Managing church finances

By Rev. Dr. Perry J. Hopper, MBA

Managing church finances can be a complex task under the best circumstances. When we consider the unprecedented times in which we are currently living as a result of the COVID-19 pandemic, managing church finances can become a daunting task.

Churches rely on the tithes and offerings of their members and faith-based organizations on the gifts of generous donors as a source of income to maintain building operations and fund ministry programs. What do you do when worship services are no longer being held on site and staff are mandated to work from their homes? How do you manage your finances and generate the income needed to keep your church running?

A financial strategy and a plan of action will help to guide your church through difficult times.

Your church leadership or finance committee, if your church has one, might be faced with difficult decisions in the weeks and months ahead. Some decisions — such as suspending ministries, instituting a hiring freeze, postponing building projects, and staff furloughs — will not come easily. Strive for incremental savings rather than major cuts to ease the impact on your congregation.

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With many people facing reduced employment or unemployment, weekly giving has been greatly reduced. For these reasons, church members are no longer giving as much as they did and those who can still give might not be aware of different options available for them to continue making contributions. Here are a few ideas to help sustain giving at your church during these difficult times:

Digital giving — Set up electronic giving, if you have not already done so, with apps such as Tithe.ly, easyTithe or Givelify.

Automatic Online bill pay — Many banks offer this option. Church members can set up their church as a recurring weekly or monthly payment.

Schedule giving reminders — Send an email to church members on Saturday night to remind them that their giving and support is still needed even though they’re not attending normal worship services.

Communications with church members about finances is important, especially during trying times. Transparency is key, as difficult as it is to communicate the cold, hard facts about your church’s financial situation.

Establish a COVID-19 relief fund for your church — During times of crisis, those who can give, want to support ministries that are closest to their hearts.

Communications with church members about finances is important, especially during trying times. Transparency is key, as difficult as it is to communicate the cold, hard facts about your church’s financial situation. When you make your members aware of the church’s financial challenges, it provides your congregation the opportunity to participate in solutions, such as cost-saving ideas and strategies for raising funds.

The federal government has also stepped in to provide economic assistance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed into law on March 27, 2020. The CARES Act aims to reduce the economic impact of the COVID-19 pandemic and authorizes aid to various sectors of the economy. Programs that provide assistance to churches and faith-based organizations and their employees include:

#1: Paycheck Protection Program (PPP)

The Paycheck Projection Program (PPP) is a new loan program based on the loan program of the Small Business Administration (SBA) and will make loans potentially forgivable to qualifying small businesses.

#2: Business and individual tax provisions

There are various business and individual tax provisions available through the CARES ACT. First, the business tax provisions:

Payroll Taxes Delay. The CARES Act created a “payroll tax deferral period” from March 27, 2020 through the end of 2020. Employers may defer the deposit and payment of the “employer share” of the Social Security tax that they would otherwise pay to the federal government with respect to their employees. For religious organization employers, this is usually limited to Social Security taxes on the wages of lay (non-clergy) employees. The 2020 taxes deferred must be paid in the following two years (12/31/2021 to pay at least 50% of what is due for 2020 and until 12/31/ 2022 to pay the remaining amount). Employers that receive a loan under PPP may not defer the deposit and payment of the employer’s share of Social Security tax due after the employer receives a decision from the lender that the PPP loan is forgiven under the CARES Act.

Employee Retention Credit for Employers Subject to Closure Due to COVID-19. Employers can receive a refundable credit against applicable employment taxes of up to $5,000 per employee in 2020. This credit applies to wages paid after March 12, 2020 and before January 1, 2021.

Pandemic Unemployment Assistance Program provides payment to those not traditionally eligible for unemployment benefits and who are unable to work as a direct result of COVID-19. It also provides enhanced benefits for all workers eligible for unemployment and intends to cover independent contractors. It extends coverage to workers who are self-employed, seeking part-time employment (if permitted under state law), do not have sufficient work history, or otherwise would not qualify for regular unemployment under state or federal law and become unemployed or cannot find work due to COVID-19.

Second, there are two individual tax provisions:

Charitable Contributions Incentives encourage individuals to contribute to religious, charitable, and educational organizations by creating a new “above the line” deduction. This deduction will permit them to deduct up to $300 of annual monetary contributions and is applicable for tax years beginning after 2019 and does not sunset after 2020 like the increased limits.

Recovery Rebates for Individuals. All US residents with adjusted gross income of up to certain limits are entitled to receive rebates under the CARES Act. An additional rebate per qualifying child under the age of 17 also will be provided.

#3: Retirement-related provisions

Retirement-related provisions include Coronavirus Related Distribution (CRD) and loan rule changes:

The CARES Act adds a new category of in-service distribution, known as Coronavirus Related Distribution (CRD), available to qualified individuals regardless of whether the distribution would otherwise be allowed. In-service distributions are distributions while the retirement plan participant is still employed. It also increases the loan limits for any loan made from a 401(a), 403(b) or governmental 457(b) plan to a qualified individual during the 180-day period beginning on March 27, 2020. Additionally, it increases the maximum loan amount to $100,000 and allows loans up to 100% of the present value of the retirement plan participant’s account. These two provisions are not mandatory; plan providers may offer at their discretion.

#4: Student loan provisions

Student loan provisions include expanding tax-free educational assistance to include student loan payments from employers. An employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment would exclude from the employee’s income. This applies to any student loan payments made by an employer to the employee or directly to the lender on behalf of an employee after March 27, 2020 and before January 1, 2021. The provision also includes temporary relief for student loan borrowers. Principal and interest payments are deferred without penalty on federal student loans through September 30, 2020.

To learn more about the CARES Act legislation, we urge you to visit https://home.treasury.gov/policy-issues/cares.

“The information contained herein is for informational purposes only and does not constitute any financial, investment, legal, or tax advice. While MMBB made every attempt to ensure that the information is accurate, MMBB is not responsible for any errors or omissions or the results obtained from the use of this information.”


Rev. Dr. Perry J. Hopper, MBA serves as the associate executive director and director of denominational relations of MMBB. He joined MMBB’s staff in 1987 and is responsible for coordinating special programs that support MMBB’s mission. Perry works in various capacities to best serve existing members, to reach prospective members, and to maintain solid relationships between MMBB and its affiliates.

His education includes a B.A. in political science (with a minor in business administration) from the University of Washington and an MBA from Penn State University. Perry also holds a Master of Divinity degree from the Harvard University Divinity School and a Doctor of Ministry degree as a Samuel DeWitt Proctor Fellow at the United Theological Seminary of Dayton, Ohio.

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