By Paul Rice
In the last two posts, we addressed the two types of margin we should be building into our budgets: Survival Margin and Growth Margin. Both types of margin are critical to ensuring our church’s mission is funded properly.
Now that we understand the importance of margin, it’s time to build margin into our budgets.
You might be thinking, “Money is already tight. We don’t have enough money coming in to build margin AND run our church!”
Allow me to humbly challenge that perspective: Operating your church is NOT your mission.
Your church is a vehicle for advancing your God-given mission. If finances are tight because of operational expenses, running your church is strangling your mission instead of fulfilling it.
(NOTE: A church spending within their means does not necessarily mean they have a healthy budget or are advancing their mission and vision.)
So, why do churches struggle to build margin into their budget? The answer runs deeper than simply cutting expenses.
There are two BIG reasons churches struggle to build financial margin into their budgets.
Reason #1: Investing in Too Many Areas
Establishing positive cashflow is pretty easy. Just hack away at costs until the money going out is less than the money coming in. However, having positive cashflow doesn’t mean your mission is being funded properly.
It takes a lot more effort to make sure enough money is invested in the right things that will produce the highest possible return for your church’s mission. This is the biggest distinction from simply cutting costs and is especially critical for small churches with limited income.
Ask yourself, your board, and your leadership team the following question:
“How many ministry areas does our church invest in?”
If the answer is higher than 5 or 6, you are probably investing in too many areas. It is very difficult to do more than a few things well at a time. Even the largest effective churches focus on only 4 or 5 areas of ministry to advance their mission.
Why?
Concentrating your resources into a few areas will yield a much higher return for your mission than resources spread around to many areas. You want to make sure your investments are going to areas that produce the biggest return on investment for your mission.
Reason #2: Not Killing an Idea Soon Enough
Time for another question:
“How many of those areas directly advance the mission of our church?”
This question usually reveals the underlying issue. Most churches can identify the core ministries that they excel at and advance their mission. However, you probably identified ministries that used to work, but don’t anymore. (Or maybe they never did!)
Churches are great at identifying ideas that don’t work anymore. Churches are even worse about killing them. Usually, they don’t want to deal with the pain of shutting down an idea to which so many people have contributed.
I talked with Pastor Ryan Wood, of Christian Life Church, who once opened a brick and mortar coffee shop after success with an online store. He ended up closing the physical store because sales were not keeping up with expenses. When I asked him about what he learned from that experience, he said,
“If you know you’re going to lose, lose as fast as possible."
Sometimes leaders are afraid to shut something down because the idea used to work really well. What they don’t recognize is that the idea that once produced a return for the mission is sapping valuable financial resources from areas that are advancing the mission now.
Ideas that don’t advance the mission are losing propositions. We want to lose fast so those resources can be redirected into areas that will advance the mission.
Let’s talk practical application.
Application #1: Ruthlessly cut all investments that do not advance your church’s mission.
As church leaders, we must quickly kill investments that do not directly advance the mission and vision of our churches. Every month that these investments continue is money lost that could be going to investments that do advance the mission.
Remember the two questions we asked earlier?
Once you and your leadership team have identified all low-return investments in your church, develop and execute a plan to cut those investments. You’ll find extra money for growth margin and free up non-financial resources (volunteers, time, etc…) too!
Application #2: Identify and say “No” to low-return investments before you have to cut them later.
Once you have done the work to eliminate low-return investments, you need to prevent new ones from replacing them. Before you invest in anything new, make sure to ask the question, “Does this investment advance our church’s mission?”
Don’t just ask yourself. Ask your board or leadership team if the investment will produce a high return for your mission. Be honest and work hard not to let pet projects take root. I think you will be amazed at how much leftover money you have for growth margin when you put these principles to work.
Your mission is riding on your ability to properly fund it. Start building survival and growth margin into your budget so you can start advancing your mission and vision TODAY, even with limited income.