Crisis Response: 4 Ways to Simplify Your Church’s Finances

In a short video, I offer four words to church leaders who are analyzing their financial responses to COVID-19. Even though churches are immersed in important spiritual work during this crisis, we cannot ignore the financial realities that impact each organization. In order for ministry efforts to continue in this trying time, churches must focus on how to keep them funded.

Will we be proactive or reactive?

Church finances can be complex, so our goal here is simplification. This advice is based upon past experiences and current conversations. I’m blessed to be part of CDF Capital—a ministry that learned valuable lessons from the recession of the last decade; not only have we devoted an immense amount of research into church finances, we’ve counseled churches on how to systematize their budgeting strategy. And in recent days, we have had numerous conversations with church leaders around the country who are anxious about their finances. While these discussions have ranged from encouraging to disheartening, they have shed light on the questions that churches are asking about the challenges before them.

3 Responses to Crisis

As I observed in the video, there are generally three camps of churches right now:

1. The Confident

These churches spent years preparing for a financial crisis. They’ve stashed away sufficient reserves and are best positioned to continue their ministry, regardless of how long this crisis lasts.

2. The Concerned

Some churches set aside contingency funds but were leery of building larger reserves. While they have some savings, they’re somewhat modest. They’re holding firm today, but a prolonged crisis would create massive challenges to their operations.

3. The Crushed

Unfortunately, some churches were living on the fringe before the crisis hit; now, they’re practically suffocating. They’re already forced to make tough decisions (laying off staff and becoming delinquent on bills) and the longer this crisis continues, the more dire their situation becomes.

4 Words to Simplify Your Finances

1. Navigation

Regardless of your church’s position, I offer these four words to simplify your view of the financial picture so you can guide your church through the crisis. While there’s nothing groundbreaking here, we sometimes need an abridged strategy for moving forward.

Even if your church is confident in this season, it’s always helpful to gauge whether your long-term response is adequate. If your church is in the concerned or crushed categories, understand that there is hope. You just need a framework with which you can view the financial challenges of the pandemic.

The question your church should ask: Will we be proactive or reactive?

We’re emerging from one of the greatest periods of economic growth in our country’s history. While economists have warned that the bubble was about to burst, no one anticipated it coming to a screeching halt. This situation is unprecedented, which is why I implore church leaders to devote time to financial planning now. Your church’s operational budget needs steering at this very moment.

Affirm that leadership will be deliberate, not reactionary, in facing this crisis.

I’ve been impressed (and simultaneously dismayed) that many smaller churches have a better grip on this than some larger churches. Again, proactive leadership is essential in times like this. Yes, the spiritual challenges of this pandemic are daunting, but they will be exacerbated if your church simultaneously experiences a financial crisis. Don’t be passive. Encourage your team to address the financial challenges head on.

Action steps:

  • Affirm that leadership will be deliberate, not reactionary, in facing this crisis
  • Gather the church’s financial statements and become intimately familiar with them
  • Ensure that every member of your board and staff is aware of key financial metrics (income, expenditures, cash reserves)
  • Develop a weekly/biweekly meeting solely for discussing the financial response
  • Create a weekly financial dashboard so your leadership team can stay up to date on financial health

2. Reallocation

The question your church should ask: Have we prioritized our obligations?

In simplifying the situation, recognize that your church has what can be categorized as fixed costs and variable costs. These aren’t uniform for every organization. For example, if your church rents a facility for Sunday worship, you might currently be saving money in your facility budget; in this example, rent is a variable cost. But if your church is paying a mortgage on a building you own, that cost will not change, even if you don’t gather on Sundays; here the debt is fixed.

As you’re reviewing your church’s financial obligations, talk to creditors to see if they’ll potentially defer payments during the crisis. I’ve talked to quite a few churches recently who have had success in doing this. Here at CDF Capital, we started a church assistance program for our current loan partners, providing the opportunity for forbearance on mortgage payments. While pushing off payments isn’t ideal, it should be viewed as crisis management. Now is the time to make temporary adjustments. Crucial decision-making is key to keep the ministry moving.

