As we move into October, many churches are in the midst of budgeting.
There are some common budgeting blunders that plague many ministries, and these blunders are often associated with well-meaning individuals who unintentionally bring some bad budgeting practices to the table. Let me introduce you to Calculator Charlie, Sneaky Steve, and Sandbagging Sally.
Calculator Charlie: Calculator Charlie appears to be really organized when he comes to the budget meeting. He has his line numbers memorized. He knows each account and the amount spent from that account thus far this budget year. But when questioned about his budgeting numbers, it is discovered that he simply takes the current spending and annualizes that for the year. What’s wrong with that? How can you avoid this budgeting blunder?
It is quite possible to annualize waste. The practice of merely multiplying monthly expenses by twelve months does not lead to careful evaluation of the current expenses. While constantly re-bidding, re-quoting, and re-evaluating would be maddening and horrific stewardship, annual budgeting provides a time to reflect on current spending. Business consultants even advise that every time a process improves, there is new waste to eliminate. And the discovery and removal of new waste in operations would release more money for things you value more.
Sneaky Steve: (Full disclosure–in my early 20s, I was Sneaky Steve in need of repentance.) Sneaky Steve masterfully keeps his budget as high as he can (with good motivation to reach and disciple people) by sliding over project expenses from one budget year to the next. For example, Steve worked hard 18 months ago to slide some new equipment into his budget. Now that the system has been purchased, it would make sense to take that out of the starting point for his budget. But he knows that most people will simply look at the total budget from year to year, so he comes to the budgeting table with the same amount and boldly articulates, “I am not raising my budget.” In reality, he has raised his budget the amount of the equipment.
To avoid unintentionally annualizing major expenditures, I recommend having a line item in each ministry department for “equipment or major purchases.” Simply zero that line each year for an accurate picture of the department’s regular budgeted expenses.
Sandbagging Sally: Sandbagging Sally is risk adverse and abhors the idea of “going over budget” in her spending. Rightfully so, but her fear leads her to overstate her expenses so as to overly hedge against her fear. By doing so, other ministry budgets can be adversely affected.
My recommendation is not to place “hedges” in individual ministry department budgets but within the overall budget. This allows for more accurate budgeting of expenses and simultaneously gives those with responsibility over the entire budget the job of properly watching and administering expenses.
Charlie, Steve, and Sally are great people who love the Lord. Charlie’s attention to detail needs to be leveraged to more deeply look at current expenses. Steve’s passion for his area needs to be applauded and focused. Sally’s concern for shrewd spending needs to be affirmed, but she needs to be lovingly reminded of the need to have expenses accurately planned.
