The pastor and church finance

Three principles can help take the financial hat off your head and free you for the primary purpose of your ministry.

Milton E. Erhart is pastor of the Boise, Idaho, Central Seventh-day Adventist church.

A pastor may find himself wearing the hat of church financier reluctantly, especially in our world of spiraling inflation, yet both the church and the conference normally expect him to give financial leadership.

During sixteen years as a pastor, I have found some basic principles that have worked successfully for me and that I believe can work for any pastor. The construction paving the way for a new church and a new school have, in those sixteen years, testified to the effectiveness of these principles. None of these congregations has been wealthy, and in most instances considerable motivation was necessary to achieve results. Yet the congregations were financially sound after these undertakings.

Principle number one: the treasurer's report. Immediately upon arriving at one new pastorate, I found the congregation $5,000 behind in church expense and $20,000 in arrears on payments for school land. Visiting with the church treasurer, I learned of a $6,000 savings account not listed on the report. We quickly made one back payment with the cash from this unspecified fund. The $6,000 was continued on the books as a reserve, and the land fund was now listed as a $6,000 deficit. Ultimately the $20,000 was raised and the deficit in the land fund erased.

Another church desperately needed additional space for youth divisions. For several years the board was unaware of $10,000 in reserve that had not been included on the treasurer's report. Once a complete report was made to the board, the church was able to move quickly and make a down payment on a large house across from the church, which provided the needed space. Later a fund-raising campaign provided the necessary amount to pay off the house.

Thus the treasurer's report often be comes the first key to financial success for your church. In far too many churches the treasurer's report is in complete, with no sense of organization or readability. On assuming a new pastorate, one priority should be to work  with the treasurer to develop a simple, easily understood, and complete report that is shared monthly with the entire church board. It need not list every expenditure, but it needs to be complete to the point of listing all the church's funds and balances. A complete report creates confidence, whereas secrecy breeds dis trust. A complete report also allows the church to make intelligent decisions based on the total picture of its financial and spiritual health.

Sometimes church boards will actually transfer money from one fund to another in the face of a pressing need. Unless the fund is no longer active, such transfers are inadvisable. They are prone to create misunderstandings and lessen the giving habits of members. Sometimes these funds are not paid back. It is much better to pay the bill and have the fund from which the bill is paid show a deficit. Then the board knows that the money has simply been borrowed and must be raised to pay back the depleted account.

Principle number two: communication.

The financial troubles of most churches can be traced to a lack of communication. As simple an item as the church newsletter can be essential. Each newsletter should contain a short treasurer's report, with comments by the pastor. Commend church members for a balanced budget and encourage them to do better when it is not. The newsletter can also be used to promote various campaigns and explain special needs. But such reports must be brief, or members will complain that all the pastor talks about is money. To balance the financial emphasis, short spiritual articles should be included.

Effective communication is absolutely essential for a successful land purchase or a building program. First, the pastor and the church board should discuss the idea carefully. If the board is in general agreement, a special committee should be selected. This committee should be composed with care, because its attitude will make or break a successful program. This committee's progress should be re ported faithfully to the church board, and at times it may be wise to call a business meeting for additional input. Once the committee has a report, it should be discussed by the board, not necessarily to approve the committee's recommendation, but to approve the inclusion of the recommendation on the business-meeting agenda.

The standard complaint concerning the business meeting is that too few at tend, and that certainly is a problem. But publicizing the meeting thoroughly and having a well-planned, fast-moving agenda can increase attendance. Regardless of attendance, no financial pro gram should be undertaken until the church in business session approves. This is especially true if real-estate transactions or building programs are involved. If the recommendation calls for a major outlay of funds or a long-term commitment by the congregation, it may be wise to have at least two business sessions—one for discussion of the recommendations, at which time the church may have some additional suggestions for the committee, and a follow-up session to call for a vote. The vote should be taken by secret ballot to allow the members to vote for or against without jeopardizing relationships with fellow members.

