How To Safeguard Church Finances: 15+ Proven Guidelines
Confession Time: I’m not a naturally financially minded person. As a pastor, I’d much rather leave the nitty gritty details of church finances to others. On a good day, the list of responsibilities and tasks is barely manageable:
- Budgeting
- Restricted funds
- Assets
- Liabilities
- Bookkeeping
- Tax compliance
On a bad day? These can be the stuff of nightmares. However! Finances are vital to running a church well. If you need help with church finance best practices (like I did), I’ve got your back.
The best practices in this article will set your church up for financial success. From long-term planning to this year’s industry-leading church accounting software, I’ve got 15 examples combined with real-life success stories from churches that have implemented these practices.
Remember: It Begins With Stewardship
When implementing financial best practices within your church, start with a biblical understanding of stewardship.
When you hear that word, likely your mind goes immediately to money. But stewardship is so much more than that. It’s about taking care of and managing our time, talents, possessions, resources, and relationships.
Everything we have belongs to God (Psalm 24:1) and He has entrusted us to be good managers of His stuff.
For me, this is where I get excited. I am a visionary and I love to dream with Jesus about how we can partner with Him to build a community where every aspect of our lives is lived in fellowship with Jesus.
The first command God gave to humanity in the garden was about stewardship.
God blessed them; and God said to them, “Be fruitful and multiply, and fill the earth, and subdue it; and rule over the fish of the sea and over the birds of the sky and over every living thing that moves on the earth.
Genesis 1:28
I want to be part of a church that gives generously with its finances, but not out of obligation. Guilt and shame should never be used to coerce people into giving.
I want my congregation to give by faith, after they have spent time talking to Jesus about their finances and asking Him how much (or how little) they are to donate.
My desire doesn’t just apply to their finances either. I want them to look to Jesus to give of their time and talents by faith and as an act of worship. Biblical stewardship looks at the whole person and asks, how does Jesus want to work in and through them?
Success Story: The First Baptist Church of Greenville
The First Baptist Church of Greenville, SC faced financial struggles, with stagnant giving and a deteriorating building. To improve their stewardship, church leaders implemented a comprehensive program focused on education, engagement, and generosity.
Education: They taught sermons and Bible studies on biblical stewardship, emphasizing that it involves more than just money.
Transparency: The church began providing detailed financial reports, building trust, and showing the impact of donations.
Vision Casting: Leadership articulated a clear vision for ministry and outreach, demonstrating how increased giving could expand their service to the community.
Diverse Giving Options: They introduced online and mobile giving, making it easier for members to contribute.
Gratitude: The church consistently thanked givers and shared stories of how donations made a difference.
Over two years, overall giving increased by 15%, regular givers grew by 25%, and the church completed necessary repairs. They launched two new outreach programs and saw greater volunteer engagement. This intentional focus on stewardship transformed the church into a thriving community, fostering a culture of generosity that extended beyond monetary contributions.
Church Finance Best Practices: Stewardship And Planning
Being a good steward of the resources God has entrusted to your church takes planning. This can include long-term planning as well as diversifying your sources of income. Long-term, this will hopefully help the resources of the church to grow, setting your church up for long-lasting kingdom impact.
With all the following best practices, start with the end in mind. If you don’t have a clearly established vision, it’s kind of hard to know whether you’re headed in the right direction. So if your church doesn’t yet have a vision and a mission statement, start there. Once you have these in place, use your church’s vision and mission to shape your goals and financial practices.
1. Define clear financial goals.
Establish financial goals that will help you accomplish your mission. Here are some considerations:
- Do I need the budget to balance, or am I comfortable running a deficit budget?
- Does the church have debt that you want to eliminate?
- Are there upcoming capital expenditures?
- What services or programs do you want to implement or expand?
- Are there local and global mission projects you want to support?
Without clear financial goals, your church will be like a rudderless ship with no clear aim or direction. You won’t be informed when it comes time to make important financial decisions. However, having clearly defined financial goals will make decision-making easy. When questions come up about spending, you will be able to see if the expense will help you accomplish your goals or whether it will take away from your goals.
2. Develop a comprehensive church budget.
With clear financial goals in place, you are now ready to tackle the church budget. Typically, this is done annually. Crafting a well-structured budget ensures alignment between the church's mission and its financial resources. It will include the following:
- All expected income streams of the church. Offerings and tithes will be the largest part of this category, but if you have diversified the way your church makes money, you may have other income streams such as church grants, investments, and cafe or bookstore earnings, just to name a few.
