Giving Speaks is pleased to bring back this popular 3-part guest blog article on congregational budgeting by K. Peter Henrickson*  Here is Part One….

      WHAT IS THE BUDGET FOR ANYWAY?  or, “How do we respond to “I hate budget meetings!”?

Most Unitarian Universalist (UU) churches manage the annual stewardship campaign in close alignment with the budget and the program year. For many churches the fiscal year starts July 1, for example, and runs through the following June 30. The annual pledge drive, then, occurs in the spring prior to the start of the year. Some choose a different fiscal year with a different time for the pledge drive. But for nearly all churches, the annual budget process is an initial part of the stewardship campaign.

There are a few scattered examples of churches attempting a rolling twelve month stewardship drive, lifting The Ask out of the immediate context of talking about the cost of running the church. The rationale for such efforts is verbalized as one of spreading this important workload throughout the year, surmising it could be done more effectively with a smaller dedicated group of volunteers who would engage members in more intimate conversations about the church, its mission, and its impact in their lives. Uncoupling the annual stewardship drive from the budget cycle has enthusiastic promoters.

But church leaders still rely on promoting a strong connection between their primary income source, pledges, and a description of spending needs, the budget. The problem is that most members have minimal enthusiasm for reviewing the budget. While acknowledging there could be some connection to their pledge, they find little inspiration in the three pages of numbers they are asked to review.

What’s wrong with our budget process?

Most churches engage in a depressingly familiar assessment of next year’s financial needs. First, the committees are given reports on how they have spent money in the past year and are asked to provide an idea about where they felt a little pinched this past year. Someone meets with the minister and staff, perhaps, to get an idea about what they want. The Treasurer guesses how much will come in next year based on current membership and giving trends.

With all this input from different sources, the Finance Committee (or, the board in smaller congregations) adds it up, finds there is a shortage, cuts some requests, increases some revenue items, and comes up with a “balanced” budget.

This budget is presented to the congregation which debates the proposal in an open meeting, often full of rancor over the various “cuts” or “waste” or the “lack of realism” in the revenue estimates. The budget debate focuses on small expense categories — such as a cost/benefit comparison of the church phone line vs. cell service or whether there is too much photocopying being done. At the end of the evening the budget is adopted and everyone goes home feeling dismal and unenthusiastic.

What’s wrong with this picture? I can think of four things; perhaps you see more. First, the process encourages the membership to consider their gift level as a function of how the church will spend money next year. There is usually a sense of angst over whether we can get enough to do what needs to be done. We are asked to become more motivated in our giving because we see that the church needs to have supplies, purchase insurance, increase salaries, or support health insurance enrollments.

We do not engage this paradigm with other charitable organizations: Sierra Club, CARE, Planned Parenthood, Ducks Unlimited, and National Public Radio all receive our generous donations without our questioning their fiscal plans. We “know” what these organizations will do with our money, and we feel good about our support because they can do more with our help. The more generous our gifts, the more uplifted we feel because the organization will do good for us, with us. While we are always concerned that our gifts be used wisely, we presume that the leaders (whom we often do not have much voice in selecting) will continue to further our interests as they have in the past.

Alas, the usual church stewardship campaign does not foster a similar presumption.

Second, the process fractures the community as it squabbles over a “fair” allocation of resources rather than bringing us together in support of varied interests. (The divisiveness seems an intentionally perverse way of kicking off the drive to encourage sustaining gifts.)

Third, the “balanced budget” as presented to the congregation mistakenly leads members toward “zero sum” thinking – completely at odds with the reality of our communal enterprise. In the case of governmental agencies, for example, there is an estimated level of revenue within which the agency must live. The revenue usually derives from some tax base; and estimating it for the upcoming year is usually beyond the power of the agency to control. This reality contrasts quite strongly with that of church communities.

In our churches the flow of revenue is, quite literally, by the design of the members. The members of a church determine for themselves how much they will both provide and receive communally — how quickly they will fix the roof, hire the Youth Advisor, or set up the homeless shelter. Our relatively small and homogenous group is the only thing standing in the way of moving toward our dream.

Fourth, the focus is on tinkering with the spending pattern of the past, adjusting prior program patterns, rather than dreaming of our better future. We engage in patching up what we guiltily have left undone in the current year with little more than passing thought about where our path will take us three or five years from now. In truth, some members want the leadership to “not change things much around here; just do what we are doing already, but better”.

