20130803-152355.jpg

The Shocking Truth of Church Budgets

The auctioneer tried everything he could to increase the bid. But in the end, the pews sold for $25 apiece.

We watched as the contents of this Missouri church emptied out during the auction. The church itself closed a few weeks ago, a victim of declining attendance and daunting fixed costs. Our cameras (for a documentary on the state of the church) caught this church’s last gasps.

This sad scene is becoming increasingly common across the country, as the old financial models no longer work for many churches. The shrinking tithes and offerings can’t cover the two major expenses–personnel and buildings.

THE SUSPICIOUS PUBLIC

I’ve lost count of the number of times that people have told us, “Churches just want your money.” They’ve picked up on the financial pressures facing most churches today. They do understand that ministry requires funding. But they intuitively smell something foul about how many churches’ offerings are being used.

They are accustomed to evaluating the effectiveness of non-profit organizations. They are aware that charities that do the most with donors’ dollars keep their administrative costs relatively low. For example, the American Red Cross spends 8 percent of its revenues on administrative and fundraising expenses. World Vision spends 14 percent. Compassion International spends 16 percent.

Comparatively, what do churches spend on personnel, buildings and administration expenses? Those items consume 82 percent of the average church’s budget, according a study from the Evangelical Christian Credit Union.

You could argue about comparing a church’s expenses to a public charity’s expenses. But the enormous disparity is striking, especially to the public. It’s made worse by looking at how churches allocate funds to direct ministries. According to the ECCU study, churches use 3 percent of their budget for children’s and youth programs, and 2 percent for adult programs. Local and national benevolence receives 1 percent of the typical church budget.

When you look at it this way, is it any wonder the public questions the church’s return on investment?

IMPLICATIONS FOR THE FUTURE

What does this financial squeeze mean for the future of the church? To right-size personnel costs, churches are increasingly looking to volunteers to carry ministry roles once held by professionals. And the idea of bi-vocational ministers is making a return to the American landscape.

With buildings, churches will be forced to consider becoming better stewards of brick and mortar. More congregations will need to combine under one roof. The Mormons, by the way, figured this out long ago, housing multiple congregations in one building. They simply coordinate their worship and program schedules.

Also, some churches are already succeeding at dispersing their people into small congregations that meet weekly in homes, restaurants, and other free locations. Then all the small congregations meet once a month for a larger worship time–in an economical rented public space.

And, in order for the church to be the church in a more meaningful way, congregations will need to re-prioritize their budgets to emphasize direct forms of ministry that givers will agree directly respond to Jesus’ two Great Commandments.

In the end, all of this financial pressure may just lead to a healthier, true-to-mission church.

72 Responses to “The Shocking Truth of Church Budgets”

  1. While I agree that congregations need tio better spend their money, your comparisons are way off. How can you compare charities that have millions in donations with a congregation that takes in only 40, 000 to 60, 000 in donations. Of courses their percentages are lower.

    • Dave, the smaller churches you mention are closing because their admin costs are killing them. Our documentary crew watched small churches fail that were spending over half their income on the building. It’s simply an unworkable and irresponsible use of the Lord’s resources.

  2. Churches have fallen into bad habits about how they spend their money. It’s born from by practices where staff are central to everything that happens and all church initiatives.

    However, the idea that the Red Cross or any other charitable organization should keeps it’s overhead costs down is actually equally destructive. The video below changed my thinking on this and might help expand these thoughts. If we demanded that charitable organizations spend more money on advertizing they’d make more money to help people. By juxtaposing overhead as “against actual help” it handicaps earning potential for the Red Crosses of the world who could make more money for others.

    As for the church, I’m pretty certain ROI for a the Red Cross or Group Publishing or the Riddle Group is a very different thing when seen through lens of the kingdom. God’s math is always counter-intuitive.

    http://www.ted.com/talk/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html

    • “God’s math”? Really? God uses a different mathematical system now? If this is what church leaders are thinking, then church budgets really are in trouble.

      Plus, how do you know “God’s math is always counter-intuitive”? You just made that up, friend.

      • Jeremy – I’m not smart enough to make it up. It’s borrowed from Phillip Yancy. Grace doesn’t add up, leave the 99 and follow the 1. that sort of thing… but things for taking me literally :)

      • Jeremy – any other thoughts aside from taking one point completely out of context?

      • Hey Mark, I agree with most of what you’re saying. Spot on, actually. (I’ve seen that Ted talk and I think it’s great.) However, I tend to disagree when folks make statements that presume they know what God is thinking. It sounds dogmatic to say God’s math is ALWAYS counter-intuitive. I’ve heard a lot of Christians make inferences they claim are incontrovertible, but are really just their opinions. So I usually dismiss those arguments because they can’t be substantiated. I don’t like that one statement of yours, but I’m willing to bet you and I agree more than we don’t.

        I interpreted what Thom is saying as an argument that churches are spending too much money on buildings and staff, instead of focusing on what really matters (loving God by loving people). Regardless of how that compares/contrasts with charity budgets, it’s definitely a subject worth talking a lot more about.

        Best to you, bro.

  3. And those of us who are church staff on salary, Red Cross which I volunteer for only has a few paid employees very true, in scale we only have 2 FT and 2PT staff, I work over 40 and more like 60 hours for these children to help them know God. If my salary was cut, i wouldn’t make mortgage on my house and bi-vocational ministry would bring a severe lack to my ministry. If i had to focus on having another job then that takes away from the focus on the ministry, we would have to cut half our programs for teens and kids thereby possibly denying them the word of Christ. Our church has a strict policy of charging little to nothing for people to attend studies, camps, or other programs so that money does not hinder their relationship with God. So we do take a lot in donations and we use every penny to make sure no one is denied the word of God because they didn’t have the money. Those admin expenses go towards discretionary funds which help us pay for those who can’t afford our low cost programs and go towards funding the free VBS we hold, and the books for our studies so that there’s no reason a person cant’ come.

