It is important to design your budget recognizing the fact that some revenues and expenses fluctuate throughout the year. Most churches develop a twelve-month budget but differ on how the budget is displayed and managed.

To have the most realistic and manageable view of the budget, create a Church Cash Flow Budget. Unlike the creation of a budget that evenly divides income and expense categories by the number of months in the budget period (linear), a Church Cash Flow Budget provides realistic month-to-month projections of anticipated receipts and expenditures. The advantages to creating this type of budget are numerous, including:

• Gaining visibility into actual revenues and disbursements of cash
• Understanding how seasonality may affect revenues or expenses
• Managing cash flow for months with higher expenses or lower income.
• Mitigating the risk of not having enough cash on hand to pay bills.

Tip 3 is brought to you by the Church Finance 30/30 Series

Ask any church leader about church management and one topic always comes up – infrastructure! From building maintenance, boilers, roofs, sidewalks, and parking lots – this is a top-of-mind issue when it comes to financial planning.

Here is the good news – the church capital assets budget is a proactive way to analyze the present and plan for the future. Defined as the spending plan for updating, repairing, maintaining, or purchasing capital assets, this budget can save you time and money today, tomorrow, and forever.

Capital assets are simply those items that the parish owns that have value extending beyond a year. For example, the church building and rectory are capital assets because the value of these assets continues over multiple years. Other examples might include the parking lot, computers or any major equipment owned.

By creating a church capital assets budget, church leaders can reduce their fear of dreaded leaks, breakdowns, cracks, and potholes!

Interestingly, even though these assets are critical to accomplishing the mission of the parish, many parishes do not have a capital budget. For example, if a church building is unusable due to maintenance issues or the high costs to operate the facility, how does the parish accomplish its critical mission?

A strategy to get started with effectively managing capital assets is to catalog all assets owned by the church and document the relative age of the assets. By recording this information, the parish can project when assets may decline or will need replacement.

The other benefit of this type of documentation is succession planning. When a new pastor arrives at the parish, the catalog can be extremely helpful to know what assets exist at the church.

By developing a capital assets budget, the parish is prioritizing the critical infrastructure that is necessary for meeting mission goals.

In tomorrow’s post, I’ll discuss how to go about cataloging church assets to get this plan created.

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To complement a church financial report’s narrative, a variety of church finance visuals can help enhance a report’s readability and accessibility. I define the term “visuals” broadly, including any graphs, charts, pictures, tables, even art that displays data to accompany a concept, topic, or method. The Chinese proverb, a picture is worth a thousand words, speaks well for the impact visuals can have on virtually any report. Alternatively, I also like to say in fun, when you put together a visual and the picture is not worth at least 250 words, consider not including it!

Open up any word processing, spreadsheet, or presentation software and you will find an endless list of visuals that you can use. However, remember that beautiful colors, stylish charts or graphs may make a report look good, the question is whether the visual adds value to the information being conveyed? Another key question – what is the goal of including a particular visual?

Opportunities for Church Finance Visuals are Endless – Choose Well

Once the questions above are answered, there a variety of visuals you can choose. Without the time in this article to describe every visual available, over the next series of posts,  I will discuss a few of the most common used in church financial reports.

As you can imagine, the choice of which visual to include for your particular situation will be subjective based on a variety of circumstances. There is not a one-size-fits-all solution, but there are some general parameters that you can use.

Pie Charts

Pie charts are useful when your goal is to present data on a category/topic as a percentage of the whole. Pie pieces can be easily arranged by color, shape, and highlighted to emphasize information.

Pie Chart Advantages

• The pie chart is easy to read, understand, and people are familiar with this visual.
• The pie chart is particularly useful to show relative proportions, or percentages of information.The use of colors and pie shapes display well any differentiation among categories.
• The use of colors and pie shapes display well any differentiation among categories.

Pie Chart Cautions

• Pie charts are often overused without regard to whether these charts are the best choice for displaying certain types of data. For example, a pie chart that offers no distinction between the data (unless this is a goal of your visual) does not add value to the report. If you have more than one data set, it can be difficult for people to look at multiple pie charts and make comparisons.
• The recommendation is to use a pie chart when you have between three and seven categories, otherwise, the pie chart may become messy and confusing.
• Avoid “miscellaneous” or “other” categories. These terms are confusing and can be misleading. If they are included, ensure that the definitions are clear.

Of course, pie charts are not your only choice. Learn the advantages and disadvantages of the infamous bar/column charts and line graphs!

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