Let’s dive into an aspect of church life that’s as old as the faith itself: tithing. The practice of generously giving a tenth of your income to fuel the mission and ministry of your church is all based on biblical principles, but there are some modern-day questions that come up.

Ever found yourself wondering if Uncle Sam has a stake in tithes? You’re not alone. These are common questions, but don’t worry, the answers are all below.

Understanding Church Tax Exemption

The term “church tax exemption” might sound daunting, but it’s pretty straightforward. It’s simply the special status that churches enjoy which exempts them from paying certain taxes. Why? Because churches are nonprofit organizations that exist to serve a religious purpose and provide a public benefit.

Basics of Tax-Exempt Status

So what does tax-exempt status really mean for your church? It means that your church doesn’t have to pay federal income tax on its earnings. It might also exempt your ministry from certain state and local taxes, like property taxes. This status lets your church put more resources towards its religious activities and reaching out to the community.

Legal Framework Governing Church Taxes

The legal provisions governing church taxes in the U.S. are primarily outlined in the U.S. Internal Revenue Code Section 501(c)(3). This lays out the criteria for tax-exempt status for religious organizations, including churches.

To qualify for tax exemption, churches must stick to a few rules. They must operate exclusively for religious purposes, steer clear of substantial political activities, and avoid providing excessive benefits to individuals.

Exceptions and Special Considerations

While the tax-exempt status of churches generally covers tithes, there are a couple of exceptions and special considerations worth noting.

Unrelated Business Income Tax

Here’s something unexpected: Did you know that your church may be responsible for taxes if it earns income from unrelated business activities?

Let’s say your church runs a bookstore or a coffee shop that’s open to the general public. The income generated from these activities could be subject to what’s known as Unrelated Business Income Tax (UBIT), because these activities aren’t directly related to your church’s main religious purpose.

This doesn’t mean you can’t engage in such activities. It just requires you to be aware of the potential tax implications and plan accordingly.

Reporting Requirements

Even though your church is tax-exempt, it still has certain reporting obligations to the government.

Churches have a duty to report tithes and other donations they receive to the appropriate tax authorities. This helps maintain transparency and integrity in the eyes of the law and your congregation.

Tax Benefits for Donors

We’ve talked about the tax implications for churches, but what about the folks who give their hard-earned money to support your mission? They too can reap some tax benefits.

Deductibility of Tithes for Donors

You’ve probably heard that tithes and donations can be tax-deductible. But what does that really mean for your donors?

When your congregation members give a tithe or donation to your church, they could potentially reduce their taxable income by the amount of their gift. In effect, their act of giving can lower their tax bill!

To claim this deduction, they must itemize their deductions on their tax returns instead of taking the standard deduction. And of course, the donation has to go to a qualified organization—like your tax-exempt church.

Not only are your donors supporting a cause close to their hearts, but they’re also getting a tax break. It’s a win-win!

Documenting and Reporting Donations

As you can imagine, the IRS likes to keep things above board. So if your donors want to claim a deduction for their generosity, they’ll need to have some records to back it up.

That’s where donation receipts come into play. These are documents that your church provides to your donors as proof of their gifts. They typically include details like the donor’s name, date of the donation, amount given, and a statement that no goods or services were provided in exchange for the gift.

These receipts are crucial for your donors when tax time rolls around. If they’re audited, they’ll need to provide these receipts as evidence of their charitable contributions.

So don’t forget to help your donors out with their tax deductions. After all, a little gratitude goes a long way.

Common Misconceptions and Clarifications

Myths About Church Taxes

There are a few misconceptions floating around that can muddy the waters when it comes to understanding church taxes. Let’s clear a few of them up:

1. Myth: Churches never pay taxes. While it’s true that churches enjoy a tax-exempt status for many activities, it’s not an absolute rule. Remember UBIT? That’s one instance where churches might have to fork over some tax dollars.

2. Myth: Donors can’t deduct tithes if they don’t itemize their deductions. This isn’t entirely accurate. While it’s true that you need to itemize to claim the charitable contribution deduction, the CARES Act has added a provision allowing for an additional $300 deduction for charitable contributions, even for those taking the standard deduction.

Clarifications from Tax Authorities

1. Not all donations to churches are tax-deductible. For a donation to be tax-deductible, it must be made to a qualified organization, and the donor must receive no goods or services in return for their gift. So, if your church holds a fundraising event and provides meals or merchandise in exchange for donations, those donations may not be fully deductible.

2. Churches have reporting obligations. Even though churches are generally tax-exempt, they still have certain reporting requirements. It’s important to issue donation receipts and keep accurate records of all contributions.

Conclusion

If you walk away from this quick lesson in church taxes with just one takeaway, remember that it’s crucial for churches to properly track and report tithing contributions. That means providing accurate donation receipts and keeping proper financial records.

For donors, don’t forget to consult with a tax professional or refer to IRS guidelines to understand the specific rules for claiming tax deductions for tithes. Keep those records of your tithing contributions safe and sound!

If you’re looking for an all-in-one digital solution that makes tracking donations and producing giving statements a breeze, make sure to explore Churchstaq, Pushpay’s integrated suite of tech tools that eliminates much of the stress and hassle of managing your church’s finances.