    I also question the study as a medium to large church, how the programming budget on a med church is 20% but on a large church it’s 4%. That makes no sense. After looking at the report and then our own church budget I can say we spend at least 2/3 of our given money on ministry and programming needs. Also after interning at a small church which meets elsewhere it is so hard to find places to have things like programming in free spaces that meets the needs of those who are both attending and facilitating. Also many free spaces are not safe enough for children with disabilities or not accommodating enough so we have to turn them away.

    It breaks my heart to see people assume we misuse that which is given as Tom said “In the end, all of this financial pressure may just lead to a healthier, true-to-mission church.” To think one of our own, the founder of Group who we rely on for so many resources that we have to use administrative money to purchase his materials, thereby fund his company, so we can in turn take it to the people and offer the same materials we had to buy from TOM to the people for free, while he encourages people through his blog to stop spending and to cut these things. so we can be a “real” church.

    It really puts a perspective on my week as we enter day 2 of Kingdom Rock VBS which we offer to the community for free by paying for it in our budget costs, that we aren’t being a church “true” to Christs mission on earth according to the man we had to buy the materials from.

    • Lisa, thank you so much for your thoughts. My point is not to advocate trimming your paycheck or your direct ministry. If your church is allocating 2/3 of its income to direct ministry, that’s tremendous! Please understand that admin costs do not include program costs, including curriculum. Since the study shows that the average church spends just 3 percent of its budget on children’s and youth programs, don’t reduce your VBS budget! Keep on faithfully serving the children and families in your community!

    • In the LDS church even the pastors are volunteers – our neighbor is a Dentist and a Bishop (like a pastor) in his ward (about 250 families) and there aren’t any paid staff except for a janitor part time in their building (which houses 3 wards. The level above his is a group of 12 wards and their administration is all volunteer as well.

      He told us that he was called to serve and it is for from 2 to 5 years typically and the last Bishop was an executive at HP so clearly it can be done. His kids seem to miss him though as he works many evenings counseling people or in meetings.

    • I’m sure that the captain of the titanic was probably a nice guy but I dont want to get on board. My point is just because you can show your working hard doesn’t mean that it’s the best use of resources. I think if Christ was to return today the money changers are the pastors and most dont even have a clue. I’m not saying they are bad people but Christs mission wasnt to give them jobs its to feed the poor and love them. In our church we happen to have 2 retired pastor’s 1 has been on 3 cruises and a Hawaiian vacation in the last year. I dont begrudge him but I’m a christian no wonder non christians think we’re phoneys. I’m sick of christians and there saying one thing and doing another. I spoke to a member who was speaking of how tough the economy was on him and he was broke. The next week he wasnt at church I mentioned we missed him he said they had gone to there condo for the week. Thats the kind of nonsense that makes us liars we talk about helping people but we take in 500 thousand and spend almost 400 thousand on staff. Christians need to wake up there are much better ways to support what we have been called to by our savior. This is not to say all pastors are bad or even the ones that maybe unaware of what I would call poor Stewart’s. The point is our Lord called us to be light to the world read Matthew 25: 31_46 the sheep and the goats (when did we see you hungry) its time for a rival and its not what most church staff think.

  4. True but using large corporations has examples and only showing part of the story is just wrong. These churches are the heart of many of these communities that are also dying. While I agree that these congregations need to re-focus on mission , it is also true that they have been left to die but more affluent suburban and emergent churches that, while looking good doing “mission-like things”, are spending their funds doing things that upper middle class people like to do but really do nothing to help those really in need or do ministry with people.
    This small churches are doing real ministry, helping through changing times, changing communities and changing perspectives. Sorry, but give us one percent of the money spend of all of these seminars and conferences on doing “new” ministry and those of us doing ministry here in the Rural US and I know we can keep these mission places open.

    • I have been involved for many years with producing our church budget on an annual basis….and this exact issue always rears its ugly head by a few who just see the trees without seeing the forest….(I know this because thats the way I used to see it)
      Many churches are closing because they are simply- spiritually dead….yes some have closed because of misused finances, but the real epidemic and cause is… spiritually dead= no people/no finances.
      Which is a whole other article to write about.

      We always have a few who say every year “We need to spend more on missions and ministry”…and I have to say to them “Thats a great idea, Now are you willing to do the volunteering and work to get this new funded idea off the ground?” and the answer is always the same…(no).
      You see, just because you draw an imaginary line between “Payroll….Operating expense… and ministry/missions, doesn’t mean they never intersect one another.
      Example- Mr. and Mrs Jones are having very personal martial issues or someone is having children issues, or loss issues (really any issue would do)… Who are they going to reach out to or call at the church?, more than likely one of the pastors….so now that “salary” is a “ministry”…and this scenario is so broad- very broad through out the entire church….even your sermon you listen to on Sunday morning by a salaried position, is now a personal ministry.
      In other words, just throwing money at something does not make it a better, more improved, or a beneficial ministry or mission…It takes PEOPLE and unfortunately those who want to sit back and just direct the money from budgets to particular areas only to complain about “percentages” ….Are the least amount of help for volunteering to make ministries or missions viable.
      For the record, I am not a church paid employee…I am a volunteer who happens to own my own business, and I happen to be good with finances.
      Our church has been very blessed with being completely solvent while many churches around us have closed. We have expanded over some tough years and currently have no debt with a surplus of funds.

      Comparing the percentages to organizations like Red Cross is like comparing apples and oranges…Churches are not just bank accounts with a few paid employees ready to write a check for supplies when needed…Churches are real, working, breathing, living people willing to not just dispense money, but to talk to, visit your house, support you at a time of loss or death, pray with you, pray for you, its endless what a church can do…while Red Cross is good…I don’t think you will see them supporting you during a personal death in your family.
      Churches (people) are not perfect by any means…and yes some have done things to discredit their reasons for existence….But I would hate to imagine this world without them.

      • Perhaps they are closing not because they are spiritually dead, but because they are intellectually dead. Christianity doesn’t have the captive audience it once had, and nones are the largest growing segment of the population. It’s simply going to get harder and harder to get people to buy utter nonsense as fact.