We Need a Longer Focus

In reflecting on our stewardship efforts in this way, we can begin to see that there are two approaches to raising money in churches. Let’s, for a moment, define people as falling into either of two groups: those with a wage earner mentality, and those with an entrepreneurial mentality. Wage earners understand their income as regular, predictable, and limited. Wage earners get a paycheck and pay their bills. Life, for the wage earner, has inflexible income boundaries. Wage earners are grounded in what is real today, and that’s where planning starts. Goals are fashioned within that context.

The entrepreneur has a different reality. The entrepreneur decides first what is to be attained, and then begins to work on what is necessary in getting from the present to the future. Income, for the entrepreneur, is not fixed; it is one of many variables to be managed in bringing a vision into being. Income may come slowly or it may come quickly, but the entrepreneur is focused on and expectant about the goal while managing income as it becomes available.

Unfortunately most of us think like wage earners. It is difficult to acknowledge and move beyond that frame of reference. Our churches, however, are small entrepreneurial enterprises that can be shaped and grown to be whatever we jointly decide to make them. For example, we might create a widely held notion of how we want to be in community together, of how our church community can support our fulfillment as Unitarian Universalists, of how we can respond to the newcomers who may choose to stay if we show them our dreams for three to five years from now. Such envisioning encourages each of us to define our place in the community independently of the particulars of spending in the next year. This is spiritual work.

The annual stewardship drive, in this framework, does not seek justification from a budget, per se. Rather, our stewardship arises out of our common vision — and the budget becomes a clear expression of first steps on our path together. It is a statement about community values and priorities. This is the budget we want to show the congregation. Its purpose is to help congregants realize their importance as part of the community and become more generous and supportive because of it.

The purpose of the vision budget is to inspire the community by lighting the path ahead to our communal gathering place; controlling spending levels is a by-product. We want to know, for example, that the congregation agrees that it wants a minister in the future, or an associate minister, and that we will be able to afford one in the foreseeable future.

We want to know that there is a plan for our staff to get compensation packages that are competitive and fair, that the carpets will be cleaned, that our building will be painted, and that our furnace will be repaired when needed — all without creating a financial crisis.

We want to know how we can do this, with a specific plan; we want our leaders to show us how by joining our hearts and minds over what may take a few years we will achieve our dreams rather than simply lament our current state.

Types of Budgets

Let’s first agree that there are different ways to present a budget. The two most common are referred to as the “line item budget” and the “program budget” (and they generally parallel the two personality types above). Each of these formats works well depending upon the organization’s dominant need.

Large organizations, particularly government agencies and large non-profits, need control and accountability over current spending. Voters, elected officials, unions, trustees, managers and stakeholders all ask: “How did the money get used? Was any of it spent inappropriately? How can we limit the amount paid for salaries?” The parties need to be answerable to each other on such questions. In such organizations “program budgets” have never gained traction in large organizations because they do not address the organization’s financial questions.

Churches and most non-profits are smaller and more homogenous. The interests of the constituents are not nearly as diverse. While controls in small organizations are more informal, they can also be more effective politically; current spending is questioned less, despite the occasional budget arguments. Issues of control take a second seat to issues of meaning and mission. The important financial questions facing small not-for-profit agencies are “What are we about?” “What do we do?” And, “Where is the money coming from?”

It may be that in your church, accountability and control is the most important issue facing the congregation. While I readily admit that I have sat in on many discussions about newsletter costs being too high, such questions are not the greatest concern of the board. More often, the dominant issues center on raising more money so that we can better support our religious education program, our outreach ministry, or our pastoral services.

A “line item budget” shows how much will be spent on postage, supplies, coffee, copy paper, and so on. This is boring stuff for which no one will increase their monthly commitment. What is needed is a budget which will inspire donors to give. This is most easily accomplished when the congregation has a sense that it is moving toward a better future, and each member feels committed to the group effort.

But where does the exciting vision of the future come from?   Stay tuned for a follow-on post from Peter in a few days.

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*K. Peter Henrickson lives in Vancouver, WA has served the Unitarian Universalist Association (UUA) and its Pacific Northwest District for over 30 years.  Peter served two separate terms as district treasurer for a total of 15 years.  During that period, he began consulting with congregations on general financial management issues.  With the learnings from those consulting jobs, Peter put together several presentations for both district meetings and the Unitarian Universalist Association’s General Assembly.  And the material from those workshops grew into a book, Church Financial Management, which is now available through Amazon.   Peter has served on the Board of Eliot Institute and was Treasurer for a total of about ten years and has served as the UUA’s District Compensation Consultant since 2005.  Peter can be contact directly at:   kphenrickson@gmail.com    (360) 608-8571