GET A DEMO

Ever wondered how your church’s financial health stacks up against others? Well, it’s time you familiarize yourself with some financial benchmarks for churches.

Understanding church financial benchmarks is a necessary practice that’s a lot like a spiritual health check-up but for your church’s financial health. It helps you take a deep dive into your church’s financial status, offering insights that can guide your decision-making. By comparing your metrics against industry standards, you can gain a clearer picture of your financial performance and identify areas that could use a little extra attention.

Think of this process as examining your church through a financial magnifying glass. You’ll take a close look and check how you measure up against your peers, then set realistic goals for growth and sustainability. You’ll also spot potential issues before they become bigger problems, and feel more confident making data-driven decisions to ensure the long-term financial stability of your organization.

Of course, it’s not just about keeping up with the Joneses; it’s about ensuring your church is financially healthy and poised for growth. After all, serving your community in the best possible way starts with having a strong foundation, and exploring church financial benchmarks helps you build just that.

The Importance of Financial Benchmarking in Ministry

Understanding Your Church’s Financial Health

Simply put, it’s not enough to know how much money is in the bank. It’s about getting a comprehensive picture of your church’s financial stability and sustainability. You should be digging deep into hard questions: Where your income is coming from? Is it consistent? Is it growing? And what about your expenses versus your budget—is your church spending according to its means?

Don’t forget to examine cash flow. Positive cash flow means you’ve got enough funds to cover the bills and invest in growth. But if you’re carrying debt, you need to assess whether it’s manageable and if there’s a plan to repay it. High levels of debt can put a strain on your financial health.

Having reserves or savings acts as a safety net for unexpected expenses or downturns. Maintaining accurate and transparent financial records is crucial; regularly reviewing those figures can give you a clear understanding of your church’s overall financial position.

Guiding Strategic Decisions

But financial benchmarking isn’t just about understanding your church’s current financial status. It’s also a compass guiding you towards better strategic decisions.

Imagine steering a ship without a compass. You might have a general sense of direction, but without precise guidance, you could end up off course. The same principle applies to managing your church’s finances. Without clear benchmarks, it’s challenging to make informed decisions about crucial aspects like budgeting, fundraising, and investment strategies.

With financial benchmarking, you can rely on a data-driven approach to resource allocation. You can see what’s working, what isn’t, and adjust your strategies accordingly. It’s like having a roadmap to reaching your church’s financial goals, helping you make the correct turns to reach your objectives.

Whether you’re looking for a single system to manage multiple tasks or aiming to deepen personal connections with your congregation, financial benchmarking can provide the insights you need to make strategic, effective decisions for your church.

Key Financial Benchmarks for Churches

Average Weekly Giving per Attendee

Let’s kick things off with one of the most straightforward metrics—the average weekly giving per attendee. Going into your giving platform and pulling this simple figure can tell you a lot about your congregation’s giving habits. It’s a window into their hearts, showing how invested they are in supporting your church.

The higher the average weekly giving per attendee, the more financially committed your congregation is. It’s a sign that they believe in the work you’re doing, trust that you’re allocating their resources wisely and responsibly, and are willing to support your mission monetarily.

Percentage of Income Spent on Missions and Outreach

Here’s where the rubber meets the road. This metric is vital because it directly reflects your church’s priorities. Are you dedicating a significant portion of your income to missions and outreach? If so, it shows that you’re committed to living out your faith, fulfilling the core mission of your church and making an impact in your community.

Operational Cost Ratios

Last but not least, we have operational cost ratios. These figures help you understand how much of your church’s income is being used to keep the lights on. They provide insight into your church’s financial efficiency and sustainability.

Having a solid grasp of your operational cost ratios enables you to strike a balance between sustaining your church’s day-to-day operations and investing in its growth and mission. It’s like knowing when to simply keep the boat afloat, and when it’s safe to set sail towards new horizons.

These financial benchmarks aren’t just about crunching numbers. They’re about understanding your church’s financial story and using that knowledge to write the next exciting chapter.

Comparing Your Church to Industry Averages

Navigating the financial seas of church management can be a daunting task. But, you’re not alone in this journey! There’s a wealth of industry data out there that you can use to compare your church’s financial performance with industry averages.

Utilizing Church Financial Reports and Studies

There are several resources available that provide comprehensive financial reports and studies. For example, the Leadership Network, the Evangelical Council for Financial Accountability (ECFA), and the National Association of Church Business Administration (NACBA) regularly publish detailed financial reports pertaining to churches.

These reports often include valuable data on giving trends, operational costs, income allocation, and much more. By tapping into these resources, you can get a good grasp of what’s happening in the broader church community and how your church measures up.

Contextualizing Data for Your Church

While research numbers provide valuable insights, it’s crucial to interpret them in the context of your church’s unique situation and community. Every church has its own story, its own set of challenges and opportunities. And so, it’s important to take that into account when comparing your church to industry averages.

Think about it this way: let’s say you’re an Executive Pastor, and you notice that your church’s average weekly giving per attendee is lower than the industry average. Does this mean your congregation isn’t as generous? Not necessarily. It could be that your congregation is younger, with many members still in college or starting their careers. Or perhaps your church serves a low-income community.

