Monday, July 16, 2018

Large Church Compensation Trends


Dr. Warren Bird is one of the top researchers and experts in church compensation trends, especially in large churches. In his years of experience, Dr. Bird has found that churches of all sizes want comparisons to ensure that their compensation is on track. The 2018 Large Church Salary, Staffing, and Benefits Survey was created for that purpose. This objective comparability data can be used to enhance integrity and confidence in compensation planning. Here are three of the most common questions addressed by the survey:

How much of our budget should go toward staffing costs?
There is no “right amount.” However, the most recent survey shows that the norm is just below 50% of all church funds. For large and small churches alike, this ratio has largely remained consistent over the years.

What are some executive salary benchmarks?
These numbers are, of course, dependent on a variety of factors. On average, the report found that the second-in-command (Executive Pastor, etc…) is typically at 70% of what the top leader (Senior Pastor) makes, while the third person is typically at 59%.

To what degree should compensation information be made available?
Most churches do not disclose compensation details to the public. However, some churches may choose to inform their members upon request. Encouragingly, it was found to be broadly practiced that a designated team from the board with no conflict of interest establishes compensation.

Planning and evaluating fair compensation is an opportunity for the church to stand above reproach. For more on each of these questions and additional information from the survey, check out the free download here: http://leadnet.org/salary/

For tailored salary compensations: https://www.vanderbloemen.com/compensation

Listen in to our podcast conversation with Dr. Warren Bird:







Monday, July 9, 2018

5 Building Blocks of Church Financial Integrity


“Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house upon the rock. The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock.” (Matthew 7:24,25)

Today’s churches are living in an age of frequent if not constant challenges. For church leaders and administrators, it is not a matter of if the rain, floods, and winds are coming, but when. Now more than ever, it is essential that your church is built upon a foundation of strong financial integrity that will weather the storms.

Often church leaders have a desire to shore up their financial integrity, but they aren’t sure where to start. The good news is building your church’s financial integrity is not as complicated as you might think. Much like a strong and solid home is built brick-by-brick, there are basic building blocks that provide the foundation for your church to stand strong in the face of challenges.

In the ECFA eBook, 5 Building Blocks of Church Financial Integrity, we explore these five essentials: Committed Leadership, Sound Financial Management, Appropriate Transparency, Excellence in Compensation & Conflicts of Interest, and Trustworthy Stewardship, as well as the “glue” that holds it all together: Accountability.

Here are a few key takeaways from the eBook:
  1. Committed Leadership – The church’s governing body and staff must lead the way for financial integrity. A committed, independent church board selects good leaders, makes decisions in light of Scripture, and keeps the church accountable to its overall mission. (Key Scripture: 1 Tim 3:1)
  2. Sound Financial Management – Integrity requires administering church finance with diligence. Important issues to address include proper use of resources, financial oversight, and a thorough understanding of internal vs. external audits. (Key Scripture: 1 Cor 16:1-4)
  3. Appropriate Transparency – Regular financial reports create an atmosphere for greater generosity. Openness and transparency through public disclosure of financial statements and project reports promotes responsible Christian stewardship and enhances trust with givers and a watching world. (Key Scripture: Rom 15:25-26)
  4. Excellence in Compensation & Conflicts of Interest – Church leaders must avoid even the perception of improper personal benefit. Carefully designed and consistently executed policies for compensation setting and potential conflicts of interest can help ensure that the church is above reproach. (Key Scripture: 1 Tim 5:17-18)
  5. Trustworthy Stewardship – Givers expect churches to be faithful to their word in the process of raising and spending resources. By striving for truthfulness in communications, honoring giver expectations and intent, issuing appropriate gift acknowledgments, and acting in the best interest of givers, not fundraising consultants or staff, your church can demonstrate faithful administration of resources. (Key Scripture: 2 Cor 8:20-21)
Accountability is the Glue

Like a New Year’s Resolution to diet or exercise, the best intentions often fall by the wayside when there is no accountability. Maintaining financial integrity requires a certain support system to be successful in the long run. Churches can make themselves accountable to their members, congregants, and financial supporters through such avenues as independent board governance, internal controls, denominational oversight, and third-party certification by independent organizations such as ECFA.

There are currently more than 2,200 organizations across the United States that demonstrate their commitment to high standards of financial integrity through ECFA membership. Churches are the fastest growing segment of ECFA members, and ECFA-certified churches represent 18 different denominations and over 40 of the nation’s largest and most vibrant congregations.

