![]() ![]() So where does it fail? Zero-based budget failure It ensures the church can keep illustrating that each budget line makes sense in regards to monthly/annual spending. It keeps the church from using the same numbers ‘as last year’. The one thing the zero-based budgeting methodology (ZBB) does well, is there’s a justification process each time. ministry) begins at zero, then is analyzed for its needs, and the budget is adjusted for any cost above zero. When a new period starts, each church function (i.e. We’ll discuss financial statements later in this post. This is why financial statements should be used and understood - and not budgets. These budget methodologies all have issues when it comes to giving church leaders the right information to make decisions. There are several budget methodologies called the - Zero-Based Budgeting approach, Rolling Forecast, or Annual Budget. Let’s first talk about budget methodologies to understand how budgets work. Given this analogy, which one do you believe is better - the outdated road maps or the always updated GPS? Church Budget Methodologies On the other hand, financial statements are like having a real live GPS device that beeps and finds an alternative route when you take a wrong turn. How will you pay the contractors now when you haven’t received all the money yet? Some budget lines will have to give up their resources in the short term to pay the contractor.īudgets are like the old atlas road maps that we used to keep in our cars- they’re outdated the moment you buy them. You still need $4,000.00 (Sept – Dec) in revenue that hasn’t been collected. Later you find out the contractors are doing the roof in August. An example of the latter is, let’s say you budgeted for a roof repair of $1,000.00/month. Or the church may not have taken in enough revenue yet to cover the budget line item that you set in January. When budgets aren’t updated, ministry leaders still assume they have money, but they don’t. So what reports give you the most accurate picture for these monthly meetings? ![]() checkbook,)when the money isn’t there, you can’t go out and spend $150.00 on groceries. This is the case with your own home’s budget (i.e. The budget can say whatever you want, but if you don’t have the money to spend - you can’t spend, or worse yet, you go into debt. January) aren’t the last word when looking at spending in August’s monthly meeting, eight months later. Simply stated - the budget numbers set at the beginning of the church’s fiscal year (i.e. ![]() These types of questions reveal an organization that focuses too much time on budgets and not enough time on understanding financial statements. Many leaders will say “but I haven’t spent my budget” or “how much is left to spend in this xyz ministry”. More time each month should be dedicated to reading through financial statements of what has happened rather than the budget. While church budgets may be important, this is only a best guess as to what will happen throughout the year. This post was last updated on November 22nd, 2021 at 12:56 pm.Ĭhurch financial statements are the reports churches should be reviewing on a monthly basis. ![]()
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