The point is, context matters. It’s not just about the numbers; it’s about understanding the stories behind those numbers. That’s where real growth happens.

Setting Realistic Financial Goals

Short-term vs. Long-term Financial Goals

When it comes to financial planning for your church, you can’t just focus on the here and now. You’ve got to have one eye on the horizon too. That’s where setting both short-term and long-term financial goals comes into play.

Your short-term goals are like stepping stones. They’re the immediate targets that keep your church afloat and functioning smoothly. Maybe it’s raising funds for a new sound system or meeting your monthly operational costs.

On the other hand, your long-term goals are your beacon, guiding you towards your church’s future. It could be something like expanding your mission work or building a new community center.

Setting both immediate and future financial goals is crucial because it provides a balanced approach to financial planning. It ensures that you’re not just surviving, but also thriving and growing as a church.

Adjusting Goals Based on Church Benchmarks

But what happens when the targets you set don’t align with your church’s reality? That’s when you turn to your trusty benchmarks.

Benchmarks are like your financial GPS. They show you where you are, where you need to go and how to get there. If your goals seem out of reach, or maybe they’re not challenging enough, your benchmarks can help you adjust them.

For example, let’s say you’re an Executive Pastor and one of your goals is to grow overall giving at your church. But your average weekly giving per attendee benchmark indicates that your congregation’s giving habits aren’t quite there yet. So what do you do? You adjust your goal to make it more realistic, maybe by focusing on increasing recurring givers first.

Or perhaps you’re a Senior Pastor, and one of your goals is to expand your ministry. But your operational cost ratios show that a large chunk of your income is going towards maintaining your current facilities. In this case, you might need to reconsider your expansion plans or find ways to reduce your operational costs.

Remember, setting financial goals isn’t a set-it-and-forget-it deal. It’s about constantly monitoring, adjusting, and fine-tuning those goals based on real, data-driven insights. Use your benchmarks to set realistic, achievable goals and pave the way for our churches’ financial health and growth!

Leveraging Technology for Financial Management

Pushpay’s Financial Tools

Let’s face it, managing church finances can be a daunting task. Between tracking church donations, budgeting for missions, and keeping an eye on operational costs, it can feel like you’re juggling too many balls at once. But what if there’s a tool that can make all of this easier? Enter Pushpay.

Pushpay is more than just a giving platform; it’s a comprehensive financial tool designed specifically for churches.

With Pushpay, you can easily track and analyze key financial benchmarks, like average weekly giving per attendee or the percentage of income spent on missions and outreach. You can even generate accurate giving summaries and reports, helping you keep your finger on the pulse of your church’s financial health.

And the best part? Pushpay bundles all these tools together at a low price so you can focus on what really matters: growing your church and serving your community.

Streamlining Financial Reporting and Analysis

We all know how time-consuming and complicated digging into the details of finance can be. But with the right software, it doesn’t have to be.

That’s where Pushpay comes in. This financial management system is designed to make your life easier by simplifying financial reporting and analysis.

With Pushpay, you can easily generate accurate financial reports, giving you a real-time view into the health of your church. No more worrying about data inaccuracies or spending countless hours crunching numbers. Pushpay delivers quick and reliable insights at your fingertips.

Pushpay also helps you streamline your processes. From managing volunteers and staff to creating more efficient systems, Pushpay has got you covered, allowing you to spend less time on administrative tasks and more time serving your congregation and community.

Whether you’re a Senior or Executive Pastor, why not consider Pushpay? It’s time to leverage technology for financial management and take your church to new heights.

Calibrate Your Compass

We’ve worked through the importance of financial benchmarking for churches, how to use industry averages and benchmarks, setting realistic financial goals, and leveraging technology like Pushpay for efficient financial management.

Financial benchmarking isn’t just a fancy term. It’s a crucial tool that helps your church understand where it stands compared to industry standards. It highlights areas for improvement and opportunities for growth, giving you a clear roadmap to financial health and sustainability.

These benchmarks aren’t meant to gather dust on a shelf. They’re meant to be used actively in your strategic planning. They’re the compass that guides your church towards its financial objectives, be it expanding your mission work, growing overall giving, or anything in between.

GET A DEMO

As the year draws to a close, it’s time for your church to reflect on the past twelve months. You’ve hosted events, preached sermons, and gathered donations, all in an effort to faithfully fulfill your mission. And now, it’s time to celebrate all you’ve accomplished and thank those who fueled your ministry with year-end giving statements.

Each donation your church receives plays a part in supporting ministries and driving community outreach initiatives. So when your members see their contributions listed on a giving statement, they can truly appreciate how their generosity has helped the church fulfill its mission. Contribution statements aren’t just pieces of paper or digital documents.

They’re a tangible acknowledgment of the generosity of your congregation.

They say “thank you” for every contribution, whether big or small.

They ensure transparency and accountability in the church’s financial matters.

And they serve as an affirmation of the impact of your donor’s gifts throughout the year.

Ready to start creating this year’s giving statements? Keep reading for recommendations on what to include and a free guide to ensure your statements make a statement.