To learn more about ECFA membership as well as other ways that ECFA can support you in your ministry, call 800-323-9473 or email michael@ecfa.org.


To listen to a recent ECFA podcast on this topic click here. To download the FREE eBook 5 Building Blocks of Church Financial Integrity click here



Monday, July 2, 2018

5 Tax Saving Tips for Pastors


Reimbursing ministry-related expenses can add up to huge savings for pastors. To best manage them, create an accountable expense reimbursement plan that outlines what is eligible for reimbursement, the substantiation required, and when the expense must be substantiated. Here are three tips for complying with a good accountable expense reimbursement plan:
  1. Only submit items that constitute a church business expense. Not everything qualifies as a business expense.
  2. Substantiate the expenses submitted to the church. The details are important. Go beyond providing a receipt. Remember the 5 W’s: why does the expense qualify, what expenses were incurred, when were the expenses incurred, where were the expenses incurred, and who was involved.
  3. Submit the expenses for reimbursement in a timely fashion. For the sake of clarity, make expense report thorough and timely.

Remember, reimbursements under an accountable plan always save pastors more money than Schedule A deductions. For more on how pastors can leverage the tax law to save money, tune in to the conversation here: https://ecfa.podbean.com/e/5-tax-saving-tips/


Monday, June 25, 2018

Budget Allocations - Part 2: Practical Steps


Churches readily understand the importance of preparing an annual budget and having it duly approved by the appropriate church committee, board, and/or the congregation—whichever is charged with financial accountability and oversight responsibility.

But here’s the catch: A budget is a largely useless document unless the monthly budget allocations are done well. Decisions of whether to make spending adjustments must be informed by sound allocations of revenue and expenses. Unfortunate decisions can be made based on poor allocations. What is the church financial team to do?

Take these simple steps:
  1. Take monthly budget allocations seriously. Don’t go through the arduous budget development process and destroy the usefulness of the budget by failing to do the further hard work of making sound revenue and expense allocations by month.
  2. Study prior year actual data by month. The starting point for current year budget allocations is the prior year actual data. Study it to determine the significant data that will change for the current year. For example, in the prior year, suppose a large expense for attorney fees occurred over a four-month period because of a lawsuit brought against the church. The matter is now closed and only a modest amount is in budget as a legal retainer—this amount might well be spread ratably over the current year.
  3. Reflect on changes in revenue or expenses patterns for the current year. Certain new or increased activity for the current year may modify the monthly revenue or allocation pattern for the current year. For example, a new program may be scheduled only to run for three months in the spring and three months in the fall, therefore the budget allocations by month must match the anticipated expense pattern.

Sound budget allocations will help your church make more informed decisions. Try it and see for yourself how useful a budget can be.

For more great tips on budgeting, check out the 10 Essentials of Church Budgeting eBook (free to ECFA certified churches). 



Don’t live with your bad budget allocations for the entire year! Read more in this article from ECFA President Dan Busby. (Published in The Church Network inSight Journal - Summer 2018.)

Monday, June 18, 2018

Budget Allocations - Part 1: Common Budgeting Mistakes


How do some churches short-change the budget allocation process?

Here are three possibilities:

  • A church takes the easy way out on budget allocations. The simplest and most inaccurate way to arrive at monthly budget numbers is to divide each budget line-item by 12 months. This may work for monthly rent payments and insurance premiums but for most line-items, it is not a valid approach. If January and February always have disproportionate heating bills plus a big annual insurance premium, then every single year you’ll start off quickly sinking behind budget, and then spending the next several months saying, “we are way behind.” Then if a truly “way behind the budget” situation occurs, your appeal may then find resistance or giver fatigue from people saying, “but we just went through that!”
  • A church allocates the line-items based solely on previous year data. This approach is better than dividing the line items by 12 months. However, it falls short of sound allocations because it fails to take into account changes in circumstances for the current year. There may be changes in one-time or cyclical program expenses, such as new or increases in line items that are effective only for part of the year. Suppose last year’s women’s retreat was in the spring and this year moves to the fall. If you don’t reallocate your budget, you might unwittingly spend any spring excess and get caught short in the fall.
  • Budget allocations do not match where expenses are charged. When the budget was adopted, there was an expectation that certain expenses would be charged to particular expense accounts. However, there is a significant mismatch on the charging of some large expenses. Therefore, some categories show major variances only because the budget dollars are on one line and the actual expenses are on another.

