Even though there are more churches than ever before in the history of America facing financial problems, there is no simple, quick-fix formula that has proved always to work to reverse financial difficulties. The most obvious thing that pastors, staff, leaders, and congregations should do first is to pray for God’s wisdom and direction. Along with prayer, there are a few principles that, when followed resolutely, have proved to be effective in turning around financially troubled churches and ministries. Some of these principles may seem drastic in today’s credit society, but if they are followed without compromise, financial turn-around has proved to be the ultimate result.
Integrity is key to maintaining credibility—with donors, suppliers, the community, and with employees and staff. If the church makes promises, it must deliver on the promises. Otherwise, credibility will very rapidly decline, and it will take years of faithfulness and financial discipline to reestablish the credibility that was lost.
Control Cash Flow
For churches and/or ministries to survive, they must have positive cash flow! In order to do this, the financial resources that are readily available should be distributed to those whom the church owes.
The first priority should be payroll, followed by utilities, and rent or mortgage. After these obligations have been satisfied, partial payments can be made to vendors that fit into the following categories:
-Vendors who provide vital goods and services
-Vendors who are aggressively threatening to pursue collection procedures
-Vendors whose survival is being threatened because of payments owed them by the church
A difficult but sometimes necessary decision that must be made if cash flow continues to be lacking is to eliminate or restrict money from being allocated to church ministries or departments that consume a lot of cash but produce very little.
Another necessary step is to add no new staff and not to replace those who leave. That could mean that some employees might end up with dual positions and multiple responsibilities.
Evaluate each department and ministry. Determine whether the ministry or department is an integral part needed to fulfill the ministry goals of the church or a marginal necessity. Look at the spending practices of the ministry or department. Does it have the overall good of the church as a primary concern, or is it self-consumed? Are the ministry or department directors and leaders praying about the financial turn-around of the church? Evaluate each aspect of the ministry or department, which includes the attitude and dedication of the leadership.
Whenever the church or ministry is facing a financial crisis, the leaders, staff, and department heads need to be informed of the situation and should be updated regularly. Tell them the state of the finances first. Then suggest ways in which the situation can be improved and the positive consequences if the situation does improve. Finally, allow them to voice their opinions and give suggestions on how to better the situation.
Develop a Plan
After all suggestions have been received, evaluated, prayed about, and discussed, a plan of action should be developed, implemented, rigidly followed, and strictly monitored.
Generate New Cash
This may be the most difficult thing to do. Generating new cash may include selling assets such as vehicles, equipment, computers, buildings, and so on. It also could include reducing inventories like paper goods, supplies, and children’s church materials. Eliminate all trips, retreats, outings, cookouts, or any other activity in which the church has or would have a financial obligation.
The senior pastor of a church that is having financial difficulties must regularly keep the financial situation before the congregational body. This allows them to know if there has been any progress in correcting the problem and gives them a tangible need about which they can earnestly pray.
In addition to the suggested principles above, churches or ministries suffering from financial difficulties also need to seek outside help. There are numerous Christian organizations and individuals throughout America that might be willing to help churches and ministries pull out of a financial pit. Contact them, explain the financial situation to them, and ask if they can be helpful. Be sure to ask their price before committing to their service.
Originally Posted December 6, 2011