Essential Elements of a Year-End Giving Statement

One of the most critical components of an end-of-year giving statement is the detailed breakdown of financial contributions. Here’s why it’s so important and what you need to include:

Detailed Financial Contributions

Your congregation members aren’t just donors but partners in your mission. They’ve committed to supporting your church and deserve to see exactly how they’ve done that over the past year. So, it’s essential to provide a comprehensive list of individual donations along with their specific dates.

Listing Individual Donations and Their Dates

Each donation made by a member represents a moment of generosity—a decision to invest in the work of the church. As such, it’s crucial to acknowledge every one of these instances. By listing each donation with its date, you’re not only providing a complete financial record but also reminding your members of the times they stepped up to support your church’s mission throughout the year.

Importance of Accuracy and Clarity

Accuracy and clarity are non-negotiable when it comes to your year-end giving statements. Mistakes or confusion can lead to mistrust and frustration, undermining your relationship with your congregation. Furthermore, accurate reporting is vital for maintaining data integrity across all systems, a key concern for finance directors and executive pastors alike.

Remember, you don’t want to just send your congregants a bland list of transactions. Your statement should tell the story of your year, how it was filled with generosity, partnership, and impact. But before you can tell that full story effectively, you need to ensure your figures are spot-on and easy to understand.

Summary of the Year’s Financial Status

Before you delve into the specifics for each individual’s contributions, you’ll want to take a step back and look at the big picture—the overall financial status of your church for the year.

Every dollar given has played a part in supporting the mission of your church. The year-end giving statement is an opportunity for you to remind your church members that they have all helped your ministry. So show the tangible results of their generosity. Point to specific ministries, events, and projects, emphasizing that none of this year’s great achievements would have been possible without them.

Overview of Fund Allocations

Take this opportunity to further build trust with your congregants. Remind them that you strive to steward their donations in a way that respects their generosity and furthers your church’s Kingdom work. This means investing in areas that align with church mission and values, such as community outreach programs, ministry support, operational costs, and more.

You might say something like:

“Inside, we’ll share a detailed breakdown of your contributions, but rest assured, every penny has been put to good use. We’re prayerfully stewarding the gifts that have been given to best serve our congregation, support our community, and spread the love of God. Your giving has enabled us to reach out to those in need, spread hope, and make a positive change. We’ve seen lives transformed, relationships restored, and faith strengthened. And it’s all thanks to your unwavering support.”

Ready to learn from the experts? Get instant access to our free webinar, Giving Statements Secrets, to see how Pushpay can help you save time (and skip the envelope stuffing) during the busiest time of the year.

Legal Requirements and Compliance

When preparing your year-end giving statements, you’ll obviously want to acknowledge generosity and show transparency. But there are also legal requirements set by the Internal Revenue Service (IRS). Let’s review those requirements and help you get started. If you need help confirming you’ve met the legal requirements, it’s best to get advice from a tax expert or directly from the IRS.

IRS Requirements

According to IRS guidelines, charitable contributions must be itemized and substantiated. So, your giving statement should include detailed information about each donation, like the date, amount, and format of the contribution (cash, check, credit card, etc.). It’s also crucial to note whether any goods or services were provided in exchange for the donation.

Additionally, the IRS requires that churches issue these statements by January 31st of the following year, allowing your members ample time to prepare their own tax returns.

Pushpay’s Giving Statements enable you to send tax statements to your community on an annual, quarterly, or custom time period. These statements will include all tax-deductible donations recorded in Pushpay and will be formatted to meet IRS requirements for charitable contribution receipts.

Ensuring Compliance

Ensuring that your giving statements meet legal standards is a two-fold process. First, it involves meticulous record-keeping throughout the year. This includes keeping track of all donations received, maintaining accurate donor information, and properly categorizing and recording funds.

Secondly, it involves careful preparation of the giving statements themselves. They should be clear, comprehensive, and accurate, providing all the necessary information for your members to claim their charitable contributions on their tax returns.

These statements are designed to help your members fulfill their tax obligations. We believe that you can also use them to acknowledge your congregation’s generosity. But first and foremost, your priority should be ensuring accuracy and IRS compliance, to protect your church and provide valuable information to your congregation.

Personalization and Gratitude

In addition to providing detailed financial information and ensuring compliance with legal standards, you can create year-end giving statements that serve as more than a receipt. Two aspects are personalization and gratitude.

Personalized Acknowledgment

You probably wish you could write an individual note to thank and celebrate each of your givers. Addressing your contributors directly in the year-end giving statement can make a world of difference. It turns a generic document into a personal note, making your members feel seen and valued. But since that may not always be realistic, there are other ways to personalize your statements to your congregants and church as a whole.

With Pushpay, you can customize the messages that accompany the giving statements to your audience and what ministries they gave to. Whether you send statements to individuals or use Pushpay’s Household Giving Statements, your personalized message should touch on your shared ambitions and stated mission, and end with a heartfelt invitation to continue fulfilling your mission in the new year and beyond.

Expressing Gratitude

Thanking your contributors is another crucial part of the year-end giving statement. A heartfelt thank you can go a long way in making your members feel appreciated.

But don’t stop at a simple “thank you.” Make your gratitude more meaningful by sharing specific examples of how their contributions made an impact. Highlight the projects or initiatives supported by their donations and the difference those projects have made in your church and community.