What can happen if your budget is not properly allocated?

Here are just two unfortunate decisions that could be made from the report based on poor allocations:

  • Programs are started and jettisoned based on poor information. A new ministry to millennials was started at the beginning of the new church year. Because the comparative data outlook is so gloomy, the church board decides to temporarily stop the new program until finances improve. By the time the accurate data is available, the church restarts the program, but considerable momentum is lost because of starting, stopping, and restarting the program.
  • Staff are hired or terminated based on poor allocations. Based on the inaccurate data at the six-month point, the church board reduces two full-time staff members to half-time and eliminates four part-time positions. A few months later, the church board realizes it took these extreme actions based on faulty information.

Don’t live with your bad budget allocations for the entire year! Read more in this article from ECFA President Dan Busby. (Published in The Church Network inSight Journal - Summer 2018.)



Monday, June 11, 2018

Church Reporting Refreshers


Proper church reporting really matters, and we’re here to help make sure your church does it right. This snapshot from the 3 Church Reporting Refreshers Podcast features some of the most common mistakes made by churches in respect to compensation paid to employees. Catch these at year end before the W-2’s are filed to avoid complicated filing territory later on.

Top 4 Common Compensation Reporting Mistakes

  • Failure to report taxable fringe benefits and social security reimbursements as taxable compensation on the form W-2. Retirement contributions, automobile allowances, and other fringe benefits must be properly reported as taxable compensation to avoid underreporting.
  • Reporting social security and Medicare wages and withholding in boxes 3, 4, 5, and 6 of the form W-2 for pastors. Pastors are always subject to SECA-type social security (never FICA) which is calculated on the Schedule SE. If you have social security data in these boxes on the W-2, the incorrect type of social security has been filed.
  • Failure to report non-cash compensation as taxable compensation on form W-2. This includes gift cards and other benefits given to a pastor. They are seen as taxable compensation in exchange for services rendered.
  • Including a designated housing allowance as taxable compensation in box 1 of Form W-2. The housing allowance is typically fully taxable for social security purposes, but tax-free for income tax purposes. 

Catch the full podcast for further discussion and companion resources to help you excel in church administration:





Monday, June 4, 2018

What's Happening With the Housing Allowance?


After a few quiet years, a new case is challenging the constitutionality of the minister’s housing exclusion. With recent legal challenges to the housing exclusion, many church leaders are asking: “What’s happening with the housing allowance?”

Under the current law, here are the three major housing exclusion traps to avoid:


  • Trap #1: Wrong workers claiming a housing exclusion.

Being a minister does not automatically entitle someone to this tax benefit. Generally, there are four factors that need to be considered: Does the individual perform sacerdotal functions such as marriages or funerals? Are they considered to be a religious leader by a church or association? Are they conducting religious worship? Are they carrying out management responsibilities in the control, conduct, and maintenance of the local church or an association of churches? For a qualified minister, these functions would be written as part of their official job description. There needs to be a legitimate reason for appointing a housing allowance besides providing a tax break. When in doubt about qualifications, bring in a professional who is experienced in ministerial taxes.

  • Trap #2: Wrong amounts excluded from tax.  

This happens when a pastor fails to exclude the correct housing exclusion limitations. Firstly, for church-provided housing, the lowest of either the actual housing expenses or the amount prospectively and officially designated needs to be applied. In the instance of minister-provided housing, the same two amounts must be considered, as well as the fair rental value of the furnished home plus utilities. The failure to apply these limitations could result in underreported income and underreported taxes due.

  • Trap #3: Wrong action by the employer related to the housing exclusion.


In order for a minister to receive a housing allowance, it must be properly designated from the minister’s salary by the church or other employer. The top two mistakes occur when no official action is taken by the employer at all, or the action is not done in a timely fashion. The allowance itself must be officially designated by the church in writing and approved by a governing body. It must also be made ahead of time by the employer. Any payments for housing made prior to a designation are fully taxable for income tax purposes. It is helpful to carefully word your housing allowance resolutions to remain in effect until a subsequent resolution is provided.