  5. Thom, being bold is often the lifeblood of a blogger…you’re good at it. We readers often miss your golden nugget due to our defensiveness. Sometimes your bold comparisons and thus your analysis misses the mark. However, be bolder and continue your relentless pursuit to prophetically challenge us as leaders. A nail must be engaged with a hammer…hit us well!

  6. Most successful churches are doing at least 20% to missions(excluding outreach/evangelism events). Church isn’t the same as Red Cross or World Vision. Little bit of apple/oranges. Yes they’re not-for profit but churches have more responsibilities than WV or RC (not ripping those organizations) Most churches need some sort of building, need at least some staffing and to pay those people. If churches have buildings that serve the community via food, or programs like Upward there’s really no monetary value on that, but you can’t say its that bad. So buildings aren’t all bad but obviously they shouldn’t be everything. I think the Mega-church era has faded and will be rare and we will see more church plants and house churching movements but still with some sort of “home base” type of church setting because people don’t want to deal with their own teens/children

    • They didn’t need buildings and staff in the New Testament Church, so why do we? Could it be we are building OUR church not HIS church?

      it seems today we are not a church unless we have a building and a paid professional who does all the important ministry and runs the show.

      We have convinced ourselves without these, God cannot save the world.

  7. You are comparing apples and oranges. Red Cross spends 8% on overhead. Many churches if only counting admin costs probably don’t spend much more. You are counting building and staff as overhead for church, but not for non-profits. Unless a pastor only spends their time doing administrative work, then they should be counted as programming, not admin. Same with building. A church building that has a 400 sq foot office but 10,000 sq foot building should be considered 4% of building costs as admin. And even those are partially going toward programming not all admin.

    I am all for making church budgets missional documents and showing people why they spend what they do. But suggesting that most churches are 82% admin is misguided at best.

    • Adam, I agree public charities and churches are indeed different. But admin costs for charities are indeed inclusive of staff and buildings. Here’s a definition from Charity Navigator, the watchdog agency that provided the figures I included in my post:

      “Administrative Expenses: This measure reflects what percent of its total budget a charity spends on overhead, administrative staff and associated costs, and organizational meetings.”

      • I clicked through and read the article which actually suggests that churches have lower than average administrative costs when compared to non-profits. Non-profits on the whole are encouraged to keep below 15%. But churches averaged 6%. So they are being very efficient and should be commended for that, not told they are spending too much.

        But I think the problem with your analysis is that churches are no longer the central place for missions (local and international). I know my church encourages people to give directly to missions agencies and does not run any local benevolence ministries. That is because they believe that local non-profits that are cross denominational and focused are better at doing that than they are. Same with international aid. So our church intentionally does not have a large missions budget because we want people to have direct contact with those groups and does not want to simply be pass through (or inefficiently run missions or outreach)

        As I talk with others, that is more of what most churches that I know do. The size of the church matters and the denominational affiliation matters. But churches are getting out of the types of work that non-profit ministries do.

    • It is not misguided Adam. I have seen more than one survey that showed most churches spent more than 80% of their income on themselves.

  8. There is definitely truth here. Churches need to constantly evaluate how they allocate their resources. Facility and personnel costs are definitely the big ones. But churches that are dying because of these costs seem to also just generally be dying period. I have seen a church struggling that sold their property and parsonage in favor of a smaller facility and no parsonage. It kept them alive, saved them money, but they are still struggling and not growing.

    I would also add that comparing churches to public charities is faulty. The church isn’t a charity. it’s the church. it has a different purpose and mission. i understand why the comparison is drawn, but it’s not comparing 2 of the same things.

  9. I brought up public charities in this discussion because the public is accustomed to evaluating the admin costs of charities. And the public tends to question similar expenses in church spending, whether it’s an apples to apples comparison or not.

  10. Having grown up in the church (literally, as a PK in the parsonage next door), I remember seeing my dad try and manage the church budget when he had trouble with a checkbook. Nothing against the ministry, but I do know first hand (now that I am on the other side of the pulpit) that many ministers go into the ministry with very little idea what a budget consist of and how to allocate the monies collected. Because of this, there tend to be many inefficencies. This is where mega-churches have an advantage-they can usually either hire or have, as a member, someone with a strong financial background. On the flip side, I feel, due to the downturn in giving, many churches are forcing themselves to learn the hard way. I have seen a recent trend in my city of smaller churches merging or smaller churches sharing a building with another church. I feel there is hope for the smaller church, it just may take some longer than others

  11. Thankyou Thom! Our church just sent out questionnaire on some of these
    Issues. I like your ideas!
    Sharing the building is a good one!

  12. It’s scary being an hourly employee at a church and seeing the budget. We we feed the community and support local and international missions. We also give scholarships to youth camps and just had a week of VBS that was free of charge to the kids. The oven we use to cook food to feed the community just needed a part that cost several hundred dollars. I order cleaning and restroom supplies and cringe with guilt when I do. Because when I look at the budget I see the church savings dwindling.
    Thanks for the article.

  13. Rev. Ruth M. Brandon Reply August 6, 2013 at 3:15 pm

    Church buildings and church personnel costs should be counted as part of program cost not separate from it – if 15% of the pastors time is with youth then 15% of costs of having a pastor should count there, if 20% is pastoral care, then 20% of costs of having a pastor should be counted as for the program “Pastoral care” – etc.

    • Ann Sullivan-Larson Reply August 7, 2013 at 6:33 am

      That’s what I was thinking too. We have paid staff at our church whose entire job function is active ministry.

      • And you probably have a majority of attendees who are passive in ministry because the professionals run the show.

  14. But the downsizing doesn’t come without a sufficient amount of whining from parishioners who have been spoiled and feel entitled to large, pristine buildings. I found that out in a large, suburban church that was used to painting their walls on a regular basis (and I’m talking touch-up jobs here) and when cuts had to be made after a pastor left and a church split ensued, you would have thought it was the end of the world not to be able to paint on a regular basis. I compared this to inner city churches that I’ve been in who weren’t as fortunate to have that kind of money to paint at will and just because. That’s just one example, but I could name others. Some parishioners don’t know how good they have it and how quickly they think it’s a given that they have certain things versus realizing that sometimes cuts become necessary. ‘Course, when it comes as a result of a split, people are already bitter about how things have gone and so they’re not real receptive to hearing anything about cutting back even though the numbers don’t lie.