Is your end-of-year paperwork snowballing out of control? Get the free guide to save time sending giving statements that stand out with messages of inspiration, impact, and Kingdom growth.

Get Ready To Send Those Statements

To summarize, an effective year-end giving statement isn’t just a financial record; it’s also a tool for building relationships, recognizing generosity, and inspiring continued support. By personalizing your acknowledgments, expressing genuine gratitude, and providing clear, accurate financial information, you’re following legal requirements and reinforcing the bond between your church and its members.

And remember, the impact of these practices goes beyond the year-end giving statement. The personal connections formed, the appreciation expressed, and the trust built all contribute to a stronger, more engaged congregation.

So, as you prepare your year-end giving statements, we encourage you to keep these practices in mind. Take the opportunity to show your members how much they are valued and appreciated. And most importantly, let them see the difference their generosity is making. The impact could be more significant than you think.

Pushpay’s giving software can help save your church hundreds of hours generating and sending personalized giving statements. Schedule a demo with our team to see how we can ease your administrative burden.

SCHEDULE A DEMO

What are the cornerstones of a thriving church? The success and impact of your church depends on your pastor, an active church community, and some would even say an engaging music program. Yet there’s another important, often overlooked, driver of your church’s success—your church’s financial management process.

You may be thinking, “Wait, at our church, it’s about the mission, not the money!”  Yes, sharing God’s Word is your purpose and mission, but to continue that important work, good financial management is absolutely necessary. It allows you to manage your church finances efficiently and get a clear picture of your church’s overall financial health.

How to manage church finances

Streamlined church financial management processes can help you create accurate projections, make important budgeting decisions, and provide transparency and accountability to your congregation. Church software, embedded with intelligent finance tools, makes these processes faster, easier, and more accurate, helping you lay a strong  foundation for your church’s successful operations, today and in the future.

Successful Church Financial Management Relies on Data

Are you meeting your church’s individual donor goals? Can you afford that new roof or playground makeover? With the constantly changing economy, have you adjusted your five year financial forecast? These questions are critical to the financial health of your church. But they’re virtually impossible to answer without reviewing and analyzing data. A streamlined church financial management system helps you:

• Track income patterns to anticipate financial trends.
• Use predictive modeling to adjust budgets for long-term financial stability.
• Understand donor’s journeys for more effective campaigns.
• Confidently provide accurate reporting to financial stewards, auditors, and your community.

Idlewild Baptist Church’s Men’s Ministry and Financial Steward, Rob Taylor, shares that to minister effectively, you need to consider the numbers. “Behind every number there’s a person and behind every person there’s a story and every story matters to God. It’s not just about data, but the data will help us in a great way. You’re not going to be a church long if you don’t make strategic moves and engage with technology.”

The Cost of Manual Church Financial Management

Church leaders everywhere feel the challenges of manual financial management. The old cliche “preaching to the choir” likely resonates here!  While each ministry’s scenario is unique, here are some of the most common pain points of trying to manually keep track of church finances.

• Manual processes are error-prone. Entering donations manually, usually by different part-time staff or volunteers, leaves you open to errors that are hard to track and correct. And let’s not forget the arduous trips for bank deposits and follow ups when expired credit cards interrupt scheduled giving. Did you know 49% of all church giving transactions are made with a card? (Nonprofit Source) Automating and updating this payment method should be a priority.
• There’s a lack of transparency. Creating important financial statements by copying and pasting numbers and formulas from different sources is not only time-consuming and potentially inaccurate, but it doesn’t convey transparency and trust. Auditors, financial stewards, and your congregation all expect clear and easy-to-understand financial reporting.
• It’s very time consuming. Manual financial management processes take hours, even days, to complete each month. Often by the time reports are ready for review, these numbers are already out of date.
• There’s no automated data analysis. Most churches don’t have the valuable insights from a data analyst on staff to cull through the reports, so financial opportunities or red flags may be missed.

If one (or more) of those pain points resonated with you, it’s likely time to reassess how your ministry handles your financial management.

Embracing Technology to Better Manage Church Finances

One of the easiest ways to transition away from manual financial management is to invest in an all-in-one church platform with embedded financial tools.  This type of comprehensive software houses all your church’s data points so you can automatically track  growth and engagement, freeing up time to focus more on your ministry and purpose. With all your data in a single place, you can whip up more accurate projections at a moment’s notice, giving you the confidence to plan for the future.

This kind of on-demand access is invaluable when you’re considering big projects like new capital campaigns, calculating and allocating budgets, and creating smaller fundraising and digital giving initiatives. Plus, with the ability to evaluate donor trends as they happen, you’re perfectly positioned to uncover fresh ways to re-engage members, convert offline donors to online giving, and even encourage recurring donations. Research shows recurring givers donate 42% more annually (Nonprofit Source).

Digital giving and financial management software can also go beyond data analysis, offering automated giving features, like notifications when payment processes stumble or cards are nearing expiration. They can even provide options for donors to cover processing fees. These features help make the giving experience for your donors as easy and joyful as possible. Additionally, robust security measures to secure payments and billing, and maintain necessary documentation for compliance and audits, bring peace of mind to everyone involved.

