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By Michael Castrilli

Preview – Church Finance 30/30

Happy Halloween! Tomorrow, November 1, let’s turn from the darkness of Halloween to the light of All Saints.

The Academy presents, Church Finance 30/30: 30 Tips for 30 Days! Hmm, intrigued? Check back every day at www.ChurchManagementAcademy.com/blog.

Read All Tips – Church Finance 30/30

Budget Primer

Church finance postcard that shows a church and the church finance tip, budgets are about freedom not constraint

By Michael Castrilli

Beachgoers, Snowbirds, and Church Budgets

Is your church impacted by seasonality? An example is a parish in the Outer Banks of North Carolina, Holy Redeemer by the Sea. From Memorial Day through Labor Day the church has an increase of 75% of people coming through their doors for Sunday mass.  In the winter months, parish attendance declines and then Easter Sunday brings the people back into the pews! The fact is that seasonality and other special circumstances can wreak havoc on church budgets. (As a side note, if you ever find yourself in the Outer Banks, Holy Redeemer is awesome!)

As you create the budget, there are some factors that you’ll want to consider. These factors can be positive, negative, or both as it relates to the amount of money coming into your parish or the expenses you’ll pay. Understanding whether these factors influence your parish can serve to inform you as you develop income and expense estimates for the church. Some are one-time occurrences (events), and others may be ongoing (seasonal adjustments) regarding their impact.⁠ Remember, information is power!

Weather

Snowstorms, hurricanes, tornadoes, earthquakes, and other weather related events impact the church budget. The emotional, spiritual, and financial toll these events cause can be enormous.  At the same time, regions can prepare and even plan for the likelihood that weather will play a roll in the impact on the parish community. The average snowfall in Syracuse, New York is 124 inches.⁠ However, like other upstate New York cities that face similar snowfall amounts (i.e. Dioceses of Buffalo, Rochester, Albany, New York), they will want to prepare their budget keeping this type of weather in mind. For example, additional spending may be needed for the cost of plowing the church parking lot, the purchase of snow melt/salt for slippery sidewalks and high heating bills to keep the church warm will all be factors in the budget.

winter backyard with reindeer yard ornament covered by snow

For parishes that are located by the ocean and adversely affected by less frequent but possibly larger scale events (tropical storms, hurricanes, flooding) a church will want to prepare for these types of events as well.  The goal of planning for weather events is to determine the likelihood that an event will impact the parish and then determine the scope to which it will impact the budget.

Snowbirds

The term “snowbirds” is the affectionate term used by many to describe the large numbers of people that travel from the northeastern states (New York, Massachusetts, Pennsylvania) to the southeastern states (Florida, George, South Carolina) seeking warmer weather during the cold winter months.  Both regions are affected.  The loss of the parishioners in the north means swelling church communities in the south. Cities like Miami, Fort Lauderdale, and Tampa see significant increases in daily and Sunday liturgies.

Community Events

Events in the local and regional community can also cause large fluctuations in the number of parishioners attending services.  For example, when Pope Francis came to the World Meeting of Families in Philadelphia, Pennsylvania in September 2015, the event drew over 2 million visitors to the region.  Mass attendance grew at local parishes as some visitors came before the visit and some tourists stayed in the area after the Pope had left. No doubt that Philadelphia’s Cathedral of Saints Peter and Paul saw an increase in collections during those weeks.

Holydays and Holidays

It’s apparent to church members that holydays will affect church attendance, but what about the special circumstances when holidays and holydays collide with one another? For example, if December 25 falls on a Friday or Saturday, do church members tend to go to Mass again on Sunday? Does July 4th occur on a Sunday and many parishioners go on vacation for the weekend? Sometimes national or local holidays will affect church attendance.  It is important to be aware of these factors as you create your budget assumptions.

Recommendations for Addressing Special Circumstances

When developing the budget, review the list above and determine, “Will any of these factors impact our parish income and expenses? Are there other special circumstances?” Next, build these factors into your budget, create assumptions, forecast impacts on income and expenses, and develop a concise narrative.

As you continue your journey to developing a realistic budget, remember, you don’t need to implement every recommendation written on this church finance blog all at once! Any step you take towards ensuring that your budget is reflective of your situation will yield results.  Take it one step at a time!

By Michael Castrilli

Accessible Church Accounting

Accounting has roots in the church! Did you know that one of the most important contributors to modern-day accounting was a Franciscan Friar, Luca Pacioli (1447-1517)?

Pacioli literally wrote the book on the double-entry accounting system and made tremendous contributions to accounting concepts that we use today. Interesting enough, he is also the same guy that taught math to Leonardo Da Vinci.