Unless your church is different from most, there will be some opposition to anything that is proposed. Should the recommendations pass, however, most of the opposition will join the majority in a short time, provided adequate communication has been maintained throughout the entire decision-making process.

In your efforts to maintain good communication, don't leave out the need to communicate with the conference ad ministration. If yours is a major project, administration should be kept informed of the process step by step. Sometimes church members go directly to the conference to criticize or complain. Proper communication with the conference ad ministration will bring credibility to the church and its pastor and discount such criticism.

Principle number three: maximum utilization of the church's financial assets. Special gifts and reserve funds should never be used to pay for normal operating expenses and maintenance projects. When a pastor or the building committee approaches the church about its needs to   expand or improve its facilities, immediately there will be those who say that it is difficult enough just to pay the bills. Current bills and small debts will always be with a church. Yet too often a church will use its assets or special gifts to cover these normal expenses. This is a critical psychological and financial mistake. A congregation should be responsible for its day-to-day operating expenses, including major maintenance projects.

The key to a $100,000 land purchase by a 200-member congregation was a $14,000 bequest. It would have been very easy for us to say that $14,000 wasn't enough even to consider purchasing land and that it should be spent on a new roof for the school instead. Yet because the members refused this option, the gift became the catalyst for the land purchase, and now a beautiful, representative church is being built on that choice site.

At Christmas time my congregation once received an unexpected $3,000 check from a nonmember. The church had some remaining school-land debt and, at the same time, a desperate need for a new press. The board had been wrestling with both problems. It seemed inappropriate to buy a press when the church still owed money. Yet the board concluded that the congregation ought to raise the money for the debt it had incurred, and voted to use the $3,000 to buy a press in honor of the donor.

Several months later the church sold its youth lodge. Again the question came up, "Should we use the proceeds from the sale to pay the land debt?" Once again the answer was No. The congregation had incurred the debt without planning to sell the lodge, and it was inadvisable to use the proceeds of this sale to pay its debt.

Today that church still has a small land debt, but it is dwindling each month, and from the sale of the youth lodge it has funds with which to consider seriously a land purchase for a new church. Had its assets been siphoned off to pay smaller obligations, it would not be in a good position to consider building a new church.

Proper utilization of the church's as sets also involves maximizing the return on every dollar the church receives. My current congregation has between $85,000 and $100,000 drawing daily interest at 13 percent to 15 percent. The church invests every available dollar with a nationally recognized investment firm, which in turn places the funds in treasury notes and bonds. Each account with this firm is insured for $500,000. This safe and financially rewarding pro gram yields the church $1,000 a month in interest income.

The money that comes in each Sabbath is put into these funds. When the monthly conference check is due, the amount is withdrawn to cover the check. Then, again, each week during the month the funds build up. Interest from this process is listed separately on the treasurer's report under earnings. A small portion of these earnings is being used to purchase a memory typewriter to save on the number of hours the secretary works. If a new church is built, it will be possible to provide most of the furnishings with the interest income. Congregations in small cities may not be able to get the same high return that is available in large places, but six- and twelve month certificates are available at attractive interest rates, in addition to normal passbook interest.

You may think I am spending an inordinate amount of time on finance. Actually, the opposite is true. After setting up the treasurer's report and arranging for a good investment program, I spend no more than one hour a month on church finance. That hour I use to check the treasurer's report for discrepancies and to answer occasional calls from the treasurer about bills. The treasurer and assistants take care of the financial details of the church. A careful, well-planned program takes the financial hat off my head and frees me to spend more time for my primary purpose—soul winning. It can do the same for you.

Ministry reserves the right to approve, disapprove, and delete comments at our discretion and will not be able to respond to inquiries about these comments. Please ensure that your words are respectful, courteous, and relevant.

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Milton E. Erhart is pastor of the Boise, Idaho, Central Seventh-day Adventist church.

February 1981

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