Tune in for more discussion of the developing story here:


Monday, May 28, 2018

Stories of Enhancing Trust - Ron Blue Institute


Starting a Stewardship Ministry

Our relationship with money has a significant impact on our relationship with God and others. However, at the mention of finances, our first instinct is to make a polite yet speedy departure. We can’t afford to let something that touches nearly every aspect of our lives to go unaddressed in church. Michael Blue, Executive Director and General Counsel of the Ron Blue Institute, joined us on an ECFA podcast with tips for forming a stewardship ministry in your church.
  1.  Start at the top. Whoever is in charge for setting the direction of the church needs to be on board. To flourish, the spirit of this ministry needs to filter down from the top leaders into every other ministry.

  2. Identify a stewardship leader and begin to build a team. These people will lead in ways that others can’t, so don’t be afraid to ask about spiritual and financial maturity. People can be trained in technical aspects, but more important is a heart for generosity.

  3. Celebrate simple acts of generosity. Whether in a staff meeting or in church, give people an opportunity to see what it looks like to live a life of stewardship. Stories and testimonies can provide vital encouragement.

  4. Have a church-wide event to kick it all off. Start a sermon series or a bible study. Look for further opportunities to integrate the ministry throughout the church.

  5. Measure success in ways that matter. The most obvious standard is, of course, giving. However, that is a dangerous metric. Measure your stewardship ministry’s success as you would any other discipleship ministry: by hearts aligned with God’s in finances, spiritual maturity, and growth- not dollars coming in the door.
We want the church to be seen as the center of financial wisdom. For that to happen, we need to be willing to talk about it, and be able to speak from a position of confidence. A healthy stewardship ministry will minister to people on all levels, from struggling to surplus. The goal is to impart a biblical understanding of stewardship and create lasting change within people’s hearts.




Monday, May 21, 2018

Social Media, the Church, and the Law

Social media has greatly impacted the way we interact with one another and gather information. An active and accurate social media account makes it easy for your church to be found online and engage in further outreach.

For all its benefits, social media also introduces challenges that churches should be prepared for. Privacy, copyright infringement, negative comments, and even criminal activity are all issues that may arise from social media use. Your church should be aware of these potential pitfalls and have a policy that clearly establishes guidelines for your church’s social media presence. Adopting a social media policy at your church will help guide your social media use from the very beginning.

Creating a Social Media Policy for your Church

  1. State the purpose of the church’s social media accounts. Directly indicate that they are for the furthering of the church’s message and online outreach.

  2. Establish goals for using social media. Whether you are looking to find volunteers or engage potential members, be sure that your social media activity is in line with the mission of your church.

  3. Create a system for maintaining and monitoring social media accounts. Put rules in place for what can be shared and by whom. Be aware of what is being posted.

  4. Determine the roles and responsibilities of social media administrators. Designate individuals to keep your accounts active, accurate, and up-to-date

  5. Establish who is authorized to speak on behalf of the church online. Keep personal accounts of church staff separate from the church accounts.


Watch the full Webinar-On-Demand on this topic for more social media tips for churches.





Wednesday, May 16, 2018

Happy Birthday, ChurchEXCEL!


ChurchEXCEL, ECFA's free resource community for churches is one-year-old this month! In honor of our first birthday, we are highlighting the Top Ten Most Popular FREE Resources. Have you seen them all?

  1. Financial Management Policies and Procedures Handbook - Easily customized for your church.

     
  2. 2018 Church & Nonprofit Tax & Financial Guides - Year-round reference guide for all your tax and reporting questions.

  3. Housing Exclusion eBook - Leverage this tax benefit.
  4. Governance Toolbox 3 - Conflicts of Interest - Engage at your next board meeting.
  5. Ministerial Expenses Webinar-on-Demand - Ministerial expenses can add up.
  6. Spanish eBooks - Same great titles, now available in Spanish (and Korean).
  7. ChurchPULSE eNewsletter - Top news items, blogs, and church resources.

  8. Large Church Trends Podcast - Insights from the recent survey.

  9. Cash Reserves eBook - How much is enough?

  10. The ChurchEXCEL app - All these great resources and more in the palm of your hand!



If you're already a part of the ChurchEXCEL community, we thank you! Be sure to visit ChurchEXCEL.org to access the above resources and to see what's new

If you're new to ChurchEXCEL, click here to sign up for free!

Here at ECFA, we are excited about all that ChurchEXCEL has become and want to make it even better. Your feedback is important to us! Share your ideas to be entered in a giveaway for a $250 Amazon gift card.

