How to Cut a Church Budget
What if you were faced with a situation where you had to cut your church budget significantly? Where would you start? How would you go about deciding what (and who!) could stay, and what you could do without? This may become a reality within any recession in North America.
A church I served faced this situation in 2006. Our Senior Pastor retired, and during the search for our next senior staff and church leader, nearly 20% of our attenders moved on. This resulted in a corresponding decline in giving and attendance. Now, this is quite natural and even predictable in our situation–when polling other churches who went through a similar transition we found our numbers to be about average. Our Senior Pastor was with us for 15 years, and long-tenure leaders leaving tends to result in difficult transitions. In our case, we had to trim a $6.5 million budget to $5.5 million–a 15% reduction in spending, year-over-year.
To make matters more difficult, many fixed-cost items like insurance, healthcare and utilities rose, and we could not cut our debt payments. So we entered the budget process with nearly $500,000 more in fixed expenses we had to compensate for even if we did not cut the budget at all. In total we had to find $1.5 million in spending we were forced to do without. It wasn’t pretty, it wasn’t fun, but here’s what we learned.
Be realistic, but optimistic. One approach to our situation would be to just “trust God” for that $1 million and not cut anything. And we honestly considered that option–after all, God can do whatever He pleases, and He has promised to provide our every need. At the same time, we knew we had to be realistic about where we were. You cannot lose 20% of your average attendance and not have that affect your giving. We had some track-recording to lean on–giving was down significantly in the months following the Pastor’s retirement, and that was an indicator that adjustments would be required. We felt a 15% cut, $1 million, still left us with a challenging but attainable budget goal.
In the end, our desire was not to spend beyond what we took in–that’s realistic. But we also planned some “wish list” budget items in case God blessed beyond our Budget–that’s optimistic. It’s okay to encourage blue-sky thinking, but face it, we live in a world that is partly-cloudy most of the time.
Cut what you can before touching personnel. Bonuses, pay increases, added benefits, ministry budgets and flexible expenses should be cut first. Capital spending should be reduced. If the budget adjustments must result in loss of personnel, it’s crazy to leave in money for new Christmas decorations at the expense of a person’s livelihood. Personnel should be the last cut on the list, because when you make those cuts, they’re going to leave wounds. Before getting to staff cuts, we pored over every line item, reducing each where we could. I know some leaders may disagree here, as personnel is the highest-cost item in most budgets. But remember, the church is not like a for-profit company. The church is, first and foremost, people. So we want to put people first versus other priorities in any plan to reduce expenses.
Be in line with your vision. The mission of our church did not change as a result of a budget cut, so any cuts had to be in line with our church’s overall ministry role. This actually made the cuts easier to make, because we had a firm foundational statement on which to weigh these decisions. Remember, in a budget cut you are trimming expenses, not ministry. For us it meant refocusing on core areas of service that were closely aligned with scripture, and trimming expenses in areas that were more peripheral. It doesn’t make it any easier to explain to ministry leaders why a specific area of ministry is not considered “core,” but the reasoning holds up in light of the Budget situation that is being managed.
Treat personnel cuts with dignity. In our case, a $1 million budget adjustment meant cutting 15 full- and part-time staff positions. Even after cuts in other areas, we were forced to trim personnel. We began with our intern program and part-time helpers, then moved on to full-time positions. Most cuts were based on seniority and the ability of other areas to absorb some of the workload. Frankly, there is no way to make these kinds of decisions without affecting emotionally those in the affected area of ministry and lowering overall staff morale.
Our experience taught us that a straightforward approach worked best. That is, we did not discuss staff cuts outside of the leadership circle until we were confident of a decision on the affected positions. In that way, we did not cause alarm and anxiety to staff areas that were not affected. Secondly, we clearly stated our thinking leading up to the staff cut with the staff persons affected, and our plan for the future without that staff position. This helped them to understand why they were affected and that we fully realized we would have to adjust without their valuable contribution to the staff. It also gave them the opportunity to ask questions of us as leaders directly.
Finally, we shared with the church family exactly what we shared with the staff members themselves (minus any personal information), and we did it immediately following the decisions. We did not try to make up an optimistic presentation or couch the decision in unrealistic terms. This minimized the gossip and misinformation surrounding such an emotional and traumatic adjustment and gave our church a degree of trust in our decision making.
This straightforward approach in the end was a God-honoring process that maintained as much as possible the dignity of those staff members affected and the trust of the church body itself in our leadership. I will not say that some of those affected were not hurt or did not complain publicly. I will say, however, that we could assure our congregation that staff cuts were treated with dignity and respect.
Leave room for risk. This is a tough one, but leave some room to take risk for the sake of Christ and His Kingdom. Ministry does not cease because there are fewer resources to work with. That particular year I worked within a departmental budget that had 70% less discretionary funds available than last year. Yet God was still just as active in our lives and church body that year as He was on December 31 of the previous year.
Leaving room for risk means setting aside some funds, even in a tight year, for God-directed needs or opportunities that may arise. Our revised budget had very little money that was not predetermined for a specific need–but we did leave just a little, so as God moved in a way that was unexpected to us, we could be as prepared as possible.
That’s life. Nobody was happy about this. Nobody. Sorry, but you will not win awards by dealing with reality. Budget increases and cuts, ups and downs, are part of life, and we deal with them in every area, from business to our homes to government. Leaders of a church in the middle of a growing period would like to think that budgets will always increase and numbers will always rise year-to-year, but that simply is not reality. The stock and housing downturn of 2008 shows that even without internal circumstances, church finances can be drastically affected by the ebb and flow of world economies.
Natural disasters can also affect an otherwise rosy picture–just ask those church leaders affected by Hurricane Katrina. No matter what the present circumstances, it’s important to live “in the now.” That is, to deal with the situation in front of us.
Better for it. This sounds crazy, but I think in the end we were better for the budget cuts we had to make as a leadership staff and church family. The Budget cuts were a gut-check for our staff, and made us think in a passionate way about what was really important to us in each area of ministry, and in a creative way about how to meet needs on fewer resources. I am not sure, if given $1.5 million more that year, that we would have spent it as wisely had we not had to do without. In many areas we were even more accountable, more diligent and more frugal with our resources from that point forward, because we knew what it was like to have and have not.
If you are facing a Budget cut, know this: It’s not an insurmountable issue. View it instead as an opportunity to be the best steward possible of what you have been entrusted with by God as a leader in His Church. I have learned that the roller-coaster of ministry has ups and downs, even loops, but I trust in God because He never lets us leave the track. He is faithful to provide exactly what we need–never less, and sometimes no more. Budgets will rise and fall, but the name of our Lord stands forever.
Author: Eugene Mason, Communications Director for Cross Pointe Church under the leadership of Dr. James Merritt.