  15. Good words Thom. Of course there are going to be plenty of people who will defend the status quo as that has always been the case when God is putting pressure on the church. Seems we would rather be comfortable than upset.

    Just a little story here. My wife attends a church that has weeknight house fellowships. Occasionally I go to the house meetings ( I can’t stomach the Sunday meetings because they are so boring) and this particular night they were discussing their financial plight. Apparently the pastor’s salary gobbles up two thirds of the budget and he is only paid part time.

    They all came up with their ideas as to how to solve the problem and when they had not come to any conclusion I said “perhaps you can do it the biblical way”

    I was asked what that was. Simple I said, don’t pay anyone. No one in the NT Church was paid to lead the church so do the same. Problem solved.

    Response….Oh we don’t do things that way. Interpretation…That is not the way dictated by the denomination.

    Doesn’t matter what the bible teaches, we can’t ride roughshod over the denomination. After all, they know all the answers.

  16. While I don’t disagree with you Tom, obviously Group does it homework, I do think there is some blanket statements being said that mix apples and oranges. When Red Cross cost of administration and fundraising is calculated not 100% of its staff cost is under administration or fundraising. Only the administrators cost are allocated. Salaries of field service folks and direct services folks are calculated in the services provided field. As in most cases the sole pastor salary is 45-50 % of a small church budget , so to say 80 plus percent of church budgets are for administrative cost , building and fundraising leaves out the pastors time spent on home visitation, worship leading, worship prep, counseling, mission work etc. If you really allocated the time spent doing ministry to the ministry and mission category I think you would come away with totally different numbers. As a congregation that just finished 2.2 million building addition (BTW to accommodate a Life Tree Cafe among other ministries) I know we did not waste money nor do we worship the building. Funny thing about people, while they want their money to be used for ministry and mission they want their church to look professional, up to date, staffed with professionals who are community leaders, exceptionally clean and yes, “I need a staffed nursery to put my child.” It is no longer a debate about incarnational or attractional, it is required that “all the needs are met”. BTY Tom, you have very attractive building in Colorado, very professional staff and a to die for Life Tree Cafe!

  17. Clergy personnel should be counted as a programming cost, not admin. That throws off your 82% figure. Three categories of expenses for nonprofits: Programming, management (admin), and Fundraising. Figure out time spent by each employee in each area and get a more accurate functional expense allocation. Also, check out guidestar’s “debunking the overhead myth”: http://www.guidestar.org/rxa/news/news-releases/2013/2013-06-17-overhead-myth.aspx

    There are bigger reasons why these churches are folding.

    • Why is that Ellen. The New Testament never had clergy personnel that they funded and paid to be a christian so why should we?

  18. Ann Sullivan-Larson Reply August 7, 2013 at 6:40 am

    There are a lot of people giving at churches who don’t give money. Time and talent have an uncalculated value. You reference volunteers as though those contributions don’t count. Sometimes members just don’t have the cash to give. And then there are members who give only from their excess, not openly and generously. If you had a budget of $100,000, you’d spend it how you needed to – and then suddenly, if somebody gave you a $1,000,000 gift, you’d reallocate most of that to direct ministry, wouldn’t you? This article sounds a lot like blaming the victim.

  19. I’ve never been much of a blog commenter, but I’ve lived both sides of this. A few years ago I was working for a small struggling church doing primarily youth, children, and education ministry. During the years I was there, the deficit grew steadily and eventually the congregation panicked and cut my position for a quick fix. Since then I have been working full time for one of the non-profits that Thom mentions. There is a difference between churches and non-profits, but it isn’t scale. Yes, large non-profits have very large budgets but decades ago when they were small non-profits with small budgets, their ratios of administrative costs to outgoing funds were roughly the same (80/20, 85/15, etc.)
    The difference in budgeting is that where successful non-profits focus on just 1 or 2 programs (disaster relief, poverty, inner city work), most churches have many more irons in the fire. Churches need to budget for programs for youth, children, outreach, worship, preaching, teaching, fellowship, adults, parents, service…you get the idea. All of this on top of building expenses and staff salaries to keep all of these programs going. It’s a whole lot easier to ‘sell’ the non-profit’s 1 program when the need is urgent, the message is clear, and the organization’s approach is proven effective. When people connect deeply with a non-profit’s work and message, they give gladly. In my experience, getting people to connect with the more abstract, multi-dimensional idea of church is much harder. My point is that this is the big challenge many churches are facing: connecting people to the Gospel and the church’s mission, because when that happens, the money follows.
    Incidentally, in my post professional church work days, I am attending a church that rents space from a separate congregation, has many staff with side jobs, and gives 30% of their budget to help the poor. As a member, I am happy to give.

  20. Maybe look at your local YMCA as a more reasonable comparison? They are closer to what the church does in that they have youth programs, similar staffing issues, classes for all ages, a building to maintain, etc. Our local Y can offer a Family membership for $91 a month. Right now our church needs an average of $293 from each household/family to keep it’s doors open. I think Thom’s main point is right on. Churches have to do a better job in keeping costs down.

  21. How many of those other non-profits and charities offer weekly worship services, classes, on-sight ministries, meetings, etc. that require the use of their many buildings on a daily basis? I am an advocate for churches creating a “ministry based budget” that factors in the salaries, mortgage, utilities, insurance, etc. by percentages applied to the various ministries. For instance, what does it cost to conduct our three worship services on a Sunday when you factor in all of the above? What does it cost to host our pre-school ministry above and beyond what they bring in and are able to contribute? What does it cost to provide space to the 200+ boy and girl Scouts we either sponsor or host on campus. My point is, unless a local church only has one worship service a week and no ministries happening on its campus, the comparisons to other non-profits would be better served by comparing a very active church to say a private school or other on-site type agency. Just a thought.