- All anticipated expenses for the year, including salaries, building maintenance, ministries, and missions.
In general, it’s best to run a balanced budget where your income matches the expenses for the year.
But this may not always be the case. It all depends on your comfort level and what the goals are that you are trying to accomplish. Most importantly, how is God leading you to spend His resources in the year ahead?
Since donations fluctuate from year to year, you will be making an educated guess about this every year and it will be rare that you are exact with your estimate. Always start with studying the previous year and make adjustments for the upcoming year. Look at places where you were over or under in spending. Also, refer back to your goals to inform decisions on where the money should be allocated for the current year.
3. Create a long-term financial strategy (that includes an emergency fund).
Long-term planning for the church will ensure that it stays solvent for years to come, able to continue in the mission to love others and share the gospel. It’s time to get strategic here. What do you want to see happen in the church over the next 3-5 years? What about beyond that?
The first step is to create an emergency fund. Unforeseen events (e.g., building repairs, sudden expenses) can disrupt church operations.
Set aside 3-6 months of operating expenses as a cash reserve in a separate account. This ensures the church can continue its mission during financial crises without cutting essential programs.
Next, look at the medium to long-term capital expenses that may be approaching. Maybe your church is expanding and you will outgrow your current space. Maybe you are renting a building and you would like to buy a building at some point. If that’s the case, setting up separate building funds might be a good idea.
Lastly, plan for retirement benefits for staff, and growth projects. Consider setting up an endowment fund to ensure the church has resources for future generations. Have regular strategic financial planning meetings to review progress and make necessary adjustments.
4. Diversify income streams.
Most of the church’s income will come from donations, tithes, and offerings from your members. At times, this can be risky. It’s a good idea to diversify your income streams so that you are not so dependent on a single source of income. Explore additional income opportunities such as facility rentals, fundraising events, grants, or business ventures that align with the church’s mission. This helps stabilize cash flow and fund long-term projects.
Success Story: Crossroads Church
Crossroads Church in Cincinnati, Ohio, faced financial challenges in the early 2000s. They looked at their situation and recognized that improving stewardship within the church would benefit each individual and the church as a whole, allowing them to expand and accomplish their mission and vision.
They implemented a comprehensive financial strategy focused on:
- Teaching biblical principles of generosity and stewardship.
- Offering a "Money Matters" course to help members improve their personal finances.
- Practicing radical financial transparency by sharing detailed budgets with the congregation.
- Encouraging joyful giving without a set percentage.
- Developing multiple revenue streams, including a coffee shop and event rentals.
As a result, annual giving significantly increased, allowing the church to expand its outreach programs and eliminate all debt within five years. Attendance grew as members applied the financial principles taught, leading to improved personal financial situations. Crossroads Church's approach demonstrates how financial planning can help the church to succeed in its mission to share the message of the gospel in the community around them.
Church Finance Best Practices: Financial Management And Controls
Proper management and financial controls are essential for the church to maintain transparency and accountability. It will ensure compliance to local and federal tax laws, which is required to maintain your charitable status. If you don’t know a lot about managing church finances, then make sure you have the right people at the table who can inform you about these best practices.
5. Segregation of duties
When setting up the financial controls of your church, segregation of duties is a primary consideration that will protect not only the church but also the individuals responsible for managing the resources within the church.
The American Institute of CPAs (AICPA) states that segregation of duties is a form of risk management that “ disperses the critical functions of that process to more than one person or department. Without this separation in key processes, fraud, and error risks are far less manageable.”
This means that a different person should be handling money, recording transactions, and reconciling bank accounts.
This creates a form of checks and balances within the church to ensure there is oversight and that you will be able to catch errors when they happen.
6. Implement robust accounting systems and software
I don’t think I realized when I first got into ministry just how much of my time would be spent on the administration of the church. It’s the mundane and stodgy part of my job that I can’t get away from. However, many of my headaches have been mitigated with the help of the right accounting and church software in place.
Churches, just like any business, need a system in place for record-keeping. If you’re still using an abacus to count your money (see above photo), I have got some good news! There are dozens of tools to help
- streamline your financial management
- track donations
- manage with competence.
Yes, trying to find the right ones for you and your leadership team can be a daunting task. Don’t worry, I’ve already done the research to help you in your searc:
- Find the right accounting software with the Best Church Accounting Software To Manage Finances.