One more thought about this: as your church tightens the belt, it will create some uncomfortable conversations; in recent days, I’ve had ministry leaders ask me when it’s time to furlough or lay off staffers. This is never a pleasurable process, but it’s precisely why your team must be fully invested in the reallocation process. Trim all the fat that’s possible to stave making the most difficult choices until absolutely necessary.

Action steps:

  • Prioritize your spending, discerning between fixed and variable expenditures
  • Seek ways to reduce (or even eliminate) your church’s variable costs
  • Inquire with creditors to see if payments can be differed
  • Determine potential triggers: when reserves reach a certain level, appropriate cuts are made

3. Communication

The question your church should ask: Do our people know what we’re doing?

In years of working with churches, I observed many senior leaders who deliberately avoid financial conversations. Some pastors believe this falls outside the confines of the calling—that it’s their role to focus on spiritual guidance. Yet financial stewardship of church resources is a matter of spiritual guidance.

In this health crisis, it’s critical that your congregation understands how the church leadership is meeting the financial challenges of managing the church. It’s your duty to share the burden and keep this concern in front of your people.

As your church tightens the belt, it will create some uncomfortable conversations.

There are many creative ways in which churches can keep the congregation informed about financial issues without sounding obsessed about them. Yes, there are people struggling financially themselves in this time, so you’ll want to be sensitive. But you cannot shy away from engaging the topic. Many churches are communicating this deftly, positively presenting the challenge and encouraging their members to donate online or set up reoccurring giving.

Ultimately this crisis presents an opportunity to alter giving habits so that worship through tithing is no longer tied to the Sunday worship attendance. This could have beneficial results that last far beyond the crisis itself.

Action steps:

  • Have your leadership team discuss your financial communication policy
  • Bullet point the proactive decisions leadership has made to manage finances during the crisis
  • Develop a list of benevolence initiatives the church has enacted at this time
  • Record weekly updates on video and disseminate on social media

4. Preparation

The question your church should ask: What will ministry look like on the other side?

This suggestion isn’t about preparing to meet the challenge of COVID-19, rather it is about preparing for what follows it. We at CDF Capital are convinced that this is a pivotal moment in the life of the American church. Most likely, the ministry that emerges from this crisis will look dramatically different from that which proceeded it. As a result, churches should start planning to do ministry in the new context created from this crisis.

Financially, I suspect churches will adopt new perspectives for how they approach ministry spending. This crisis will force churches to acknowledge the duality of years of abundance and years of famine. In the past, ministry leaders have rejected my advice to keep more robust reserve accounts. I predict I’ll get less pushback in the months ahead. This is how churches responded as they emerged from the Great Depression—even creating endowments to guarantee their financial health. Certainly we don’t want churches to put all their faith in financial strength, but leaders must prepare their ministries to weather the next storm.

The American church’s response to COVID-19 will have long-term impact on ministry methodology. Was your church’s online response a temporary response or will it become the norm? How will your church continue to utilize technology in your ministry? The answers to these questions will have implications for staffing and budgeting. It could have influence on how you design and use your facilities. Preparing for the new reality created by the virus must be considered during crisis management.

Action steps:

  • Create an online shared document where staff/leadership can note methodological changes
  • Observe the success of emergency initiatives, determining which responses will outlast the crisis
  • Review the shift in church’s giving/spending habits, predicting what it means to the future
  • On the other side of the crisis, rewrite your strategic plan in light of this new context

Meet the Challenge

The simplification of your church’s current financial situation involves navigation, reallocation, communication, and preparation. In your church’s next leadership meeting, take inventory of these steps and gauge your ministry’s response.

It’s a team effort that will require creativity, but now is the time to meet the challenge.