Take the survey here: https://www.surveymonkey.com/r/CE1Bday

We look forward to another year of serving church leaders. As always, we pray that this community is a blessing to you and your ministry. Happy Birthday, ChurchEXCEL!

Thursday, May 10, 2018

Leadership Network 2018 Survey of Large Church Salary, Staffing and Benefits


After 17 Years of Studying Large-Church Salaries ….

Across 17 years of studying large-church salaries, Leadership Network receives continual questions like these:

  • Are we paying our staff too much or too little? 
  • How do we determine compensation for a campus pastor or an executive pastor (or another large-church role)? 
  • What are the trends in salaries and benefits for large churches like ours?

Good news: You can get dependable, current data through the feedback Leadership Network gives
(FREE!) to everyone who participates in their 2018 Survey of Large Church Salary, Staffing, and Benefits. But you need to participate by May 30 (midnight Pacific time).

Click this link to complete the survey, or just to learn more, including the list of helpful incentives for participants.

If you want a free sample of Leadership Network’s report from last time, just to see how much you would learn by participating, go to leadnet.org/salary.



Monday, May 7, 2018

Minister’s Compensation: The Tough Questions Podcast


Minister’s compensation can be a challenging topic, but you are not alone. Here are a few tips from a recent ECFA podcast, Minister's Compensation: The Tough Questions. Keep these objectives in mind when it comes time to wrestle this part of your church’s budget:
  1.  Take the “Big Three” into account. Social security, expense reimbursements, and the housing allowance are the three significant factors at play in minister’s compensation. Each can be leveraged for significant tax benefits. 

  2. Consider compensation studies in determining fair compensation. Compensation studies can provide helpful insight. Use them as general information rather than as a benchmark. Take a hard look at the church’s goals as well as the needs of the minister and his or her family.

  3. Designate a “champion” to communicate the minister’s compensation needs. This person can have open dialogue with the minister about his or her financial needs and present them to the determining body for consideration.

For these and more practical steps, tune in to the full podcast here.

Find more resources on minister’s compensation: eBooks, tax guides, and more at ecfa.church.



Monday, April 30, 2018

Creating a Safe Culture - Making Sure #MeToo Doesn't Happen In Your Church


The recent rise of the #MeToo and #TimesUp movements reveal the epidemic of sexual harassment and assault in the workplace, and as further evidenced in the even more shocking #ChurchToo hashtag, churches are far from immune. A recent free ECFA webinar, co-sponsored by the Christian Legal Society, entitled “Creating a Safe Culture” addresses this sensitive yet crucial topic.

Hosted by ECFA Executive Vice President and Legal Counsel, John Van Drunen, and David Nammo, Executive Director and CEO of CLS, the webinar covers the basics of what every church should have by way of rules and administrative procedures to prevent harassment and assault against employees, volunteers, and participants, and to properly address situations that may arise.

John and David are joined by attorneys Sally Wagenmaker (Wagenmaker & Oberly, LLC) and Theresa Sidebotham (Telios Law PLLC). Here are a few highlights from the discussion…

On Why Creating a Safe Culture is Important:

“As Christians engaged in ministry, we must acknowledge our fallen condition, our sinful nature, our need for a Savior, and thankfully, the gift of Salvation through Jesus Christ. We have people working together and doing ministry together, and there are many opportunities for misconduct, misunderstandings, and serious problems. The Bible says we are to flee from such conduct. Sexual harassment is unacceptable, especially in any church or ministry, and accusations of harassment are devastating, even if they are wholly unfounded.” – David Nammo

 “When you have a culture of accessibility, people feel like they can raise their concerns and not have things pile up – instead of the ‘me too’ and ‘me too’ which is the last thing you want to have happen…Like so many ministry matters, this really boils down to stewardship. How do we care for each other? And particularly recognizing that people are God’s most precious resource, we’re here on earth to serve Him, with each other, co-laboring for Christ.” – Sally Wagenmaker

On Anti-Harassment Policies

“[With a good anti-harassment policy] people can expect that the problem will be investigated with confidentiality, with no retaliation or backlash, and some remedial measures to fix the problem. The whole policy should reflect the culture of accessibility.” – Sally Wagenmaker

“Not only is it a great idea to have a policy for practical reasons, but it carries enormous legal implications and benefits for the employer.” – Sally Wagenmaker

