Most of the pastors with whom I have conversations live with the tensions of effective financial leadership.
According to the most recent studies, only about one-third of American congregations are growing in their budget income. This concern can be all consuming or at least the source of significant anxiety.

Effective financial leadership is important for support to be available for ministries of ethical concern within congregations as well as denominational and nonprofit programs addressing social ministry and social action agendas.

Many factors impact the revenue of congregations and nonprofits, including:

â—     The local economy

â—     The shift in the culture toward lower levels of giving to religious charities

â—     Competition from the growing number of faith-based nonprofit ministries

â—     Attitudes toward giving within the congregation

â—     The effectiveness of leaders in encouraging generosity within the church

No simple answers will solve the financial dilemmas facing churches, and numerous suggestions deserve consideration. What is certain is that growing missional resources is impossible in an environment of mistrust.

Trust must extend to every aspect of the church, including the character and commitment of the pastor and staff, the lay leadership of the church and the competency of those who manage financial resources.

The first level of trust in stewardship of finances is with those who collect, deposit, record and manage the gifts of the congregation.

Larger churches have written policies about such matters, but churches of all sizes need clear processes for managing their money. They also require persons of competence in both paid and volunteer roles related to finances.

A second level of trust in stewardship is achieved by being Informed of Internal Revenue Service requirements.

For example, one basic need is awareness of what is necessary for givers to claim a tax deduction on their gifts. Too many churches have no idea what’s acceptable.

An accurate, quarterly report to each giver of the amount of her or his gift is important as it will enlarge trust in the church by regularly thanking the giver and encouraging continued generosity.

A second IRS requirement is the proper recording of all compensation to employees of the congregation.

For example, churches that collect cash for a minister without depositing it to the church and recording the amount as income for the minister violate this requirement.

A third IRS requirement is proper reporting of all forms of income given to church employees, either in an annual W-2 or a Form 1099 reporting honoraria.

Clergy are eligible for tax benefits that too few lay leaders understand. Clear policies on such issues as housing allowance and reimbursable expenses are a must.      

A third level of trust in stewardship is established by being clear about who has access to giving records.

The most generous congregations are those in which a select group, such as chair of the finance committee and the pastor, are aware of the giving practices of the people.

Growth in generosity requires the encouragement of all congregational disciples to enlarge their commitment in a variety of ways.

A mistaken notion thinks the amount of one’s giving should have no influence in who is selected to serve in key leadership roles or who is challenged to enlarge their commitments.

Specialists in stewardship development argue that because there is a relationship between one’s spiritual health and one’s giving, the pastor should be as aware of this dimension of the person’s life as much as knowledge of major illnesses, job losses, family crises or personal struggles.

Giving is an indication of the well being of the person, so how can one know of the need to respond if there is no knowledge of this aspect of commitment?

A fourth level of trust in stewardship is met when congregations prioritize expenditures based on congregational mission, not programs.

The typical church budget is usually based on the program committee structures of the congregation. There is a line item for each committee and requests for additional funding form the negotiations for what will get funded each year.

In this system, every committee asks for more and lobbies within the congregation to keep its requests at the forefront of the finance committee.

A missional budget will be based on the strategic thinking priorities of the congregation. If there is an intentional commitment to the future, priorities in funding make new dreams come to fruition.

If there is no missional dream, there will be no missional budget, but a missional dream without a missional budget will mean no missional accomplishment.

Hopeful congregations are generous congregations.

One can approach the important tasks of managing finances as tedious and unfulfilling. But the excitement of participation in a congregation full of generous disciples is itself synergistic to the total ministry of the church.

God blesses congregations with vision and the willingness to give to fulfill that vision.

A fuller discussion of the leadership tasks of biblical stewardship are developed in my book, “The Calling of Congregational Leadership”

Larry L. McSwain is retired professor of leadership at McAfee School of Theology in Atlanta, Ga. He is currently a congregational consultant/coach with the Center for Congregational Health in Winston-Salem, N.C. This article is adapted from his book “The Calling of Congregational Leadership,” which is available from Chalice Press.

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