3 Essential Keys to Stewarding Donor Funds

The Bible teaches us to be good stewards of the resources we have. This theme is woven throughout Scripture. In the local church, the pastor and board are entrusted with stewarding the funds contributed by donors. What are some key practices church leadership should follow to ensure good stewardship of donor funds? 

Key #1: A commitment to accountability, transparency, and integrity.  

Accountability in church finances means every transaction has at least two sets of eyes on it. This can be done by having two people sign the check, or having a purchase order system where every purchase is reviewed and approved by a second person before it is made.  

Transparency means every financial transaction can be reviewed at a later time. This means the  invoice or receipt and proof of payment is retained and filed away. It also means financial reports that detail every transaction are prepared regularly. These financial reports should be reviewed and approved by the governing board on a regular basis, too. 

Integrity in your financial activities means the church makes a commitment to use donated funds for their intended purpose. Donated funds should always be used for the stated ministry purpose of the church. They should never be used for personal expenses. Nonprofit organizations have at least three sets of eyes watching how they spend their funds: their donors, the public, and the IRS. You don’t want any one of these groups to get the impression that the church isn’t using their funds appropriately. 

A commitment to accountability and transparency, will help promote integrity in financial operations.

Key #2: Clear policies and procedures.  

The pastor and board should define who has access to funds, who can spend funds, and how transactions are reviewed and approved. These financial policies should be documented and provided to each person involved in the financial operations. 

If you don’t have any written policies and procedures, it may seem like an overwhelming task. Just start with your policies—define a few “umbrella” guidelines for how funds are received and spent. You can add the step-by-step procedures at a later time.

Key #3: Strong internal controls.  

Internal controls are the processes you have in place to ensure your financial transactions remain accountable, transparent, and follow your stated policies. 

In a smaller organization, you may have fewer controls to implement. But the number of controls will grow as your organization grows. 

The basic tenet of internal controls is segregation of duties. In a church setting, this means that the same person doesn’t make the deposit, write the checks and enter the transactions into the financial software. 

However, in smaller churches, this is often the case. Strong internal controls will require assigning some of these tasks to other people in the church. You won’t necessarily have to hire more staff, but it will require additional eyes on each transaction.