  22. A number of the comments above capture a lot of my thoughts. I think that comparing non-profits and churches is comparing apples and oranges to a degree where it isn’t helpful at all, except to your point that this is how the public sees “charitable giving”. Rather than adapting church budgets toward the model that charitable organizations use, which is like fitting a square peg in a round hole, we need to educate people theologically on what the Church is and why it’s important. For that matter, we ourselves as ministry leaders need to know very clearly what the Church is and why it’s important, and why our local expression of it is important. If we have a passionate vision and educate into it, it will increase giving.

    The pendulum has swung very strongly into “mission focused” models of doing local ministry. I myself have begun to fall into this mission focused model lately. However after reading your article, I think I’m starting to pull back a bit. I’m an Episcopal priest with a very Anglo-Catholic theology. I believe that our local churches have forgotten a great deal about what it means to be the church, have fallen into awful models of doing the church from the age of christendom, and are inheriting unwieldy, old, degrading buildings that cost too much to keep up. That being said, I’m afraid that our new obsession with mission focused models of doing the Church and mission focused budgets forgets about something important to my theology: that is that the mission of the Church centers around and flows from it’s celebration of the Eucharist. I have no problem with spending money on beauty designed to draw our hearts and minds into communion with God and each other. There is no comparison to praying in an incredibly beautiful cathedral to praying in a rented gymnasium. To the world, this might look like a waste of their charitable giving.

    Having said all that, I’ll admit that there is a severe evil in spending all of our money on that very beauty at the expense of the poor and hungry in our neighborhood around us. I just think it isn’t an either/or situation. My point is that I think we need as leaders to have an extremely clear vision about what is significant and worth spending money on, and then share that passion with others.

  23. I agree with the other commenters who note that this post compares apples and oranges.

    In paragraph 1, it talks of non-profits that spend a certain percentage on “administration and fundraising expenses.” But when it gets to churches, that changes to “personnel, buildings, and administration.”

    Most churches I have been a part of are extremely lean organizations when it comes to personnel and administration — to the point of anorexia — with practically $0 given to fundraising.

    If this really were to compare apples to apples, it would need to include time given to preparing and leading worship, pastoral visits, Christian education, and all the other things pastors do that are not administrative as a program cost.

    This does raise the question: are church buildings overhead or are they a program cost? I think it’s a bit of both. Church buildings are a huge financial drain. However, what makes the comparison between non-profits and churches so invidious is that non-profits for the most part do not have ties to a particular space or location and can easily move to cheaper office space (or rent from a local church!). For churches, this is a much more difficult proposition.

    I’m sorry, but the comparison here is completely unfair and unhelpful.

  24. Thom,

    What is a church and what makes it different than a charitable organization? Any religious group can care for the poor. Any charitable organization can care for the poor. What makes a Christian Church Christian? The thing that makes it Christian is that the primary role of the church is not to fix the social disparagement of the world…rather it is to address sin, through the preaching of the Gospel and the Sacraments.

    As such, the majority of the funding which you say goes to administrative costs…means paying the pastor. The Pastor, the one occupying the office of Holy Ministry, is the one who preaches and teaches the Word of God and Administers the sacraments rightly. In effect, the majority of the budget goes to the actual mission of the church, as it is carried out by the one whom God has called, and as he leads others.

    I thought the section on buildings being a large burden to be true, and some of the ways others groups have found to reduce those costs creative and useful. A Christian church is not the building in which you find it. I agree that the struggle on the budget are those fixed costs.

    I think though, that the issue really isn’t an unwillingness to give, for lack of trust or not, but rather that 60-70% of people live paycheck to paycheck…how can we expect people to tithe when they have trouble paying rent? Americans don’t manage money well, we have an unhealthy relationship with money and it is reflected in our churches. We need to be better stewards at home, before we can address a lack of revenue in the Church.

    Also, the church needs to acknowledge what is and what is not relevant to preaching the Gospel…and budget accordingly 0.07 per color copy comes out to be a lot of money on the year and the color doesn’t make the Gospel any more true. Running the A/C when it’s just pastor in the Church is a waste.

    I appreciated your article, but the comparison between churches and other non-profits doesn’t make sense, and I don’t think addresses the real heart of the issue. It’s not a lack of faith in the church, it is a ubiquitous inability for Americans to have a healthy relationship with money.

  25. I think comparing charities and churches is comparing apples and oranges. A charity in most cases is a legal civil entity charged with doing some form of charitable work. Not all charitable organizations have low overhead numbers. Here’s a list of 10 charities spending too much on fundraising: http://www.charitynavigator.org/index.cfm?bay=topten.detail&listid=28#.Uh484z-sbms

    Churches, whatever the denomination are in the business of saving souls. The overhead is largely for the building. Building improvements like ramps and elevators benefit handicapped congregation members.

    I was raised Catholic and there is a great tradition of volunteerism in most congregations. Ushers, Eucharistic Ministers, Choir, Parish Center Personnel, Youth Mentors are all volunteer positions. The only paid positions are the priests and choir director. The parochial school is largely self supporting.

    Mass, Marriage Counseling, Family Counseling, Baptism, and the sacraments are all things the priests do without charging a parishioner a fee.

    On the other hand some charities charge a fee for certain services offered depending on need.

  26. Your math is impacted by the fact that nonprofits and churches tend to count their costs differently. Most churches are not as sophisticated in their accounting techinques as nonprofts are. For instance – a church will book all of the pastor’s salary as “administration cost” instead of doing like a non profit does and conduct a time audit to discover how much of the pastor’s time is spent on program, how much is on fundraising and how much is on administration and then reporting the pastor’s salary into those categories based on those findings by percent. The same thing goes for how you expense a copy machine? CHURCH = ALL ADMIN. Non profit = by percentage of how each different department uses it.

