When I was in high school, one of the hardest classes for me was Spanish. I would skip open recreation time to study and memorize the various spelling and pronunciation rules. Still, when it came time for the final oral exam, I would freeze up, and I couldn’t find the words I needed. Even to this day, the thought of learning another language is extremely intimidating to me.In this article, I’d like to briefly talk about understanding the finances of your church, and specifically the language of the numbers. Maybe, similar to my experience with Spanish, when you’ve heard, seen, or presented the financials of your church, it’s been overwhelming or intimidating. You want to understand it, but it’s just not clicking. My hope is after reading this you will be able to see that numbers aren’t something to fear. They’re friendly. I promise!
A Church’s Financial LanguageThe first step in learning a new language is usually growing your vocabulary and figuring out the meaning of these words that sound funny. The same thing holds true for understanding the finances of your church.
A church’s finances will usually be organized into various funds. A fund is simply a way that a portion of your church’s money is designated or set aside for a particular ministry or project. This designation can come from the donor or the church board. Each fund within a church’s finances will always have a beginning and ending balance for the period being looked at. The hope is that these balances stay positive - money available for ministry! When a fund balance does go negative, there’s no money available, unfortunately.
Additionally, within each fund, you will have money movements. Money can come in, money can go out, or money can be transferred into/out of the fund by the church treasurer. The language used to describe these movements can vary, so let me unpack them for you.
Money Coming In – This primarily represents donations or money collected. I’ve seen various church accounting systems call these deposits, income, or received. Collected Pathfinder dues or donations for evangelism are primary examples.
Money Going Out – This represents money the church has paid out. The language used for this can vary, but some of the common words are checks, expense, or spent. Paying a contractor to clean the church or supporting a church member needing financial assistance are ordinary expenses.
Transfers – Every church accounting software also can move money between funds. This will primarily be called a transfer. A transfer of money out of a fund will have a negative sign, while a transfer of money into a fund will have a positive sign. Often, the church treasurer will complete this type of transaction when the church board has reallocated or set aside money in a new way.
Being fluent in the essential financial vocabulary of your church should lessen the intimidation of the numbers. But as I said previously, the numbers are our friends. Friends like to tell each other stories. So, what simple stories can the numbers from your church tell?
The Story in the NumbersAs a church member, and especially as a church board member, it’s essential to know and understand the financial health of your church. It’s not just the treasurer’s responsibility. Understanding church finances is similar to getting your blood work done or having a physical done by your physician. The goal in either of these is to catch a problem before it’s too late. So, what are a few simple financial data points that can tell the financial health or story of your church?
How much money does your church have in the bank? – Simple question. Simple answer. Your church treasurer should always share this number with the church board at every meeting. It should also be reported to the church at its business meeting. This answer then leads to the next question.
Has the money in the bank been going up or down? – Identifying short- or long-term trends in the numbers is a critical part of the story the numbers are telling. A follow-up question to this question should always be, “Why?”. Why is our balance going up? Why is our balance going down?
Does your church have any debt?– Maybe it’s a mortgage or some other obligation. Whatever it is, it’s important to know the balance and timeframe for that responsibility. When times get tough, debt payments can’t be stopped.
These stories help us by giving valuable insights into what is going on in our church financially from a heightened perspective. By understanding the story, we are then able to be good stewards with what God has entrusted to our care. By knowing the story, it is easy to answer the question, “Should my church tackle this new project or take on this new outreach initiative?” By having a complete story or financial context, a more informed decision can be made. In 1 Peter 4:10, it says, “As each has received a gift, use it to serve one another, as good stewards of God’s varied grace.” Part of being a good steward means understanding the language of the numbers and the story they are telling.
If you have a moment, please check out the following helpful websites related to church finances.
- Seventh-day Adventist Church Treasurers' Website
- Adventist Risk Management's Website
- Manage Finances
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