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Ways to get financially fit

By David Lee

I like to describe the recession our nation has been experiencing for the past few years as an equal opportunity recession. It has put so many of our churches in challenging situations that have required leaders to make difficult decisions. At the same time, we have seen healthy churches emerge and flourish.

We have uncovered six things that financially healthy churches do right. Adopt these behaviors if your church is serious about becoming financially fit:

“Garminize” your mission. Make sure all the stakeholders in your church have the right address entered into their spiritual GPS. If everyone is clear on the mission of your church, they’ll end up at the right location regardless of where they started in their life journey. Making “yes” and “no” ministry decisions is seldom easy, but having a clear mission makes them easier.

Strengthen your leadership. Healthy churches are led by men and women who demonstrate authentic transparency, vulnerability and humility, undergirded by an active board that practices true accountability. These leaders are comfortable with their weaknesses and they surround themselves with qualified people who complement those weaknesses. We can clearly identify poor leadership as the No.1 reason many churches have failed or closed.

Build and maintain healthy liquidity. Healthy churches have financial margin, otherwise known as cash. A healthy cash position for a church means having 16 percent to 18 percent of annual income as unrestricted cash. An unhealthy level of cash combined with weak leadership can be toxic for your church. In fact, we have identified that a lack of adequate cash is the No. 2 reason churches have failed or closed. Can you identify an opportunity that your church was unable to pursue because you lacked the cash? If you own property, or if you have (or are considering) multisite campuses, you need to consider capital replacement costs based on the age of your facilities and plan accordingly.

Create a proactive culture. Healthy churches evaluate constantly to identify critical contributors and barriers to the fulfillment of their mission. Rather than reacting to financial pressures, healthy churches make hard decisions – like cutting expenses (ministry and staff) – sooner rather than later. In the context of your physical health, what would be more costly – treating or preventing an illness? The same goes for your church.

Don’t spend everything. Healthy churches create financial margin by building reserves or savings into their budgets. If you are considering taking out a loan, try this: “Pay” yourself the anticipated monthly mortgage payment ($700 for a $100,000 mortgage) for a year and see if your church can continue to be effective in ministry. The result will be $8,400 in the bank for reserves and clarity as to whether you can afford to take on debt. A helpful guiding principle is: Don’t spend in anticipation of growth. Spend in response to growth.

Recruit volunteers. Healthy churches rely more on volunteers to serve in positions that were previously salaried. A November 2010 study conducted by GuideStar found that 22 percent of ministries used one or more volunteers in previously paid positions. Healthy churches tap into the resources and talents of their entire congregation. But remember, people volunteer when your mission is crystal clear!

David Lee is a ministry development officer with Evangelical Christian Credit Union (ECCU), Brea, CA. solutions@eccu.org

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