- Track your donations like a champ with Church giving software.
- Manage your staff, volunteers, and members more effectively with Church management software.
7. Conducting regular financial reviews
Not only are financial reviews or audits required to comply with state and federal tax laws, but it is a good practice for the church to ensure financial transparency and accountability.
Regular audits from an outside accounting firm will ensure that all funds are being managed responsibly. It helps to build trust within the church when donors know that the funds are being monitored and handled according to the established financial policies and procedures.
Financial reviews provide opportunities for the church to receive feedback from their accountant on any weaknesses of the processes and controls of the church. These assessments can be used to improve and streamline the financial policies of the church, ensuring a more transparent and trustworthy financial system is in place.
The review gives an annual snapshot of the health of the church finances. Over time, this will help with the long-term planning for the church, allowing leaders to make informed decisions for future growth and ministry expansion.
8. Setup a church finance committee
The church finance committee, often referred to as the board of directors, or deacons of the church, is an essential part of every church. If your church is incorporated, then you are required by law to have a board. But that’s a good thing because a good board will work alongside you to help manage the finances, create the annual budget, implement the financial policies, and ensure compliance with local and federal tax regulations.
A good church finance committee ensures financial integrity, prepares and reviews financial statements, supports long-term planning, and fosters transparency and trust within the church community.
Success Story: Saddleback Church
This large megachurch is known for its robust financial management practices, which have contributed to its transparency, trustworthiness, and long-term sustainability.
The Financial Practices Implemented:
- They ensure transparency by providing regular financial reports to their congregation
- Conduct independent audits annually, which prevent fraud and ensure accountability.
- Strict management of restricted funds ensures donations are used for their intended purpose, maintaining legal compliance and donor trust.
- The church's finance committee oversees budgeting and spending to ensure alignment with the church’s mission.
Outcome:
Legal and Ethical Compliance: Regular audits and careful management of restricted funds help ensure that the church complies with all legal and ethical obligations, protecting it from potential lawsuits or financial scandals.
Increased Donor Confidence: Clear financial controls, transparency, and regular reporting reassure donors that their contributions are being used wisely, fostering more generous and consistent giving.
Longevity and Growth: Sound financial practices have allowed Saddleback to grow sustainably, expanding its ministries and outreach programs while maintaining fiscal responsibility.
Church Finance Best Practices: Member Giving
Without donations from your members, the church isn’t going to last very long. Asking for and receiving donations is a necessary part of the church’s operations. Here are some ideas you can try to improve and increase the giving at your church.
9. Set up both online and mobile giving solutions
Make it as easy as possible for your members to give money. Take advantage of the technology available, and you will see an increase in the donations to your church. Pushpay, one of the companies who made our 10 Best Church Giving Software Shortlist, says that over half of their customers see a 75 percent increase in recurring giving within the first year: “By offering online giving, churches often tap into new, previously unreached donor pools and see increased giving from their congregation.”
Your online presence is becoming more crucial than ever. Your website needs to be easy to navigate on desktop and mobile devices. It needs to look reputable and secure. Make sure your donation page is accessible and that it’s set up for effortless giving.
10. Offer members recurring giving options
Recurring giving helps stabilize church finances and allows for more predictable income streams. I much prefer regular monthly giving over one-time larger donations. Why? Because it’s predictable and easier to plan and budget for. This is easily done through any of the online giving platforms available today.
Don’t stop there! Make sure you communicate to the church about the benefits of regular giving, not only for the church but also for managing their own personal finances. This doesn’t apply to everyone’s situation, and I’m not about to turn down any one-time large sums of money. Regular consistent giving has shown to be the way to go over time.
11. Teach a biblical understanding of giving.
Approaching giving in your church from a bible perspective means you never do these things:
- Use guilt or shame to motivate giving.
- Focus on the dollar amount over the person’s heart.
- Talk too much or too little about money.
Giving in the bible always has to do with the state of the person’s heart over the amount being given. In the story of the widow’s mite, Jesus praises the widow for her donation over the one from the rich man because she gave out of love for God and as an act of faith (Luke 21:1-4).
Each one must do just as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.
2 Corinthians 9:7
Here again we see that God is looking for us to trust Him and to give in response to His leading. The emphasis is not on the amount but on the heart behind our giving. This list of short offering messages will help you approach this sometimes awkward but always important topic.