I think accounting gets a bad rap! I understand the frustration for some people, as I mentioned yesterday, finance is like learning a new language. But, if you make learning accounting an enjoyable experience, quite frankly, I think it can be really fun!

I am not a CPA, so maybe you are like me – I love finance, but I always want to make sure I am using concepts correctly, avoiding mistakes, and having the ability to look up terms and concepts quickly.

In our book, Parish Finance, Dr. Chuck Zech and I dedicated a chapter to accounting, tailored specifically for the church. But, you may be looking for even more than one chapter.

At times, I think accounting is like solving a puzzle by using numbers, formulas, and actions to make the best financial decisions. Over the years, I have found some great resources that break accounting down into component parts and make it accessible.

Below is a sampling of resources that I think you might enjoy:

Read More Church Finance 30/30 – 30 Tips in 30 Days

St. Paul Outside the Walls, Rome, Italy

By Michael Castrilli

Break It Down

Do you feel dread when you hear the words “budget” or ‘”budget process?”  Based on my discussions with pastors and parish administrators over the years, you are absolutely not alone! No need to fret! Break the process down into four manageable stages and watch as you reap the benefits of creating a collaborative, transparent, and efficient budget.

Stage 1 – Establish Priorities

If the budget is a reflection of priorities, it’s important in the first stage to establish priorities. Stage 1 includes the examination of Church mission, vision, goals, and objectives. This is the stage when pastoral leaders collaborate with staff, parishioners, or other stakeholders and encourage an open dialogue about where the parishes today and what the parish hopes to accomplish in the future. As previously discussed on this blog, the budget is a reflection of your priorities. Therefore, it’s critical to spend some time thinking and praying over what you want to accomplish. Otherwise, the budget may become a shelf document and not a management tool to help you accomplish your goals and objectives.

Timing: 4-5 months prior to the budget being finalized

Stage 2 – Deliver Guidance

In Stage 2, create a roadmap to help you and your team arrive at your destination. This is the stage to discuss targets and expectations. Most income and expense estimates contain uncertainty anyway, so take the worry out of the creation of the budget.

It can be as simple as developing a brief one or two-page document that offers guidance, expectations, and timelines to those helping you create the budget.

This is also the stage to address any assumptions that will impact budget creation. For example, if you have a budget target in mind for a program or initiative, let people know. Don’t keep them guessing as to what you are thinking. People want direct feedback. No one wants to create a budget proposal only to find out that the program was not even considered!

Otherwise, the budget formulation process becomes a “paper exercise” that undermines your leadership and dissatisfies those working with you. Expectation setting may be challenging to deliver in the moment, but being honest with people saves everyone in the end. Transparency around decision-making also helps you gain the trust and respect of your colleagues.  Allow adequate time for estimates and justifications to be produced.

Timing: 3-4 months prior to the budget being finalized

Stage 3 – Develop Budget

Stage 3 is when your team estimates parish income and expenses, design program budgets, and create performance goals. Using your parish financial software and other tools at your disposal, you will be able to consolidate information so you can review the various budget elements (income, expenses, and program justifications) from different perspectives. Utilize helpful tools like Microsoft Excel, Google Sheets, or other software programs that serve to consolidate information. When the information is contained in this type of format, you will have a broader perspective and visibility on the various components that will make up your budget.

Timing: 2 months prior to the budget being finalized

Stage 4 – Gain Feedback and Finalize

Share the budget with those you have involved from the earliest phases of the process. After you have a draft budget include stakeholders by allowing them to give you feedback as you prepare your final proposal. This consistent information sharing will continue to build momentum and ultimate buy-in for the creation of a collaborative budget. Buy-in at this stage is defined as ownership and understanding of your budget among stakeholders who are critical for the achievement of your policies and programs. For a parish, this would include staff, parishioners, finance and pastoral councils, and others who help you achieve success.

Timing: 1 month prior to the budget being finalized

Stay Tuned: Tomorrow, we will discuss best practices for implementing these stages.

Read More Church Finance 30/30 – 30 Tips in 30 Days

Portions of this text come from Michael J. Castrilli and Charles E. Zech, Parish Finance: Best Practices in Church Management (New York: Paulist Press, 2016) Chapter 3.

By Michael Castrilli

Make Math Fun!

Now we all know people that like numbers, and we know people that don’t like numbers!

For some, I think the love/hate relationship to numbers goes back to our early education. Remember in school when someone would ask the teacher, “How will I use [insert mathematic topic] in my life?” Most teachers provide a weak response, and my perspective is that people fear numbers because they have not been taught the potential positive impact numbers can offer in work and life. 