**A sample anti-harassment policy is available in the handout materials provided when you view the free webinar-on-demand**

On Church and Ministry Standards

“For [church] employees, you can have Christian standards as a bona fide occupational qualification [BFOQ], not just what they believe, but how they act according to Christian standards.” – Theresa Sidebotham

“We want to be above reproach. Think about what your spiritual standards are – they are not going to be the same for every [organization]…but in this age of ‘#MeToo’, increased religious liberty challenges, and plain old risk-management, this is a great time for you to think through your biblical standards of sexuality and other forms of conduct.” – Theresa Sidebotham

On Avoiding Mistakes and Taking Next Steps

“It’s important to be very thorough and methodical in addressing each component of an allegation to review what has actually happened.” – John Van Drunen

“Pray for wisdom and discernment. Pray that God’s protection will be on those within your organization, but then be thinking through, ‘what can we do to create a safer culture within our church? Do we need to undertake training or clarify policies? Are things we could be doing better to create tone at the top, so that it is well-known within our organization how we handle these matters? Are staff aware of how leadership wants decisions to be made if a potential question comes up?’” – John Van Drunen

Churches must not only be vigilant and responsive to minimize legal liability, but also to prevent a culture which opens the organization or its leaders up to the accusation that inappropriate actions were allowed or even encouraged. We invite you to view the full free webinar-on-demand to dive in to more details on legal protections, reporting requirements, and investigation procedures as well as links to policy resources and sample employee handbook excerpts.



Monday, April 23, 2018

Preparing Your Processes for Growth! Interview with Amy Nikkel of Life.Church



“I am passionate about doing more than less, but I believe God wants more for each of us, and so it is reasonable to expect that he wants more from each of us.” - Amy Nikkel, Life.Church

In this podcast, Amy Nikkel offers practical tips for church growth, a thing she knows a thing or two (or four) about. She has been with Life.Church for the last eleven years and now serves as their CFO.

4 Practical Tips to Help Churches Prepare for Growth

  1. Create a simplified chart of accounts. Strive for a simple, yet intuitive structure that provides clarity to non-financial users. This will result in better reporting and more informed decisions.

  2. Focus on internal control rather than direct control.  Shape processes so that the finance team can steward resources and maintain compliance without the leadership touching every transaction. This kind of space allows for scalability.

  3. Measure data regularly. Tracking and considering data allows an accurate view of where you are and what success looks like. Be sensitive to where God is calling you but allow data to have a seat at the table as you are making decisions.

  4. Include, equip, and empower your ministry leaders to project for and manage budgets. The responsibility for financial management is imperative, but it cannot solely lie with the finance team. Organizational leaders must be included, so they must be educated to lead with vision. This will set your ministry up for success form the top down. 






Monday, April 16, 2018

10 Essentials of Church Accounting and Financial Reporting


“Now concerning the collection for the saints: as I directed the churches of Galatia, so you also are to do. On the first day of every week, each of you is to put something aside and store it up, as he may prosper, so that there will be no collecting when I come. And when I arrive, I will send those whom you accredit by letter to carry your gift to Jerusalem. If it seems advisable that I should go also, they will accompany me.” 1 Corinthians 16:1–4

Finances are essential to any organization’s ability to operate. Even the early Church understood this, as evidenced by the Apostle Paul, who stated both clear teaching on giving and explicit instructions regarding the administration of finances.

Nearly 2,000 years later, money is still a tool that allows us to carry out the ministries and programs God has called our church to do. To use that tool in a way that displays excellence and transparency requires skilled people, intentional processes, and appropriate church administration coupled with the oversight of the board. A key ingredient in the appropriate handling of finances is proper accounting and reporting.

This goal calls for engagement by everyone from capable staff to attentive pastors. The call for “approved” people handling money implies a credential that points to proven ability and trustworthiness. The fact that the Apostle Paul himself was willing to assist with the administration should inspire every pastor to get involved as advised. These 10 Essentials of Church Accounting and Financial Reporting, with some key insights from the recent webinar on this topic, point the way:

  1. Understand the Impact of the Numbers

    “It’s important to embrace a culture at the church that values the importance of proper accounting and reporting. Like any building that is set on a good structure, accounting and reporting lay the foundation for long-term ministry success.” (Michael Martin, ECFA Vice President)
    Though it can be tedious at times to require careful accounting and reporting from your staff, good planning now assures smooth sailing later.