Dive deeper in building budgets for your church 

When looking for a church financial management platform, make sure the system is easily customizable. It should also be smart enough to highlight opportunities for saving and growth. Reporting and accounting should include and analyze all facets of giving, operating expenses, forecasting and predictive modeling. Look for vendors who are industry leaders, incorporating new technology and machine learning into everyday software requirements.

The Role of Ongoing Financial Management for Churches

Financial management is more than maintaining books or ensuring bills are paid on time. It’s also about using data to continually refine your ministry’s financial strategies and processes. Data insights help churches make informed decisions about their finances. From identifying successful fundraising efforts to finding areas to cut costs, data can streamline processes, optimize resources, and drive the church’s mission with financial stability.

Regular audits and reviews are another integral part of ongoing church financial management. Beyond meeting legal and tax requirements, they serve as an important step in risk management. These reviews can also help identify potential issues before they become major problems. It’s an opportunity to spot inconsistencies, errors, or anomalies that might indicate a risk to the church’s financial health. These ongoing efforts are key to the successful operation of a church.

Fuel Your Mission With Pushpay’s Financial Management Software

It’s your mission to spread God’s Word. Pushpay’s software is designed to fuel that mission. We know you need a clear financial picture today and an accurate path to move forward tomorrow. By streamlining your church’s financial management processes, you not only foster trust within your community but also strengthen the foundation from which your mission can continue to grow and touch more lives.

Sitting down to create a thoughtful budget isn’t everyone’s cup of tea. It is a big task, and the fact that the church is funded by its members’ generosity makes planning more difficult. Your giving may fluctuate depending on the time of year, adding an extra hurdle.

Moreover, this year brought a world-wide pandemic that has majorly changed the way churches function. Many churches are facing hard decisions going into the new year.

So how can you create a smart church budget for 2023?

In this post, we’re going to talk through why you need a church budget, how to create a budget, tools to make your budget more predictable, PLUS we’ll share a free downloadable budget template to help you get started.

Why You Need to Create a Church Budget

The money coming into your church is given by faithful people wanting to serve God and build his kingdom. By maintaining a smart church budget, you can keep track of where all your money is going and make sure it’s being spent the best way. Without a budget, it’s easier to overlook neglected ministries that could use more financial support. Make sure each program gets the financial support it needs by analyzing and planning your spending.

A church budget is a straightforward document when you think about it like this:

1. A church budget tracks the money coming in.

Before you can allocate your church fund, you need to have a good handle on your church’s spending and how it comes in. What months or services tend to have the most extensive offerings? What are your leanest months?

2. A church budget tracks the money being spent.

To say that church budgeting is keeping track of the money coming in and the money going out seems glaringly apparent. But it’s that simple. The truth is that your budget is only going to be as good as your financial awareness. The longer you keep track of the money coming in and out, the easier creating accurate budgets will be in the future.

3. Creating a church budget protects essential ministries.

The challenges you have doing home finances are similar to the difficulties a church experiences on a larger scale. If you eat out too often, you’ll soon find that you don’t have money for things you need. A proposed budget ensures you set aside money for something that you might not otherwise.

Without a healthy budget, there’s the possibility of critical but smaller ministries losing out to the needs of high-profile ministries. Having a set budget for children’s ministry or small groups allows you to set up a boundary to protect those ministries from the bigger ones that might eat up all of the funds.

4. Your church budget represents freedom.

Contrary to how it might feel going in, a budget is freedom. It represents liberty from:

• Debt: Being able to allot the church fund to go into savings or to pay extra on outstanding loans is the key to getting your church out of debt—and keeping it out.
• Ignorance: A church budget stops people from assuming they know where the church money goes and allows them to see how it’s being used.
• Competition: While you’ll probably never entirely do away with ministries competing over their budgetary line items (which is a good sign that your staff and volunteers are invested in their ministry), you can stop a lot of the regular competition for resources.

How to Write a Church Budget

A church budget is an itemized summary of your likely income and expenses in a given time period. Creating a budget for 2021 will help you set an expectation for the resources coming in and prioritize its use.

Planning and monitoring your proposed budget is the key to identifying wasteful expenditures. It will help you adapt better to changes in giving and will ultimately help you achieve your mission by setting financial goals.

Start with Your Income

Start with pulling in your income from the last year—the last couple of years if it’s available. If you have multiple years to look at, do you detect an upward or downward trend? If it’s upward, by how much? 5, 10, or 20 percent? That will factor into how you set your budget goals.

Where is your money coming from?

As you’re looking at past income, remember to consider every source of income. This could include:

• Offerings
• Donations
• Dues
• Facility rentals
• Trust funds
• Investments
• Bequests

Auditing Income Sources

Once you have all of your income sources in front of you, you can begin to look at which ones are static and which ones you have an opportunity to influence. You should also make a note of any income that may be coming to an end.

Pay close attention when money comes in, too. If you have specific services that get more offerings, special fundraisers that you do once a year, or seasonal income, make a note. It will help when you’re performing your quarterly audit to know where you should be at various points in the year.

