interested in learning more about visuals for church financial reporting? Read our previous  posts:

By Michael Castrilli

Collaboration Yields Results

There is powerful research that concludes that collaboration in fact yields results. James Surowiecki epic work, Wisdom of the Crowds, was groundbreaking in summarizing research that strongly supported the principle that “No one of us is smarter than all of us.”

One example in the book, that I found particularly useful in helping me understand the benefits achieved through collaboration, comes from the television game show, Who Wants to Be a Millionaire, hosted by Regis Philbin.

During the show, contestants worked through trivia questions in their attempt to win $1,000,000. As a fun twist, if the contestant faced difficulty with answering a question, they had three options available. They were only allowed to use each option once, throughout their time on the show. The options included:

  1. 50-50 – The computer eliminates two of the incorrect answers, giving the contestant a fifty-fifty chance at the right response
  2. Phone-a-Friend – Prior to the show, contestants singled out someone they could call for help who they considered one of the smartest people they knew
  3. Poll the Audience – The studio audience would cast votes by computer

From the results* of the show, Surowiecki writes:

“Everything we think we know about intelligence suggests that the smart individual would offer the most help. And, in fact, the ‘experts’ did okay, offering the right answer – under pressure – almost 65% of the time. But they paled in comparison to the audiences. Those random crowds of people with nothing better to do on a weekday afternoon and sit in a TV studio picked the right answer 91% of the time…” (Wisdom of the Crowds, 2004, Page 4)

Tip 4: Collaboration is the glue of insightful leadership, shared-accountability, and results

What does this have to do with church budgeting? The show is just the fun example of the benfits of collaboration. But, collaborative budget processes and operational management does prove time and time again to yield results.

A budget that is developed by one or two people does nothing to build a broader spirit of shared accountability across the church. Many leaders feel they may lose control when they bring others into the budget process. However, management research proves that involvement by a team in financial matters, specifically people responsible for the finances of a particular area, will more likely lead to better results.

Why?

If someone is involved in the budget process, and they feel as if they have had the opportunity to offer feedback and input, they’re more likely to “own” and “buy-in” to what has been created. Without participation in the process, resentment builds and can ultimately lead staff to consciously, or unconsciously, undermine what has been created.

Collaboration paired with open communication is where the budget will help church managers achieve the greatest potential of their organization.

Read more tips from Church Finance 30/30 – 30 Tips in 30 Days!

*Note: Surowiecki admits that this experiment would not stand scientific scrutiny. However, other examples in the book, would, in fact, support such an inquiry.

By Michael Castrilli

Church Visuals – Bars Aren’t Only For Drinking – The Bar Chart

As churches balance the broad range of financial information that parishioners seek, they also struggle with what to report and how to communicate this information. As we continue our discussion on best practices for communicating church finances with impact and ease and choosing the best visuals, let’s turn the infamous bar chart!

The Bar Chart

One of the most common visuals in reports is a bar/column chart. Using bars or other shapes, the visual displays discrete data in separate columns. These charts can be used to show one data set, or compare two or more data sets by lining them up in the same graphic.

Bar Charts Advantages

  • The chart offers readers a simple way to visualize data highs and lows at a glance.
  • The bar chart can help readers visualize trends, bumpiness or patterns in data. Trends occur when information moves in a general direction, or data can look bumpy meaning that the information is erratically up and down. The graph can also show patterns where data moves in a repeating fashion.
  • The use of colors and shapes offer an easy to read and appealing visually.
  • Comparing bars one against the other can quickly show progress or differentiation.

Cautions

  • If using a variety of colors to display more than two categories of data, ensure that the data can be easily recognized. For example, a black and white report may not show the subtle differences between columns.
  • Label the horizontal (X) and vertical (Y) axes.
  • Be careful not to overwhelm readers with so much data that the chart looks messy and then becomes difficult to read.

Next up in the world of visuals, Line Graphs! Interested in reading more? Read last week’s post All Pictures are Not Worth 1,000 Words – The Pie Chart

Church Financial visual that displays a bar chart

Excerpt from my original article in the Villanova University Center for Church Management and Business Ethics Newsletter, “Communicate Church Financial Information with Impact and Ease” (Spring 2017).