  27. this is a comparison of apples to oranges

  28. Thanks, everyone, for your comments. As I stated in the article, you could certainly argue about comparing a church’s expenses to a public charity’s expenses. Of course they’re not apples to apples. But the public tends to look at all non-profit entities in a similar way. After spending a lot of time with the unchurched over the past couple of years, I can report that many people bristle at the notion that over 50% of their church donation may go toward maintaining a large old building.

    Bottom line, if a congregation is content with a budget that spends, for example, the national average of 1% for local and national benevolence, then there may be no need to re-visit the current budget. The public will continue to evaluate our allocations with their pocketbooks.

    • The problem with your assumption is that Christians and unChristians view the church the same. Christians are the ones that give to churches. Non-Christians may give to other charities and view churches and non-profits the same. But Christians know there is a difference. Do some churches spend too much on building and staff, yes? But there is a fundamental difference between a church and a non-profit and Christians know there is.

  29. Perhaps we are looking at wrong solutions. I pastored a small church for 13 years as a bi-vocational pastor. I was paid a stipend of $700 per month and worked another job for my income. There were 30+ pastors in my state who did this. I can speak for many of us in saying that we would have done it without stipend because we knew that we were called. If your calling is sure, then you trust in God to supply your needs. While I’m not saying that all pastors should be bi-vocational, I am saying that it is time that we as pastors ask ourselves if we truly believe that we are preaching in the last days of this earth’s history. Is there an urgency in preaching the Gospel? Scripture tells us that the end times will be like the days of Noah. Did Noah worry about results or crowd appeal, or did he concentrate on preaching the message faithfully? It is time that we as pastors listen to the promptings of the Holy Spirit and faithfully spend time in the Word ourselves.

  30. Forty years of ministry have taught me a few things:
    1. There is a difference between “calling” and hiring someone to do ministry.
    2. There is a difference between financially supporting those called to vocational ministry and paying salaries to church employees.
    3. The line between good church administration and ministry is a false distinction.
    4. The lack of enough money to keep a church going often has nothing to do with money.
    5. When a church is thought of as a charity or a non-profit organization it is probably not a church.

    • Thanks, HHS. I have a few thoughts on this pastor’s reactions.

      1. I appreciate her offering a link to my original article so her readers can see my position in its entirety.

      2. She wrote: “In this short article the author claims that churches are closing all over the country because our financial priorities are wrong.” I did not make that claim. I wrote: “The old financial models no longer work for many churches. The shrinking tithes and offerings can’t cover the two major expenses–personnel and buildings.”

      3. I agree that personnel, buildings and janitorial services can be used to further good ministry. But that wasn’t my point with this article. My focus was how our financial allocations look to the public.

      4. Defending the status quo would make sense for a church or a denomination that is growing, financially healthy, and opening more churches than it is closing. But if that’s not the case, it may be more helpful to at least consider some different approaches to ministry priorities.

    • I read the article and it was obvious that the person who wrote is pushing the organised religion line and has little understanding or appreciation for New Testament Living. and what the scripture teaches.

      In a word her theology takes precedent over the word of God.

  31. Use of the building is something that needs to be thought out. Some use their Sunday school rooms for school classrooms. Some rent parking places by the month if property and parking are in high demand. Some own rent property. Some churches share buildings with other denominational congregations and even jewish congregations.

  32. My church is struggling financially for many of the reasons you state: expensive building needing costly repairs, over paid pastor, aging congregation wanting “status quo,” etc. Since there are few young families (2 or 3), there is no Sunday school or confirmation program, and no outreach to the community (everyone is too old and tired). I don’t see a solution or way to turn this situation around and think the church will eventually wither away.

  33. The calling for the church is a place for worship where people come to be feed spiritual food.
    Once they eat, that is hear the word, receive the word, they should take action.
    The church, as it once was has changed how it relates to people but the core purpose as not changed.
    Matthew 25:31-46 is, for my discussion, a 6-point issue.
    1. The church should establish a workable budget based on the demographics of the congregation as a basis.
    2. The outreach of the church should be the focus point.
    3. Staff must view their role as a calling so that they understand salary limits with raise adjustment as growth occurs.
    4. The allocation for God’s work should be the priority and then maintenance of the building.
    5. The outreach of individuals reaching out to others and demonstrating the true call of God through the people will open doors that have never been seen.
    6. I trust that my God will provide all we need according to his riches for which he is not nor will he ever be broke.
    7. A church is different from other organizations in that they are totally dependent on God for growth be it numbers or dollars.

    My God can not fail.
    We can not fail when we follow his plan.

  34. I have an article from Leadership Journal, the leading Pastoral journal, called Normal Church Budgeting, written in 2001 issue. After surveying thousands of churches in every size and brand, 86% on average of giving is consumed by the givers. Only 14% goes beyond the givers. This should be shocking that we have been led to believe that 86% of our giving is pooled to buy things for ourselves and still call it giving. But it’s not. It’s normal. We have a 1000 ways to justify it, and some of them are from the Bible, but they are twisted. The weekly Bible lecture from the hired pastor for American believers is probably the most costly ministry in the whole world for all time until now. It’s probably just going higher all the time. This hired Bible lecture called a sermon is said to be essential for every believer every week so they are not “forsaking the assembly”. It’s just that “forsaking the assembly” in Heb. 10:24,25 specifies “one another” communication by all, not one-way communication by one man. It’s the exact opposite. The Bible does say “preach the word, in season and out of season….”. Does preach the word equal lecture the word only by a hired man for at least 30 – 45 minutes with zero questions, zero participation by the saints, and almost zero retention for reproduction of truth? The obvious answer is no, but this is how it is done and the results are very dismal when compared to the expectations Jesus stated for “teaching”. Luke 6:40 A teacher is to “fully train” his students to be “like him”. This is full reproduction of the teacher into his students so they can do what he does. Also 2 Tim. 2 :1,2. This what Jesus did and Paul did. A preacher today can preach for 20 years. After he leaves, another has to be hired to do everything he did because there was zero “fully training” going on from lecturing the word, and because it was all a professionalized version of “teaching”. This is perpetual dependency teaching rather than reproductive teaching. Everything that is living reproduces – God’s design.

