In my post “The Upside and Downside of Planning“, we talked about the need to have an Upside and a Downside Plan – in addition to your Annual Ministry Plan (budget).
As you’re reaching the end of your budgeting cycle, the Pastor and Finance Team need to come together to put
plans in place that provide what action steps the church will take in the event that giving comes in higher or lower than budget.
Let’s look at some possible steps below:
The UPSIDE Plan
Simply come up with a list of items along with associated dollar amounts and prioritize them. Some possibilities could be:
1. Since your volunteers are key to the mission and your vision, consider ways to appreciate them more.
2. Add back one or more items that were taken out of the original spending submissions
3. Add back one or more of the capital projects that were taken out of the original submissions
4. Accelerate something that was slated for next year in the vision/strategy
5. Increase reserves if needed
6. Pay down debt
7. Give away more to missions
8. Take advantage of a ministry opportunity that presented itself after the budget was completed
9. Issue small “spot” bonuses to reward jobs well done
The DOWNSIDE Plan
I like to group these into Impact Categories of Low, Medium and High. Low has little adverse impact to ministry initiatives/strategies whereas High has ADVERSE impacts on ministry and people.
Based upon the size of your budget, come up with giving % ranges for these Impact Categories. For example, maybe a 5% shortfall triggers the items in your Low Impact category, 10% triggers the Medium and 15% triggers the High.
LOW Impact
1. Red light low priority budget items
2. Red light new items that were added to the budget that can be delayed/done next year
3. Cost savings projects should always be on-going. As cost savings are realized, and to the extent they’re not in the budget, count these savings as they can reduce other adjustments needed.
MEDIUM Impact
1. Reduce percentages or temporarily suspend amounts going to reserves
2.Reduce amounts to outside entities. (Local, State missions). Increase to budget levels later
3. Take out or reduce budgeted raises, Christmas bonus, etc.
If giving is not recovering or is getting worse, (or you’re unable to spend less than what’s being given) it’s time to let the congregation know where the church stands and that the next step will be items in the HIGH Impact category. You’ll need to have a sense of when and how this would be done.
HIGH Impact
1. Start reducing/eliminating needed ministry items.
2. Assess effectiveness of ministries. Ones that you deem as ineffective you may want to eliminate altogether.
3. Reduce employee benefits like retirement match, increase health insurance deductibles and/or increase employee co-insurance %’s, increase premiums from employees
4. Salary cuts or layoffs.
Obviously, you can move things around between categories. Add to or take away from.
Pray during the Planning Stage. Pray before, during and after should you need to activate any of your Upside/Downside Plans.
I’ll leave you with another perspective on budgeting –
In your annual budget process:
a. Budget the same as your current year expected income or
b. Budget 10% less (or something less) than your expected current year income
You’re more likely to experience the UPSIDE more so than the DOWNSIDE if you don’t automatically budget increases over current year actual giving. Instead, operate within the smaller budget limits (than you would be otherwise) until giving is coming in greater than budget consistently.