By Michael Castrilli

Communicate Church Finances with Impact & Ease

Does your church struggle with creating clear, understandable and transparent church finance reports? If so, you are not alone!

As churches balance the broad range of financial information that parishioners seek, they also struggle with what to report and how to communicate this information. Many churches offer financial reports that are inaccessible or downright confusing, while others report results in such a basic fashion that the data does not lead to any clear insights.

Even though studies show that communicating financial information to parishioners has a positive impact on stewardship and involvement, many churches either fail to see the linkages or become paralyzed by the options. Sadly, beyond the reporting of the end-of-year financial statements, a significant number of churches choose not to report any financial information.

A substantive church financial report will both engage and empower parishioners to understand their parish finances. However, creating this type of report can feel overwhelming, so let’s break down the process into manageable components.

Construct the Financial Narrative

Define the Goal and Audience

Two questions are critical as you begin to create any financial report, “What is the goal of the report?” “Who is the audience?” Answers to these questions are essential to help you as you craft the narrative. By understanding the purpose of why you are creating a report, you will have direction as to what you build.

For example, are you offering a high-level overview of revenue and expenses for the prior year? Or, is the report being created for the Finance Council as they help you prepare the annual budget? The answers to these questions will help guide you as to what to include in the report and the level of details that are needed.

What is important in this process is that you include all relevant information to help the audience achieve informed insights. There is a tendency to believe that the term “financial transparency” is defined as “the more information provided, the better the report.” However, this is not true if the information you communicate overwhelms or even distracts the audience from the most critical information. Just because you have extensive data does not mean that you need to include every piece of information in all of your reports!

Tell a Story

Mark Twain said the first rule of writing was “that a tale shall accomplish something and arrive somewhere.” I argue that that the same rule applies to creating financial reports. The best church financial reports have a beginning, middle, and arrive at a conclusion. The structure you can use for your narrative is to start with where the parish is today with finances. Next, offer any context from the past that can help inform the present situation. Finally, conclude the narrative by looking towards the future.

The Present – Where are we today?

Begin the report with a narrative that concisely describes the current state of finances for the parish. Typically, this will include a discussion of overall revenue and expenses compared to budget targets. For many churches, more than 80% of income comes from collections. Therefore, offer a status on Sunday offerings, donations, and discuss any changes in program income.

In the narrative, include a discussion of expenses. Were there any significant outliers? For example, did a massive snowstorm cause maintenance costs to soar? The narrative can also describe updates on staff changes, capital projects, debt obligations/payments, endowment/savings accounts, policy changes, and/or any programmatic updates.

The Past – Where have we been?

In the next section of the narrative, discuss how the financial situation today relates to the history of the parish’s finances? For example, if collections are lower than anticipated, consider any previous cases when this has occurred. Visuals in this section can be particularly useful to offer additional context or convey complex financial information.

The Future – How are we leading into future?

Conclude the report with a discussion of the future. Consider answering questions that may include, “What are the areas of growth at our parish?” “What is the plan for addressing any challenges in the future?” “What areas are we most grateful?” “Where do we see our future as a parish community?”

For example, if there has been a surge in parishioner registrations, discuss the opportunities. If a new staff member has been hired to work on a particular program, discuss excitement for parishioners to get involved. If new policies are being implemented to address a financial situation, write about what actions are being taken to deal with what has happened.

How do I find out more information?

At the end of the report, provide a point of contact (POC) with name, phone number, and email to address comments, questions, or concerns. If readers seek further information, they will have a POC that can offer additional details.

Read More Church Finance 30/30 Tips

Excerpt from my original article in the Villanova University Center for Church Management and Business Ethics Newsletter, “Communicate Church Financial Information with Impact and Ease” (Spring 2017).

picture of the outside of St. Paul Catholic Church in Philadelphia Pennsylvania
St. Paul Catholic Church, Philadelphia