    Everyone has heard sermons on “double honor” and “those who preach the gospel should live from the gospel.” No one has heard sermons on “refusing the right to pay” and “ministry free of charge” and all the apostolic reasons given why this should be done. I am completing a paper on these very passionate and strategic passages. Wow! What a complete rejection of clear scripture takes place by those who devote their whole life to the Bible. This is the foundation of why American believers must consume 86% on average of their “giving” to feel like their church life is profitable.

    A tragic side effect of this system of church is when we export this form of church to poorer countries, they must consume 99% of their giving, and the pastor is very close to starving. There is a very powerful way for believers to obey the word and send 100% of their giving beyond themselves to serve the needy and reach all nations. (NO, it is not more important for American saints to hear 500 – 1500 hired sermons than to get the good news to those who have never heard AND have no one to tell them. Someone must be sent to preach. Romans 10.) 100% giving church involves obeying and valuing Heb. 10:24,25, Col. 3:16; Eph. 5:19, and all of the 58 “one another” scriptures on church life. God asked for a very intimate, mutual, every member driven gathering for His body. The best location for what God asked for is in a home or park, etc. Free! No pews or pulpit. (This does require 7 days a week church life, but this is what we were designed to do.) There are no instructions for one-way communication or platform driven singing. The opposite is what is specifically taught for us to do. Don’t believe me? Look up the Word. What do you think about this Thom?

    Quote: The greatest danger is not that we will renounce our faith, but that we will settle for a mediocre version of it. Author unknown.

  35. I believe that a big problem for many churches, and para-church ministries, is debt. Many churches followed the “American way” and took on big mortgages. With the recession, many of these churches have struggled to the point where they folded. My husband and I started a small church in an inner-city neighborhood eleven years ago. We were both bi-vocational up until two years ago, and we also own a small business from which we contribute some profits (when we have profits). Two years ago my husband went “full-time” at a salary level that is basically low-income. We have no other paid staff. Fortunately we have many volunteers, and, interestingly, many young men involved with the church. We are still very small but there is a lot going on. It has not been easy, and we get a lot of visitors who look at what we are doing and say, “that’s great,” and then go to a mega-church in the suburbs. Oh well….

  36. I’m astonished by the clearly delusional comments I’ve read. Look around your own communities. Count the number of churches. Count the number of active attendees/supporters and determine if those numbers are increasing or decreasing. Add up the amount of money required by each of those churches to support just the physical plant and administrative overhead. This is a model that doesn’t and can’t work. At the root of the problem is the sheer number of church economic units driven by the proliferation of sects and their demand for exclusivity. This is exacerbated by these same sects following a model of proliferation that defies any economic sense. Simply put, the ratio of church facilities to attendees is unsustainable. Pick a denomination and examine the number of facilities in a given radius. Each facility has a physical plant (often measured in hundreds of thousands or even millions of dollars) with debt service, carrying and maintenance costs. Each facility has personnel and administrative expenses. In short, the model defies economies of scale and results in the horribly skewed ratio (some want to quibble about exactly what that is while others want to rationalize it) of buildings and personnel to ‘ministry’. The depth of the delusion is clear when we observe many arguing that buildings, personnel, and ministry are indistinguishable.

  37. as im growing in the wisdom and knowlege of our Lord jesus christ im growing out of the church life style. As the kingdom of God is with in us and the church has a price on every thing from coffee to a sermon tape which is wrong. the spoken word is to be as freely as i give un to u then freely u shall give and acts the people shared all things im a shamed to be apart of this and carnt find a church that doesnt do it , but most of all u pray fr God to raise people up fr mighty works and dont even see them when they come, thank God he is faithful and look out church Gods soilders will be witnessing out side yr doors one day the kingdom of God is not of word but power look in yr church is there any in a wheel chair or sick then u tell me Gods word is true so why are they still sitting in our church like this, pastors dont even tend to the sheep they just wont to preach im hungry fr God to set the church free

  38. #1 Leasing is not the answer, but owning is the Lord’s will. I am convinced that the Lord wants his people to own the buildings they function in. Just as the Lord would want us to own homes and properties, not being under a “Landlord”.

    #2 You can not accomplish but so much in homes, and we love small groups, they are successful, fruitful, and beneficial for body growth. They however can not provide a sustainable condition for multiple meetings, and other activities that need a constant to flourish from.

    #3 The Church is evolving forward, not returning to the 1st Century. Hence, small group meetings is not enough to disciple nations. I love the idea of organic Church life, and this will remain a central part of ministry in my life, however it is only a part, not the complete.

    #4 (Sharing space) Meeting is another man’s building places us under the burden and the rulership of that person. This takes away liberties that I would not recommend. Now, it is smart business…Business we have implemented, and a great place to start, but not to remain. We have 2 Pastors and their congregations renting space from us right now, and I would not want to be in their shoes (even though they get one heck of a deal). They have to hurry through Sunday morning in order for the next congregation that will be showing up to occupy that space shortly after.

    #5 With in a “free space”, you are very limited in what you can and can not do. There is no room for children’s Ministry, Nursery care, and you do not possess the offices and other places of gathering in order to conduct discipling classes, brick and mortar bible school, new member classes, counseling sessions etc.

    #6 The work out of any building in a city should be 100% The Mission of that House. Hence, to say 1% is going to missions, i.e. foreign and to the poor is inaccurate and is prone to the definition of the blogger. Most people I know in positions of leadership have given everything in order to give themselves 100% to the mission of the city where the Lord has sent them. Foreign missions is very important, but the local mission must be preeminent to become successful. We need to reach our city first.

    I believe the writer of the above article has good points, but he is only looking at it from one side of the coin. He really hasn’t thought this out, and what it would mean for the great efforts and outreaches that are currently being held my many allotments and congregations across America today. I believe that the answer lies in men and woman being taught proper stewardship in the Lord’s Church, hence, helping to finance the vision of the house, if indeed there is a vision worth supporting. Unless the Lord builds the house, they labor in vain who build.

