If you’re fortunate, your church is blessed with a trained accountant who is certified for Quickbooks Online. He volunteers his time cheerfully, he has lots of faith, and he is not always worried about whether you’re going to make payroll next month. Plus he doesn’t use his position to usurp the authority of the pastors and elders.
In the real world, however, the average congregation in America has one pastor and about 70 regular participants. Most pastors rely on volunteers wearing lots of hats to help carry the load. And one job that can fall through the cracks—and come back to bite you—is church finances.
Your church’s books may be managed by a volunteer who has never done any accounting. He has never used Quickbooks and he doesn’t know anything about double-entry bookkeeping. He may be a cheerful worker bee, which is why he got the job, but he probably doesn’t like doing his own taxes, and doesn’t have a clue about pastors taxes. What’s a guy like that to do?
Well, I’d like to think that I’m a cheerful worker bee, anyway, and I’ve gathered a few useful lessons along the way of working with my church’s books. Here are a few suggestions:
- Churches can be financially organized in a variety of ways, but I like our method a lot. Each year, the elders appoint a budget committee to go through the budget and prepare it. Then, in April, the budget committee presents the budget to the elders, and the elders ask as many questions as they can think of. Once the elders approve of the budget, the congregation sees it in May at a congregational meeting. The congregation, then, must vote to approve it for our new fiscal year, which runs from June through May.
- Many churches get deep into the weeds because they weren’t willing to spend the money necessary to either hire someone who knows what they’re doing, or to train someone to manage their books. This lack of foresight will cause serious problems with your 1) accounting, and 2) employee payroll.
- We use Quickbooks Online for Nonprofits to manage our accounting, and it is the gold standard. I highly recommend it. Still, if you have absolutely no background in accounting, you must get further help. At the very least, you should have someone who knows what they’re doing set it all up for you and give you a few lessons.
- Payroll is complicated because you must keep in mind taxes, pension plans, rules regarding employee classifications, etc. There are many payroll companies out there, but we also use Quickbooks to process our payroll. It’s nice to have the two so tightly integrated. But whatever you do, be sure to hire a payroll company.
- Churches depend on tax-deductible donations. Consequently, it is mission-critical to have a good way to track donations. You must also be able to easily print and mail a giving statement to any donor who asks for one. You should send them out automatically at least once a year, but some churches do it once a quarter, or even once a donation. For this, we use Church Community Builder. This is our church online database, so it provides a whole lot more than giving summaries for tax purposes. There are many church management software packages, but whichever one you pick, make sure that it makes it easy to print out and send giving summaries at the end of the year. And, if possible, find one that integrates with your payroll and finance software, AKA Quickbooks.
- Each year, you’ll have to present a budget to your elders and/or congregation for approval. For this, I export the data that we have in Quickbooks Online and use Microsoft Excel and Powerpoint to pretty things up for presentation. Making these budget presentations understandable is a fine art. For this, I cannot recommend Financial Intelligence enough. It’s not about financial presentations per se, but it will improve your overall understanding of finances. That’s important if you have to walk others though a profit and loss statement or a balance sheet. Here’s a key quote:
The art of accounting and finance is the art of using limited data to come as close as possible to an accurate description of how well a company is performing. Accounting and finance are not reality, they are a reflection of reality, and the accuracy of that reflection depends on the ability of accountants and finance professionals to make reasonable assumptions and to calculate reasonable estimates.
- The point is this: your job is to communicate the situation of the church’s finances clearly. The details are largely irrelevant to your people. They need the honest “big picture,” and they need to know enough to make wise decisions. That’s it.
- The other key is to have faith with your budget, and to call your people to have faith with their giving. It may sound crass, but a man’s giving is a good barometer of the condition of his soul. A man who is stingy as he gives to the church loves money, and you cannot love God and money.
- Here are a couple more book recommendations. First, get a copy of Zondervan 2016 Church and Nonprofit Tax and Financial Guide. Taxes are hard, but this book is thorough and simple. Pastors taxes are also weird and complicated, so your pastors should get this one: Zondervan 2016 Minister’s Tax and Financial Guide.
Finally, a treasurer must have humility. As Berman and Knight put it in Financial Intelligence, “Do the finance folks dominate decisions? They shouldn’t.”
Your pastors and elders need you to keep them informed so they can lead the congregation. Likely you’ll disagree with them at some point. But your job isn’t to lead, it’s to support, to be sure that money operates as a servant of the Kingdom of God rather than as a master that binds and enslaves us. So do your job cheerfully and humbly, and remember your place.