4 Tips for Churches Experiencing Financial Stress

Whether it was the pandemic, a natural disaster, a summer slump or simply a lack of budgeting, churches can experience financial turmoil. While these disruptions can cause a tremendous amount of stress for our churches, I want to encourage you to not lose hope.

Instead use this disruption as a moment to learn and improve your core business practices, so when similar situations arise, your church will be able to hold steady. To help you do that, here are 4 financial tips to help you better serve your church and community when experiencing financial stress.

1. Evaluate your spending.

An important and immediate step for churches is to reduce expenses to help offset any revenue decrease. Concentrate first on discretionary expenses which have a tendency to “creep” over time. I would suggest looking through your monthly and recurring expenses to identify items that can be reduced with minimal effort. Do you still need those monthly subscriptions to magazines, newspapers, and website services? Could the church put a freeze on staff credit cards without prohibiting ministry? Also, look for expenses that are based on providing comfort or ease of use. Maybe you’re paying a higher price for a premium service, when a lower-tier service will suffice.

If your church has long-term debt, keep an eye on interest rates and compare them to your current loan. It may make financial sense to refinance an existing loan to a shorter period and reduce overall debt payments, but only if you can still make the higher monthly payment.

2. Create a strategy to manage your emergency or reserve fund.

In light of the 2020 pandemic and lingering economic challenges, it’s become increasingly clear why a reserve fund is essential to the health and strength of any organization. If you don’t have a reserve fund, you are most likely feeling some stress, but it’s not impossible to create margin in your current finances. As you determine which expenses will be cut or reduced, allocate a portion of those savings to reserves.

I normally recommend saving three to six months of operating expenses in your reserve fund. You may be required to tap into your reserve fund to help navigate this time, but I encourage you to keep an eye on your reserves and make a plan for additional expense adjustments if you need to deplete your reserves. For example, if you’re dipping in reserves and you’re now down to 2-months of reserve, what new programs will be delayed? At 1-month of reserve, will hiring be frozen? At 2-3 weeks of reserve, what non-essential programs will be reduced? By determining and articulating the strategy for reserve funds, the entire staff will recognize the importance of intentional spending.

3. Cultivate and nurture new donors.

The most pressing issue for churches and ministries during times of stress is revenue. A church’s cash flow is heavily dependent on tithes and offerings. If there is an economic downturn, chances are revenues will be impacted.

Nurture your current givers by ensuring that their method of giving is seamless and easy.

A recent study found that 68% of church attenders wanted digital giving options. You can cultivate new donors by offering an online giving solution. There are several great options for churches. If your ministry is new to online giving, make sure someone is available to walk your members through the process.

Encourage your church members to participate in worship through their giving. Use social media posts, announcements during your online services, and other communication means to remind your donors that online giving options are available to make regular giving easy even when they are unable to attend in person. Highlight testimonies about how God has honored people’s faithfulness though giving. Remind them about God’s promised blessings to those who are generous is giving.

4. Revisit your mission statement and look for new opportunities.

Your mission statement will remind you what is important. Your mission defines the purpose of your ministry. In the midst of a financial crisis, it can be easy to lose sight of your ministry goals and get sidetracked on things that aren’t essential. Look at your current programs and evaluate their relevance. If you were starting today, what would be the purpose of your ministry? Meet with your ministry team and discuss your mission and identify the top one, two or three things that are critical to focus on right now.

Reduce or eliminate programs that don't align with mission. We call this mission creep. I would suspect all organizations have mission creep. When times are good, and revenues are strong, it is easy to add ministry programs that have value but are not essential to the overall mission. Additionally, we sometimes continue programs that are no longer useful or effective because “we’ve always done it that way.” Now is the time to have an honest conversation about all your programs and decide which are essential and which can be eliminated.

Another reason to eliminate programs that are no longer useful is to have the margin and capacity to add new programs and new ministry opportunities as they present themselves. Providing an online service option was very important during the pandemic. But churches needed margin in their current finances to make this new endeavor successful. If there is no margin in the budget to add new programs, then the opportunity might be missed.

No matter the root cause of your church's financial stress, take heart! Use these tips to take a look at your church's spending habits to create margin in your current budget. You’ll be better prepared to weather the storm and make room for new ministry opportunities.