  2. Basis of Accounting

    “The basis or system of accounting ultimately translates into the language in which numbers will be communicated to decision-makers, stakeholders, or other interested parties.” 
    (Michael) Churches may choose a cash, accrual, or modified cash system of accounting depending on their needs, the parties they are communicating with, audit requirements, and the size and complexity of the church’s ministry.


  3. Software

    “Assess what the most important features of any software are for your organization and then compare those if you are considering any change.” 
    (Vonna Laue, ECFA Executive Vice President) When evaluating your software needs, it’s important to understand the limitations of the programs available, consider using different software for different purposes, obtain adequate training for those using the systems, and keep the software updated as much as possible.


  4. Staffing

    “It’s not helpful to place someone in a position that they’re just not skilled for. It can be detrimental to the accounting and the financial reporting, and ultimately poor decision-making can result.” 
    For staff members and volunteers who have responsibilities in the areas of accounting and reporting, it is essential to consider each individual’s God-given talents and abilities, as well as providing appropriate compensation for staff and adequate training for all.


  5. Chart of Accounts

    “We need to understand what financial information we want to communicate, and that needs to be the basis for our chart of accounts.” 
    (Vonna) Start simple, and then review periodically and add complexity as needed. As new departments are created, or other changes to the ministry occur over time, the chart of accounts may need to be adjusted.


  6. Reconciliations

    “The point of reconciliations is to help us make sure that the information we have in the accounting system would agree with anything outside that system. The timeliness of this is critical.” 
    (Vonna) Items such as bank statements, broker statements, petty cash, and donor systems should be reconciled monthly, while other items such as payroll and fixed assets may be reconciled on a quarterly or annual basis.


  7. Records Retention

    “Keeping good records is important, not just from the perspective of making sure that leaders have the data they need to make decisions, but also from a legal perspective.” 
    (Michael) We recommend that churches have a records retention policy (a sample can be found here), which details what types of records should be retained, and for what length of time, depending on your church’s needs and local/state regulations.


  8. Internal Controls

    “Get the leaders together in your church and consider: What are the facility, legal, human resources, and accounting risks facing our organization? Prioritize those and then mitigate the most important ones.” 
    (Vonna) Within the area of accounting risks, aim for a segregation of duties in regard to custody, recordkeeping, and authorization, with at least two people involved between the three responsibilities.


  9. Financial Reporting

    “Financial reporting must be tailored for each audience.” 
    (Vonna) The ministry leaders, leadership team, finance committee, governing board, and the congregation each have different interests and different levels of involvement in the church’s finances, and the reports should be tailored accordingly.


  10. Involve a Third Party

    “We can be so focused on the details of what we are doing; it’s great to have someone from the outside take an objective look at things.”
     (Vonna) Assure that your church’s accounting and reporting are above reproach by involving third parties by way of an internal or independent audit, financial review, compilation, consulting, and/or an accrediting organization like ECFA.

To explore these 10 Essentials in greater detail, check out the 10 Essentials of Church Accounting and Financial Reporting Webinar-On-Demand and eBook. (FREE for ECFA certified members)
Have questions about how ECFA can serve your church? Give us a call at 1-800-323-9473 or email Michael@ecfa.org.



Tuesday, April 10, 2018

Church Plants Gone Right! Interview with Matt Martin of NorthRock Church


From church plant to church planter, Matt Martin shares his story of operating with integrity as Executive Pastor at Northrock Church. For new and growing churches, he offers advice to challenge church leaders and congregants alike:

  1. Enjoy the journey. Note: this is difficult on days that seem like less than a victory. Make an intentional effort to avoid looking so far ahead that you miss what God is doing right in front of you. Not everything is a part of the highlight reel, but it is all a part of your story. 

  2. Celebrate milestones. Make time to celebrate milestones of all size and circumstance, thanking God for the opportunity to change lives. Your ministry is uniquely positioned to share the Gospel and make an eternal difference.

  3. Build up people, build up teams. In providing for those seeking a place of community and growth, continue to build up those that make up the ministry. When we focus on building the right people, the right things follow.

  4. Don’t quit. God is faithful. When we are intentional about sharing and staying true to the Gospel, He has a way of supplying everything we need to do so with excellence.  

Listen to the full conversation here.