Church Budget and Finance Archives - Page 8 of 9

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

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.

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

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.

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

Change Management for Church – How to Change Things When Change is Hard – Book Review

One of my favorite books on the topic of change management is Switch: How to Change Things When Change is Hard by brothers Chip and Dan Heath (New York: Broadway Books, 2010). The book focuses on the question of why it’s so hard to make lasting changes in our companies, in our communities, and in our lives and how to overcome this challenge.

Psychologists have discovered that our minds are ruled by two different systems one rational and one emotional. The rational mind wants to make a change, but the emotional system enjoys the existing routine. This tension can doom a change effort – but if it is overcome, change can come quickly.

In Switch, the Heaths’ show how we can all confront this challenge of mind and emotion and make meaningful change in our lives at work or home.

Research, Engaging Applications, and Practical Solutions!

The book strikes a good balance between research, engaging applications, and practical solutions. If you are looking for a better understanding of why change is so difficult and how to overcome common roadblocks, this book is a great read. Let me give one example that I found very helpful. In Chapter 1: Three Surprises About Change, the authors explain that self-control is exhaustible.

The narrow sense of the word, as in the willpower needed to fight vice (smokes, cookies, alcohol)…but a broader kind of self-supervision. Think of the way your mind works when you’re giving negative feedback to an employee, or assembling a new bookshelf, or learning a new dance. You are careful and deliberate with your words and movements. It feels like there’s a supervisor on duty. That’s self-control, too.”

“…when people try to change things, they’re usually tinkering with behaviors that have become automatic, and changing those behaviors takes self-control. When people exhaust their self-control, what they’re exhausting are the mental muscles needed to think creatively, to focus, to inhibit their impulses, and to persist in the face of frustration or failure. In other words, they’re exhausting precisely the same muscles needed to make a big change.

Does this point resonate with you? It sure does with me.

Battle Your Rational Mind

As a facilitator, when I am leading a challenging session with participants who are trying to think in new ways about old ways of doing business, by the end of the day I am mentally whipped, and the participants are tired too. It’s not easy to battle your rational mind that knows you need to make a change, and your emotional self that resists learning a whole new way of doing something; it is exhausting. I think owning and recognizing this reality can help make any change process more manageable because, at the end of the day, you have a bit more patience with yourself and understanding for why this can be difficult.

Switch is a great read, and I highly recommend it.

By Michael Castrilli

Allow the Light to Shine Through

Truth and light are central tenets of our faith. Even though we know this in our hearts, as it relates to financial transparency, at times, we forget this in our heads.

I don’t believe that a majority of people are trying to deceive by their lack of financial transparency. In fact, I think many leaders believe that a budget completed alone is a budget completed better — fewer people, fewer questions, less anxiety!

But time and time again, church management researchers conclude the same point — financial transparency yields the best results — people are more likely to give, engage, and trust that their money is being well used.

“If you remain in my word, you will truly be my disciples, and you will know the truth, and the truth will set you free” (John 8:31b-32)h –

As I was thinking about the topic of financial transparency and the freedom that comes from allowing light to shine on the truth, I remembered a story from grad school. My classmates and I were asked to come to the first day of class with a short one-page response to this question, “Is lying ever justified?”

Now I admit, I don’t remember the details of my paper, but I do remember my point – I firmly believed, and still believe, that lying is not justified. Trust me; I am not trying to sound like a saint. And yes, some of my classmates articulated very well that lying for the sake of public safety is positive, but I was not convinced.

My point is that even in public service, where the truth might be hard to hear, and even in the case of public safety people may panic — I believe that the truth gives people the freedom to panic — or the freedom to make a different choice. Instead of panic, what if people rise up and join together in a spirit of community to meet the challenge together? Without the truth, individuals and groups have no choice but to go forward in the dark — without the benefit of information and knowledge to decide the next right action.

Transparency is a commitment to openness in process, methods, and decisions.

The same can be said of financial transparency. Yes, parishioners will ask more questions when finances get discussed in public. But without a transparent, collaborative, and open budget process, it is far more likely that when difficult choices arise, the stakeholders without knowledge of the budget, will be less likely to support difficult trade-offs.

As non-profits, our profit is mission – people deserve to see how their money is being put to use to achieve that mission. Financial freedom does not come from worrying about what was created behind closed doors or justifying to others what was created in their best interest.

Freedom comes from opening financial doors for all to see.

Transparency allows the light to shine through all things — and we know from our faith, and from our lives, that when light shines through – it can be amazing!