Today, I’m continuing to expand upon my post on the Transparency Principle. [Read that post here]. The focus of today’s post is Reporting.
Obviously, a big part of Transparency is communicating financial results and condition to the church.
The frequency of reporting and the type of reports can be varied.
1.Weekly:
Most churches report some form of weekly offerings. You can let weekly offerings stand alone or compare to budget. There are different points of view on whether or not to include budget. (Preference, Culture, Don’t want Variance from Budget to affect giving, etc.)
2.Monthly:
Alternatively, since offerings can vary greatly week to week, you could report offerings once a month (with or without budget), or just report a weekly average for the month.
Monthly is also a great time to include non-financial info as well, such as Attendance and Baptisms and other key metrics your leadership wants the church to know. You should always try to link Financial and Non-Finance Metrics together to communicate they’re both equally important and you’re not all about money. Don’t be afraid to highlight these results from the pulpit (or lack there-of). – It’s always good to say thank you from the pulpit. Tell them what’s being accomplished with their dollars. Don’t be afraid to encourage those who haven’t yet given to start and why it’s important.
3.Quarterly:
Deliver a Financial Statement to your church. I really think in most cases quarterly is best, unless you are having severe financial issues. (If you are, remember to keep your eye on Christ, not your Income Statement). Post these to your website (they can be public or private) and have printed copies at your information desk as well.
A Quandary of Sorts:
The challenge here is to strike a balance between over-sharing and under-sharing in your reporting because most people will not understand complicated/detailed reports and/or take the time to review multiple/detailed reports. On the other hand, report too little and/or not frequently enough, that could make people wonder why.
A single summarized report that combines Income Statement information with a few Balance Sheet items usually will suffice. Again, include non-financial metrics as well. Show multiple quarters or prior year so there’s a frame of reference.
In the quarterly updates, strive to answer the big picture questions of:
How much money do we have?
How much debt are we in?
What were our income and expenses – are we spending less than we receive, are they in line with budget?
Are we saving for a rainy day?
For those who want more:
95% or more of your church will be perfectly happy with the above. However, some will desire more. I’d suggest providing more detailed statements for those who ask.
I’ll provide a couple of templates to address these two formats in a future post.
4.Annually:
I’d highly recommend doing an Annual Report. Yes, they take lot of time but are well worth it. Take the time to brag on what God has done in your church.
Talk about Changed Lives, Growth, Ministry Accomplishments, include Member Testimonies…the possibilities are just about endless. This also gives another opportunity for Pastor to communicate in written form to the church about the past year, as well as where the church is headed in the coming months. Devote the BULK of this report to that kind of stuff.
At the end of the Annual Report, include an Audited or Reviewed Annual Financial Statement with Footnote Disclosures. (The footnotes afford another chance to be transparent by reiterating some of the items in your Master Finance Document). Again, show the prior year to provide a frame of reference.
If you’re adhering to GAAP, this would be the time to issue GAAP-based Statements. Doing so shows the church the effort was made to comply with a respected External Financial Accounting Oversight Board and thus gives them some added assurance. This is just another component of doing what’s right before men.
The point is, share financial info with your church weekly, monthly, quarterly and annually. Make it available on the website and in printed form. Make sure people know it’s available and highlight from the pulpit as appropriate.
In my next post in this series, we’ll talk about how you can answer people’s questions.