Church donations are a stressful topic! If you don’t have enough donations, then church finances will be tight. How can you pay for a building, utilities, and other expenses without donations?
When you have donations, though, the stress level goes up. Suddenly, you’re accountable to an entire community of people. You’re responsible for reporting to the government, providing church donation receipts if you’re an official non-profit, and using the money wisely.
How are you supposed to do that? After all, those in charge of church finances usually aren’t accountants. Instead, they may be volunteers, deacons/elders, or even pastors themselves.
We’ve assembled a guide with 6 tips to help you manage church finances in the most accurate, ethical way.
1. Create a Budget
When you track church donations, it’s like tracking your own personal income. You need to know what’s going in and out, so you can make good decisions.
It’s hard when you’re working at a charitable organization. There’s always a good cause to send money to.
And then there are church expenses too. If you need a bigger building or want to invest in more technology to live stream services, can you actually afford to do it?
Start creating a budget by reviewing the last year’s worth of financial documents. This includes utility bills, rent payments, and any other expenses the church regularly incurs.
2. Start Tracking Donations
It’s hard to be in charge of other people’s money. Technically, once they give it to the church, it’s no longer their money.
But when people make church donations, they’re invested in where their money is going. And because of the nature of the church, people are invested in the ethical use of that money.
For instance, if people donated to help eradicate food deserts in inner cities, what if you used the money to pay the church light bill? People would likely be outraged.
You’ll want to carefully track church donations. It’s a great way to maintain transparency, build the confidence of your church, and make things easier for yourself at the end of the fiscal year.
3. Use Church Donation Tracking Software
In today’s digital age, keeping church donation receipts and tracking finances on a legal pad isn’t enough. It’s easier to keep up with digital software and is likely more secure.
It will also make your job easier come tax time. Good donation tracking software will be secure, IRS-compliant, and back itself up daily. It will also provide the support you need, so it isn’t challenging to learn new software.
With Icon Church Management, you’ll be able to do all that and more. With the ability to conduct mass communication, produce IRS-compliant donor letters, and so much more, your job of tracking church donations is easier than ever before.
4. Make A Savings Plan
Building a plan for a rainy day isn’t just good for your personal income. Churches go through difficult seasons, like people do. If giving drops because your congregation is collectively going through tough times, you still need to be able to keep the lights on.
Try to institute a plan to save at least 2% of church donations. These can be used for a rainy day, to support a family with an emergency need, or anything else.
Part of being a good steward of church finances is preparing wisely for the future. Explaining this to your congregation may even encourage them to contribute to the church savings account.
5. Implement Automated Giving
Church donations are an old tradition. In many places, passing the collection plate around is still an important part of the service.
In others, the collection plate has been replaced with a donation box that people can add to at will, without the public pressure of a plate passed around. Other congregations, though, have adapted to the digital age with success.
Here’s the thing: congregations are trying to attract more young people, at a time where they’re leaving the church faster than ever before. As the world changes and largely abandons cash, many won’t have any physical money to add to a collection box.
While many younger attendees would happily donate, you often can’t Venmo your church a donation like you would a friend. Offering donation options that actually work for younger attendees is an important update that many churches need to make.
For starters, you can add online donation options to your church’s website. This is a good start, but what about automated giving?
Many platforms, such as social justice causes or political ones, allow you to opt-in on certain automated giving tiers. Whether it’s five dollars a month or a hundred, this money is automatically withdrawn from a checking account.
This allows your church to budget with more certainty. If you know money is coming in through automated withdrawals, you can plan ahead a little better. It also helps people avoid the situation where they intended to give, but went on vacation or out of town and forgot to give through the church’s website.
6. Get An External Audit
The end of the fiscal year is busy for churches. They need to get receipts and donation letters from people who are trying to file their taxes. They also need to work out a budget for the upcoming year, calculate donations, plan savings, and so much more.
In the rush of all this, it’s a good idea to get an external audit. With the right church donation tracking software, this should be a breeze.
It’s a good idea to do this if you aren’t a born accountant. This way, you ensure that you aren’t missing anything, making critical mistakes, or should be doing anything different.
It’s also important to bolster a sense of transparency with your congregation. Many churchgoers have been burned, whether personally or emotionally, by unethical church leaders. From sex scandals to fund misappropriation, church leaders are supposed to be above reproach. With an external audit, you can achieve this.
Tracking Church Donations
When tracking church donations, making sure that you err on the side of accuracy and transparency is crucial. By instituting a plan and following it, you’ll be in the right place.
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