12. Foster a Culture of Gratitude and Transparency
If you can create a culture of generosity and gratitude within the church, giving nearly takes care of itself. Model the desired culture from the top down. Get your church leadership on board with this mission so that the culture grows from the inside out. Teach and communicate about giving and how the funds are being used to accomplish the mission of the church.
Be sure to express gratitude for the faithfulness of your members as they give. People are more likely to give when they feel their contributions are appreciated and they understand how the funds are being used. Transparency builds trust and inspires greater giving.
Success Story: The Summit Church
The Summit Church in Durham, North Carolina, led by pastor J.D. Greear, faced inconsistent and declining giving trends, making it difficult to sustain ministries and plan for growth. They noticed that many congregants were not giving regularly, and the church had a financial shortfall despite a growing attendance.
Giving Best Practices Implemented:
- Teaching the Biblical Importance of Generosity: The church began a teaching series focused on biblical stewardship and generosity, connecting giving to discipleship. This helped members understand that giving was not just about financial support but about spiritual growth.
- Offering Digital Giving Options: They introduced digital giving options, including a mobile app, text-to-give, and online giving, making it easier for members to give regularly.
- Transparency and Vision-Casting: The Summit Church became more transparent with its financial needs and regularly communicated how donations impacted ministries. They frequently shared stories of how giving supported missions and church growth.
These changes created a cultural shift where members saw giving as an integral part of their faith journey. The Summit Church saw a marked increase in regular, recurring donations. This enabled them to expand their ministry efforts, plant new churches, and increase their community outreach programs.
Church Finance Best Practices: Transparency And Accountability
If you want to build trust, keep the conversation open between you and your church members. Maintain a relationship of transparency where they know that there is nothing to hide. When they know that there is openness and accountability with the church funds (ie: with church fund accounting) it will increase donor confidence, which will lead to increased giving. Here are some best practices to maintain accountability and transparency.
13. Regularly report to leadership and the congregation
Providing the congregation with clear, regular updates on the church’s financial health builds trust and ensures that members know how their contributions are being used. It’s up to you how often you communicate these details to your church and it will depend on the structure of your church and its bylaws. All that matters is that you do it.
Consider your audience and what information is useful for them when creating your church finance report. The board of directors will require more information in the report than the church congregation since the board will be using the information to make decisions on spending and developing policies. Whereas the congregation will be more for information purposes so they can see how the church resources are being allocated.
14. Seek professional financial advice
You know this about me already: I’m not an accountant or a lawyer, and I bet you aren’t either.
When it comes to church finances though, sometimes I feel like I’m supposed to be.
I like to air on the side of calling in the professionals, because sometimes I don’t know what I don’t know. Acquiring the right legal and accounting advice can protect the assets of the church, ensuring that it will be able to continue operating for years to come.
Not only is it a good idea, but it’s required in order to maintain your charitable status.
The church needs an annual audit or review of the finances and to file a tax return. Financial reviews by an outside accounting firm will build trust and provide transparency with your donors. It provides assurance that the finances are being handled according to best practices and complying with government regulations.
15. Clear Policies on Fund Usage
If your church receives restricted funds, then you will need to have clear policies on how these funds are being received and handled. There are specific laws around how restricted funds can be used. Transparency around how donations are allocated ensures that funds are being used as intended by donors and in accordance with legal requirements.
Make sure you are educated on how to use those restricted funds and in the end communicate to your donors about how those funds were disbursed to ensure accountability and transparency.
Summary
Developing your church finance best practices doesn’t need to be as daunting as it sounds.
First and foremost, it’s about true biblical stewardship. It’s not only about the money, but about the whole individual offering back to God of their time, talents, and possessions. This is most effective when we know and understand that everything we have comes from God as a gift from Him, and that we have been entrusted to care for His resources.
With that in mind, follow these steps and your finances will be organized, clear, and effective:
- Set up financial stewardship and planning best practices.
- Put quality financial management and controls in place.
- Implement member-giving best practices.
- Prioritize transparency and accountability at all levels of the church.
Remember that church finance best practices are great, but don’t let them be the measuring stick to know whether you are succeeding as good stewards.
Our ultimate security and hope for the future is not the size of our church bank account or financial outlook. It’s Jesus.
Joshua Gordon
Ultimately, financial challenges are one of the ways Jesus teaches us as pastors and church leaders how to trust Jesus more deeply and to walk closely to Him.
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