Budget preparation is a task nobody looks forward to and few understand.
Many grit their teeth coming to budget meetings because they view the process as, at best, a necessary evil, a painful search for “fat” to cut, with frustration at escalating required costs (e.g. health insurance) and tough allocation decisions. Which is more important, dollars for mission or a raise for staff? Even in good times, hours spent on budget planning can seem like a distraction from the real work.
I say with humility that few really understand budgeting. My trustees typically possess financial acumen superior to mine. But business savvy can lead, ironically, to granting the budget process both more and less importance than it deserves. More because it’s just an instrument, after all. Less, because it exposes our priorities, making a theological statement that could shock or dismay us.
Think of the budget not as a static document but an expression of the organization as a living organism. There is a life cycle to every annual budget that reflects both finite usefulness and theological significance.
A budget has at least six life stages, each serving a different function. My outline follows the timetable of my church, where the fiscal year is the calendar year.
Conception Since church council presents the proposed budget for approval at a congregational meeting in mid-November, leaders work through the summer to bring it into final form by October. The discipline of prioritizing and negotiating funding for the coming year is guided by the goals and objectives of the church’s strategic plan as well as actual income and expense projections for the current year. So the budget is a planning tool.
Motivation Stewardship here is a year-round ministry focused on discipleship, spirituality, mission, and the life of faith. But this still includes planning the fall program in which members and friends are encouraged to make a “faith commitment” for financial giving in the year to come. The proposed budget becomes a motivational resource for that October emphasis. It sets forth the aspirations of the congregation which we aim to support.
Resolution At the congregational meeting, members affirm that the budget does in fact represent the direction that the church will travel in the coming year. The document becomes an official promise of support for the staff, a covenant with mission partners, and a commitment to property development to the glory of God. It may be the result of compromise and imperfect decisions, but once adopted the budget stands as the church’s ecclesiological self-portrait.
Plumbline Through the year, the budget serves as the standard against which income and expenses are examined. Of course, neither side of the ledger advances evenly from one month to the next. Transparent use of the budget as fiscal plumb-line with the congregation is a tricky matter, and must be augmented by reports of actual cash flow and explanation of quarterly and seasonal expenses. A constant message that “we’re running behind budget” can be a huge de-motivator and morale killer in any organization. Still, the budget is the standard by which we operate through the year.
Reconception About halfway through the cycle, the process begins again for the coming year. At this stage of its life, the budget -- along with continual work on the organization’s strategic plan and other assessments of programs -- becomes a template and planning instrument for its successor document, the following year’s budget.
Irrelevance In the final month of its life, the budget becomes irrelevant. All that matters financially at year’s end is how we did with actual income against actual expenses. Maybe I’m overstating this. The old budget, together with the report of income and expenses, becomes part of the organization’s official history in the Annual Report. Reference to these documents encourages honesty in program planning for years to come.
Understanding the life cycle of a budget will probably not make budgeting more enjoyable. But it could make it more meaningful.