The first post of the Church Finance 30/30 Series was about the same topic, with a different slant – Budgets are about freedom, not constraint. The same can be said of numbers. Numbers are about freedom, not constraint!

The main point – we need to teach people how to use numbers to help and to inform decisions, not annoy people.

Finance is not all about numbers, but numbers are a critical input and output to finance. So, how do we connect the dots and help people enjoy, and not dread math?

The Wall Street Journal ran a great article, “How One Entrepreneur Conquered Her Math Fear” by Alexandra Samuel.

I think Entrepreneurs can be much like pastors managing a church — they may be a one-person show, with limited support, and a tremendous responsibility for ALL aspects of management — Finance, HR, Advertising, Marketing

Samuel outlines four ideas that I want to use to help you conquer your fear of math, and I will share my journey with numbers along the way.

Action 1: “Learn quantitative thinking with a passion project”

Samuel’s point is that you are not going to get confident with numbers if you’re not interested.

When I was a little boy, I had a teacher tell me, “Mike, you are not very good at math, you should focus on other subjects and be good at those subjects.” WHAT? This is a terrible thing to say to a kid. But, kids listen to their teachers, and I listened well. For a long time, I thought I was “bad” at math.

It wasn’t until my teacher in high school, Mrs. Donna Eichenlaub, helped me make the connection between numbers and something I WAS interested in – money. (As a side note, Mrs. Eichenlaub was so influential in my life that I dedicated my Parish Finance Book to her).

Mrs. Eichenlaub was the first to turn me on to a lifelong passion and career in numbers. I am no statistician, but the idea that numbers can bring insights into all aspects of life was amazing to me.

My passion project became — the stock market. I pretended I had $1,000 to invest, and “invested” that money in a few of my favorite companies – Starbucks, Nike, General Electric.

Each day after school, I would come home and check the stock price in the newspaper (Hey, I am not ancient, but it is true – the internet was not invented yet). Once I saw the share price for the day, I would calculate the gain or loss, the percentage increase or decrease from the time I bought the stock, and then I would predict where I thought the stock price would go. It was terrific. 

Ok – I have no idea how my fake portfolio ended up, but to this day I still love the stock market and calculate my stats!

What is your passion project? Remember, learning math does not have to start with church topics.

What are other things that excite you? Maybe you love sports — calculate baseball, basketball, football, hockey stats. Do you like cars — calculate MPG. Do you enjoy politics — calculate the number of pollsters that were correct versus incorrect in the 2020 election. The list is endless.

Action 2: “Find a question you’re desperate to answer with numbers”

Samuel writes, “There’s no better motivation for conquering your math phobia than a question that you are motivated about answering.”

What is your question that numbers could help you answer? Maybe you want to know how much collections have grown or declined over the last five years?

Once you have the numbers, you could think through other non-math factors like neighborhood demographics or personnel changes (like the appointment of a new pastor) that may have impacted collections. Numbers provide a great way to help you think through and find solutions to questions.

Action 3: “Recruit a mentor-humbly”

Push past your comfort zone and find someone to help you navigate the math waters. “Since you don’t want to make a recommendation, much less a decision, based on mistaken calculations or methodology…” get a mentor to help you check your work. Samuel adds that this person should be someone you can approach humbly and honestly.

In the church world, I have found church people get paranoid about others finding out what they don’t know. Don’t let this stop you; if you’re uncomfortable recruiting someone on the inside — like a member of the finance council — find someone on the outside. Maybe it is another pastor, a local CFO, or even a family member that you know is good with numbers. Trust me — there are plenty of people in the world that have made numbers their careers.

Action 4: “Get indignant about your math education”

You can do it! Allow this math journey to help you become a better leader. Instead of walking into a finance council meeting afraid of the financial statements, you can grow confident and comfortable. Be relentless in your pursuit of learning.

Action 5 – Have fun (I added this one!)

Fun? Enjoyable? Absolutely. I learned math the same way I learned the piano. Let me explain. I am a big fan of Elton John and loved the song, “Your Song.” So, I went out and bought a music book filled with Elton John’s music. I pounded away at the piano until I was able to play simple chords with my left hand, and the melody with my right hand. It was great, and soon enough, I felt great. Was I good? Not necessarily, but, was I comfortable? Absolutely. 

The same applies to math. Get comfortable and learn to enjoy the questions and see what solutions emerge.

There is only one person that can stop us from learning something new – us!

You learned how to ride a bike by riding, to drive a car by driving, to preach by preaching — now learn something new by trying!

It has been a pleasure to journey with you through these 30 days of 30 tips. Please share your thoughts, comments and questions with me at mjcastrilli@gmail.com.

Chapel at Villanova University
Chapel at Villanova University