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Why your church should use a zero-based budget

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Editor’s note: Sanchez will be leading a breakout session at GO Georgia called “Budget with Purpose.” Read his earlier Index columns on the topic here and here.

If someone were to ask you what kind of budget does your church use, would you know how to respond? Let me ask you this: did you know there are different types of budgets? If you’re new to budgets there’s a good chance you don’t.

Even people more experienced with the budget in their church may not know how the process works much less there are different types of budgets. For those of us that are deeply involved in this part of the ministry of our church these are questions we need to explore. I believe in using a zero-based budget and want to urge you to consider using this approach in your church too.

So, what exactly is a zero-based budget? A zero-based budget starts with a blank sheet of paper and asks “what program or activity are we going to use to accomplish our ministry goals?”

In our budget we have a line item for Vacation Bible School. Our children’s director estimates how many children will attend VBS in the coming year, determines the cost of the materials needed for that many attendees plus volunteers necessary to manage the program, and submits a request for the coming year. That’s one example that’s pretty easy but what about something a little more complex like student ministry?

The student pastor will sit down and list the different activities that he plans to have in the coming year and what the cost of those activities will be. For some there may be a small cost to his students such as $5/each for a pizza night. For others, such as attending a student camp during the summer, there may be a larger cost that he may decide to use several fundraisers to offset and perhaps a part of budget for the year. He may also determine that an event that he has done the last couple of years has not been as effective as he had hoped and thus decide that for the coming year he will no longer plan for that activity. He may substitute it or just drop it altogether.

Each ministry area would also go through a similar budgeting process. If this sounds like it is going to be a lot of work, let me go ahead and agree with you. It is a lot of work but there are some excellent benefits to consider.

First, this process assures that each ministry in the church is reviewed annually.

Are the things you are doing each year (and maybe have been doing for years) actually accomplishing the goals you have for that ministry? If not, this is a great time to consider doing something different and take advantage of the opportunity to find a better way to accomplish those goals.

Second, zero-based budgeting helps to avoid budget inflation that can occur when a traditional or incremental budget is in use.

It is quite easy for this to occur when the budget simply increases by a certain percentage.

Third, zero-based budgeting helps to eliminate the notion that a given line item will be decreased next year unless the entire line item is spent in the current year.

This is use-it-or-lose-it thinking that can lead to wasteful spending of the resources God has blessed us with.

There are some obvious challenges to implementing a zero-based budget, especially if your church has never used this approach before.

First, this method necessarily involves more people in the process.

I don’t think that’s a bad thing because it provides visibility into areas of the church’s ministry that might otherwise be missing in the process and helps to promote buy-in to the final budget since ministry leaders had real input into the process.

Second, related to the challenge of more people being involved is the likelihood that some/many of those people will need help the first couple of times they do this.

Training is not only necessary; it is imperative to making the zero-based budgeting process work for your church.

Finally, the zero-based budget process is time consuming and requires strong leadership from the people responsible for driving the process.

You will need to be very organized and prepared to help the different people on staff as well as other ministry leaders in your church work through the process. Clear communication of deliverables, due dates, etc. are a must.

Zero-based budgets take more time but I believe provide churches with a better method of stewarding God’s resources, an annual review of the effectiveness of each of our ministries, and involves a great number of people that are closer to each area of ministry in the process. The end result is a stronger local church that is more effective in carrying out the ministries God has called them to.

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