Take Advantage of Mobile Giving

If you haven’t made a strong push toward mobile giving, the time has come. Fewer people coming to your church every week are carrying cash or checks. Upwards of 80 percent of them have mobile devices that they’re comfortable using to make purchases and do their banking. You’re missing out by not helping them get more comfortable with mobile giving.

Churches like Angelus Temple in LA have seen weekly increases of 15 percent by encouraging mobile giving.

Set Your Projected Income

Once you’ve audited all of your sources of income and considered your trending revenue for the last few years, it’s time to set a projected income from each source and a total for the year.

Budgeting for an Increase

If your revenue the last couple of years has been trending up, plan for your income to go up again. If the trend is 15 percent, talk to your people about planning for at least a 20 percent increase. Your budget must be a faith-filled document. You want to set it just outside of your reach—this gives your people something to rally around and gives room for God to move.

As you get more comfortable getting your church to rally behind goals, learning to create momentum, and finding exciting ways to bring in funds that are lacking, you can set more ambitious goals. But for now, start with a modest increase above your trend.

What if we’re trending down?

If your church has been trending down, the same idea applies. You want your church budgets to reflect your faith that God has plans for your church and its effectiveness. Maybe your act of faith could be planning a budget that’s flat with last year. Or perhaps you want to dream big and budget for an increase of 2 to 5 percent.

Whatever you do, don’t budget for another decrease. Cast a faith-filled vision for your annual budget.

Set Your Budget’s Expenses

Now that you have your projected income, it’s time to plan for expenditures.

Look at last year’s expenses.

In what areas did you spend your income from last year? If you broke your expenses down into the following categories, what percentage of your income was spent in these (or similar) buckets:

• Facilities
  • Utilities
  • Insurance
  • Maintenance
  • Website
  • Office expenses
  • Kitchen expenses
  • Depreciation
• Staff
  • Salary
  • Ministry-related expenses
  • Travel
  • Insurance
  • Housing
• Debt
  • Property
  • Building
  • Miscellaneous
• Ministries
  • Missions
  • Pastoral needs
  • Educational ministries
  • Music
  • Youth
  • Miscellaneous
• Benevolence
• Savings

Did the percentages spent on these various line items reflect your missional priorities? You can adjust your budget for any areas that need to be cut down or increased. Also, keep in mind any ministries you want to start or positions you would like to hire for in the new year.

Begin plugging numbers into these items until the expenses match your budgeted income. If you can’t make the numbers work, you will either need to cut out some of the costs or make a group decision to raise your budgeted amount.

When your income and expenses match, you have a budget. Congratulations!

Auditing Your Budget

Anyone can make a budget. The key is working on your annual budget to ensure that your income and expenses are aligned.

At least once a quarter, you should just go over the line items in your budget and see how you’re doing. Have you had some surprise expenses? Did you offset it with budget decreases elsewhere? Have you brought in the income you were hoping for? If not, how close are you, and do you need to cut your budget back a bit?

There needs to be a decided protocol for what you’re going to do with extra income or shortfalls in revenue. When you have a significant increase in giving because of your new Pushpay app, is that going into savings, a particular ministry, or a new staff member? If you need to make up a budgetary shortfall, do you have a plan in place to raise more funds or cut some expenditures?

How to Make Your 2023 Church Budget More Predictable

In most churches, traditional offerings are a barrier to static giving. People have one five-minute opportunity to give during the service. If they don’t have cash or checks on them or are not in the sanctuary, they miss their shot. And if they don’t give more next week to make up for it, your church budgets suffers.

Mobile giving allows them to give at any time from anywhere. The mid-service offering is no longer an obstacle to generosity. People can give as quickly as they can order a pizza or get an Uber.

“Before we started using Pushpay, it was easier to order a pizza on your phone than it was to give to our church. While our registered members grew, we saw a steady decline in average weekly giving per family over the last five years. We have now overcome that and feel confident that we are setting up the Millennials to share their stewardship of treasure in the way they know how…on their phones. The first month of giving on Pushpay saw an immediate increase in participation and dollar amount.”

—Stephen, Lenahan, Stephen Lenahan Director of Development & Communications, St. Anthony of Padua Church.

Taking Advantage of Recurring Giving

Pushpay users have the option of choosing a predetermined amount to automatically take out of their bank account at whatever interval they choose (weekly, monthly, etc.). It’s called recurring giving—and it can make a huge difference in your budgeting.

When church members take advantage of recurring giving, their giving becomes dependable. Whether they’re present or not, their offering comes in at the same interval—for the same amount. It doesn’t drop during the summer when they’re on vacation.

Recurring giving helps church members achieve the giving consistency they long for but might struggle to reach. They only need to be inspired to set it up once, and their giving becomes persistent—and so does your budget.

How to Encourage Recurring Giving

Recurring giving might sound like a great idea, but how do you inspire people to try it out?

In the admin console, churches can turn on a feature that allows Pushpay to suggest recurring giving. When someone has established a rhythm to the amount of their donations, Pushpay prompts them to sign up for a regular schedule consistent with their normal giving.

Churches can also set up recurring giving as a default. When someone donates, they can choose to make a one-time gift, or the app will default to recurring giving. Many users are happy to stick with automatic giving when they see that it’s an option.

