Most ministries struggle to remain financially healthy. They seek to keep a balance between living by faith and operating realistically.
Some will say, "Let's move ahead by faith, God will supply our needs as we step out for Him."
Others might say, "We can't move forward with this project or plan without having the money in hand."
I submit that a balanced approach is necessary. There are times when it's clear we should move forward by faith, while at other times that we should wait for the Lord to provide.
How do we find the balance? We regularly and prayerfully seek the mind of God, trusting the Holy Spirit to guide us each step of the way.
On a practical level, what are the ingredients for achieving financial health?
1. Establish policies for fundraising and finance The way an organization handles itself in the financial arena is a reflection of its integrity in every other arena.
For instance, Life Matters has a policy that we won't spend more money than we receive. Careful monitoring of our resources permits us to reduce expense for programs and services before a huge debt is incurred. We have determined that deficit spending is not God's will.
Related to that, we have a policy of paying invoices within 30 days, if possible. We don't intend to use the vendor's money as our own.
2. Create a budget A budget is simply a projected plan for receiving and expending funds. It can be amended when needed, but is a financial roadmap for the ministry. It should be reviewed on a regular basis and revised, if necessary, at mid-year.
In our planning we first think conservatively when estimating income and liberally when estimating expenses. Somewhere in the middle we can achieve a balanced budget.
Expenses – List the different areas of expense and determine the financial need in each area for the fiscal year. This is partly determined by your expense history.
Income – List the different types of income you expect to receive, then prayerfully determine the amount you can expect to receive from each funding source. History plays a part and you must be realistic!
3. Make a strategic plan It’s been said many ways, “No plan to succeed is a sure plan to fail.”
A strategic plan is a well thought out path to reach your organization’s ministry goals and objectives. It includes identifying individual targets and formulating the necessary steps to accomplish them. Every organization that wants to succeed should have a strategic plan and no organization is too small or too large.
4. Keep track of the financial “do’s and don’ts”
Restricted gifts – must only be used for the purpose designated by the donor and cannot be diverted temporarily to meet other financial needs (i.e., payroll, bills, etc.) – unless the donor grants specific permission to do so.
Deficit spending – Ministries must do all they can to end the year in the black.
Vendor and community relations – Do everything possible to maintain high ethical standards and a testimony of integrity, honesty, and friendship.
5. Prepare financial statements/audits At the very least, a financial statement (which can be fairly inexpensive) should be prepared each year. An audit, which is a more extensive financial evaluation of the ministry and significantly more expensive ($5,000-7,000, depending on its extent), can be done every 3 years. Once your ministry reaches a certain level of income, however, an audit should be done every year.
Conclusion Every Christian ministry, the executive board and staff, needs to prayerfully evaluate its strategies and practices with regard to maintaining financial health for their ministry. It's a process requiring oversight and regular evaluation. Ultimately, maintaining financial health brings glory to God and creates an environment for success and growth in ministry.
Tom Lothamer is president of Life Matters Worldwide. He can be reached by email or phone: 1-800-968-6086, (616) 257-6800. He would be happy to consult with you regarding this area of ministry operations.