The rule of thumb for a lot of business is this: three to six months of reserves. When we say reserves and we had this ready in case a pastor needed an explanation, but essentially “If offering stopped tomorrow at your church how long could you continue to pay your bills, and that would include your payroll?”
A recent survey by JP Morgan Chase on small businesses, we find that the median small business has 27 days of cash reserves. Half of small businesses could not last a month without some income coming in.
Larger churches avoid the lowest amount of time and they tend to land in the 8 to 15 week category, 4 out of 10 mid to large size churches land in that amount of cash reserves. They tend to be the ones that probably have somebody at least part time on staff helping with finances and more likely to be a little more organized in that way.
Audits and Credibility
Ten percent of pastors say that their church has never had a complete financial audit. If we add in the pastors that weren’t sure when the last time their church had a complete audit, that’s a quarter of pastors. It’s not in recent memory that their church had an audit. Obviously, you’re looking for indiscretions in an audit, but you’re also making sure that your accounting practices themselves are ethical.
As ministries we’re called to be above reproach. That’s true of leaders and that’s true of ministries. As leaders we’ve got to be leading our ministry to take those steps whether it be in the set of ethics that relate to accounting, or the set of ethics in how we communicate, or other aspects of our ministry.
Gift of Handling Finances
Finances isn’t a spiritual gift, but it is a gift that God give certain people to handle finances. Even in the church of a dozen people, one of those dozen people is going to be better with finances than the others. Even that person though, needs some accountability to someone else. That someone may need to be on the outside of that fellowship to look over what they’re doing.
(See the full transcript for the episode –with links–on next page)