Generosity You Can Count On

By improving the process of giving and making it simple for donors to give regularly, your church will see more dependable generosity all year round and a more predictable budget. Ready to learn more? Schedule a call to talk to an expert today.

Free 2023 Church Budget Template

Ready to get started with your budget? Download our free Church Budget Template and begin setting your church up for financial success in 2023.

If you are the leader of a new church and looking to start your first budget, this template can also serve as a church planting budget spreadsheet.

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Spend a few minutes watching the news on TV or scrolling through social media headlines, and the message is the same: The U.S. economy is in trouble. Experts agree that a combination of factors are converging to create a situation that will stress finances in all our lives.

Americans are responding by battening down the hatches. They’re putting off major purchases, opting for cheaper lifestyle choices, cutting out unnecessary expenditures—and unfortunately, for some families, the tithes and offerings your church depends on may fall into that last category.

Churches are always doubly impacted by a recession. As many learned during the 2008 crash and the recent COVID pandemic, not only do your congregants and administrative team suffer individually, but your church ministry is likely to see a drop in giving at a time when the needs of your community are greater than ever. 

In the aftermath of the ‘08 real estate bubble and the subsequent recession, 57% of churches reported that their income declined, forcing staff salary freezes and reductions, reduced savings and investments, postponement of capital projects and missions, and more. These problems weren’t just isolated to either small or large ministries, nor were they solely issues for protestant or catholic congregations—the ‘08 recession showed us that a down economy affects the Church at every level.

But, while you probably can’t change the currents of the global economy, you can prepare your church budget to conquer a coming recession. Here’s where to start:

1. Setting Realistic Financial Goals

Nothing inspires your church family like seeing the results of their effort and sacrifice. Your congregation draws strength from witnessing the fruits of their labor, of feeling part of something bigger in their religious community. 

But the goals you expected to reach in the near future probably didn’t factor in a recession. 

Those financial targets and donation thresholds might no longer be feasible. They might have made sense with consistent donations, but once your donors’ fiscal belts are tightened, those benchmarks you reasonably forecasted could be missed. And, while disappointing in and of itself, those misses could also drain the enthusiasm of your congregation.

First and foremost, you must set realistic goals for the coming storm. Reconfigure expectations for your church’s pace of growth and progress. Be forthright with donors about the nationwide financial situation, that expectations for your ministry’s progress will need to be lowered, and express that you understand the challenges they face.

In an effort to ease the burden on your members, use this as an opportunity to encourage your congregation to set up recurring giving. Not only will donors be able to set a regular giving schedule that fits their finances during a recession, but your administrative team will improve their forecast of your finances into the future.

Check out this video to see how Houston Northwest Church is using Pushpay to manage their church finances!

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2. Assigning Trusted Members For Church Financing

Church leaders tend to be disposed toward taking on too many responsibilities themselves. In their enthusiasm to generously serve their church, they try to do too much. But nothing can hamper a ministry more than bad financial management—you need to rely on someone with proper training and experience.

Odds are, there are members of your church who have experience in accounting, and may even be willing to take on the role for a reduced fee. Be cautious and honest with yourself, however, and ensure the church member truly is suited for the role, that you’re not turning a blind eye to their qualifications in order to ‘keep it in the family’. 

An outside CPA, or someone with substantial accounting experience, may end up being the smartest decision for your church to minimize the need for financial oversight. The cost of hiring someone will be recouped by their professionalism, lack of errors that cause loss of resources, and the time it frees up for your other staff to do the work of your ministry.

No matter which route you choose, church management software is a powerful tool for your bookkeeper. Online giving connected to a seamless all-in-one management platform will streamline your workflows and save everyone substantial administrative time.

3. Setting Up a Reserve Fund

Simply lowering your monetary targets may not be enough. It’s one of the most commonly cited bits of personal finance advice: You need to have savings in case of an emergency.

Well, the same wisdom applies to your church funds. Even if you already have a rainy day fund stashed away, now is the time—before a recession has fully arrived—to make a special ask of your congregation for funds, while they’re not yet feeling the full sting of the economy.

You’ll want to be as transparent as possible with this special fund. Communicate with your church ministry when and what this money is for. A ChMS can help you generate and share reports that help highlight the critical needs you’re addressing through their generosity.

Pushpay’s Accounting Tools Simplify Workflows

Hopefully you’re no longer tracking the complex and important financial information of your ministry by hand. Virtually every church uses a form of church accounting software to keep their finances in order—but not all tools are created equally.

Programs like Excel and Quickbooks are great entry-level platforms that accountants depend on in every industry. But churches have special workflows and unique needs, especially regarding the complicated tasks of tracking giving and being transparent about expenses with all those givers.

Pushpay’s ChMS facilitates all those needs and more. Not only will you receive market-leading tools that drive engagement, build community, and are proven to increase giving, but our software seamlessly integrates with over eighty different platforms—including several popular accounting solutions.

So while your leadership team focuses on ministry and brainstorms fresh ideas for church growth, Pushpay can take care of streamlining workflows for your dedicated financial management team. To learn more about our software, take a self-guided tour of our ChMS now, or schedule time for a free one-on-one demo with one of our experts.

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