    Contrasting, I have read articles concerning the amount of money spent strictly by consumers…the stats are staggering. Perhaps we should contrast the two.

    Pastor Shane Mason

    • Shane,

      There are hundreds of churches within a 25 mile radius of my home. Almost all of them “own” their church buildings. Most of them have active memberships of less than 150. “Owning” may be “the Lord’s will” (really?) but doing some simple math indicates that this is a failing model. A small number of individuals can’t support a multi-million dollar facility(debt service, maintenance, repairs especially on the older structures, heating/cooling, furniture etc.) and a slew of administrative and personnel costs (salaries, pensions, insurance, office supplies/equipment, vehicles, etc.).

      Your answer, “men and women being taught proper stewardship” simply ignores the underlying problem and suggests that people just aren’t giving enough. The real problem is that every little group can’t economically support a facility plus admin and personnel costs. And the smaller the group the more likely it will be that all or most of the dollars given will be sucked up by these rising fixed costs of ownership.

      Part of the problem is that every sect feels compelled to have their own church no matter the membership. In my area nearly 50 denominations are represented. But the problem doesn’t stop there. The larger sects have multiple facilities, a number with 20-30 churches within this area, many just a few miles apart. Let’s say that one of these denominations has 5000 active members. Does it really make any sense economically to have 20 churches with 20 buildings, 20 sets of maintenance and repair requirements, 20 utility bills, 20 kitchens, 20 pastors, 20 assistant pastors, 20 organists, 20 secretaries, 20 copiers, 20 vehicles, etc.?

      Until people start to recognize the insanity of maintaining this model they deserve all the criticism they get. It’s not only economically wasteful and foolhardy, it’s immoral in that it demands that large percentages of church income be siphoned off simply to meet the requirements of owning a building and staffing it. It really is a “Shocking Truth”. It’s disappointing and somewhat mind-boggling to read all of these pathetic rationalizations for maintaining the status quo.

  39. Seems there are a lot of opinions about what various congregations do with money.. the question in my humble opinion is…does that congregation GLORIFY GOD and spread the GOOD NEWS Message of JESUS…Based on what I have read and encountered in my spiritual life…GOD does NOT need money…

    • No your right but what seems to be at issue are pastors. I wasn’t around in the 40s but I think most pastors in the US were lay pastors then. Even if this was not the case Ill try to make a point. I do however remember the 50s and at that time you might pull up to a SERVICE station and 4 guys would run out. 1 would check your tires 1 would check the oil 1 would wash your windshield the last would pump the gas. It changed simple because it no longer worked economically. Having full time Pastors does not work in most congregation today and even if you can pay for them what is the cost?. I wont argue whether they do there job it would be like arguing if the guy who washed your windshield did his it doesn’t matter if you cant afford it. What I mean is what if you take that money and did what Christ asked us to do Matthew 21:31-46 (when did I see you hungry). I think we wouldn’t have to have back to church events to draw people in if we were doing what were supposed to be doing. I see pastors telling us to be good stewards of our money then ignoring what is clearly a problem in the churches own budget. No business would operate under the overhead most churches do, NONE NONE NONE I cant say it enough. I can already hear the crowd, well God operates on a different economy something spiritual like that to avoid the TRUTH. I know this sounds like throwing pastors and clergy under the bus its not. I believe Christians need to change the church and the way we do our
      business. I think Christians are the toughest crowd to have an honest conversation with and it should never be this way. What I mean is if you said something like this. I see were planing a mission trip to Nigeria do we know what the cost of the air fare is and the lodging and have we considered maybe just taking that and sending that to our missionary who is already there? Trust me Ive been there the crowd would look at you as if you were a heretic and the next thing you would be doing is sitting in the basement sharping pencils. Brothers and sisters the emperor has no clothes and its time we all took a look at what is it were supposed to be doing it ain’t this. I can clearly tell you at this point were losing ground and its not because we dont have enough programs or heard enough sermons. You and I can only do what God called us to do I get it. But the church needs to be an extension of that.

      1 John 3:17
      Proverbs 19:17
      Hebrews 13:16
      Acts 20:35

  40. The church I go to now had it’s annual budget ready to read out to the congregation after church services a recent Sunday. Most of the people just got up and went home, including my wife, she opted to go out and talk to her friends. I listened. The guy that read the thing said that there are three paid employees in the 1100 member church, that has an average attendance of around 700. Those three paid ministers, one of course is the pastor, the second is the worship leader, and I the third, I imagine is the youth pastor, of those three, they share $300,000. Who do you think makes the most of that? I would have to guess, as of course, they did not say. Who would be your guess?

  41. Love this post, Thom! I’m surprised there isn’t more mention of home churches in the comments. My wife and I have a small home church and 100% of our tithes and offerings from the people that come go to help people in need in their own sphere of influence. Want a model? There it is – thousands of small groups that help those in their sphere of influence. Check out this blog post on how tithes and offerings are just one of many ways in which a small church may be better suited to minister the Gospel to people than a large one. http://hurtbyreligion.blogspot.com/2014/11/the-sinking-ship-big-churches-in-america.html

Trackbacks/Pingbacks

  1. Giving Sacrificially | Ralph's Little Corner To The World - April 26, 2014

    […] seen when one considers that in many churches, those three line items consume 85% of total revenue (http://holysoup.com/2013/08/06/the-shocking-truth-of-church-budgets/). About 1% of a typical church budget goes to programs outside of the […]

  2. What’s important in a church | Ashleigh Carroll - October 5, 2014

    […] up on church entirely. And can you blame them? In a world where a typical American church spends 82 percent of their budget on internal expenses while the American Red Cross spends 8 percent. A world where time and money are precious and the […]

  3. Unintended consequences of employing church staff | the Way? - November 16, 2014

    […] a church “goes professional”, the more it requires a high level of financial giving. Studies show personnel, buildings and administration consume more than 80% of church budgets in the US, money […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 2,733 other followers