The Theology Behind Church Financial Practices

As a church administrator, I have been asked several times to “review” the procedures of larger churches. It has become my habit to write briefly about the financial systems and procedures, unless of course there are significant problems, and then spend a good amount of time telling the board or session what their financial reporting communicates in terms of theology and praxis. This has been, many times, unwelcome, but I have yet to do this with a church that has not taken seriously at least some of the items I pointed out and begun to take a hard look at their practices.

This report is from a couple of years ago, and is fairly representative. I offer it, not for what it says about this church, but for what it says about the general atmosphere of church “business”. While for some it is inconceivable, I contend that finances may be the truest indicator of a church’s practical theology. In this case, the message communicated was counter-productive to the goals expressed by the Board.


The financial subsystem of ABC Church is comprised primarily of one staff person, the Financial Coordinator, and the Budget & Finance team (BUDG/FIN) which is subsumed under the Support Ministry Area. The systems in place, from the beginning of the financial trail to the end, are responsible and accountable and would, in fact, come very close to a text book model. Since my background in the private sector was accounting and business, and considering also that I have been a church administrator and continue to be a church treasurer, I would like to summarily discuss the procedures that are in place and concentrate more thoroughly on the relationship between finances and ministry. Budgeting and planning procedures will be discussed in the later section.


The requisite procedures seem to be in place to ensure an accountable system. Offerings are counted by a minimum of two people and are deposited in a night depository on the day collected. After the mail is opened by the Admin Assistant throughout the week, the checks are given to the FINANCIAL COORDINATOR to copy and deposit. In this instance there are still two people involved in the process. The FINANCIAL COORDINATOR prints checks, which are subsequently signed by one of the authorized signers who are members of the BUDG/FIN team, thereby ensuring controls.  Expense reimbursement is through an accountable multi-part voucher system that requires the signature of the authorized person of the particular ministry area involved, or of the pastor in some instances. In short, if an audit were performed the procedures in place would enable the auditors to qualify the validity of the cash handling and disbursement processes, a step that is both essential to performing a full audit and, unfortunately, impossible to fulfill in many churches. Many church audits cannot attest to the likelihood that all receipts are accounted for, simply because adequate cash handling controls are not in place. This would certainly not be the case for ABC Church.

The FINANCIAL COORDINATOR uses a computer based accounting system to record all transactions. The system used until December, 2005, proved to be inadequate in its reporting capabilities and was replaced by Church Windows, which has been used for contributions on an ongoing basis. Electronic giving has also been instituted, but it is too early to determine its long-term effectiveness. Detailed financial statements, including a complete check register, are generated and reviewed by the Treasurer and BUDG/FIN team on a monthly basis. These statements include a balance sheet and detailed reports on cash accounts besides the checking account. These other accounts include Memorial and Funeral Team Funds, kept in a savings account, and Endowment Funds administered by a private brokerage firm. Besides general summary statements, each ministry team receives a detailed budget comparison for their particular area. An Audit Team, independent of the BUDG/FIN team, audits the financials annually. A report of audit results is generated which is included in the annual report to the congregation. The Audit Team reviews bank reconciliations, checks and invoices selected randomly, receipt and deposit data and, perhaps most importantly, the procedures that are in place.


From a ministry perspective, the beginning point financially is usually the budgeting process. Changes have been made over recent years in ABC’s budgeting process, but it is still not really driven by the ministry areas. The BUDG/FIN, in the past, simply determined the budget that would be adopted, presumably based largely on the previous year’s numbers. Each year a sum of money was borrowed and paid back to fund the budget. In recent years, the council has passed a balanced budget and borrowing has been foregone. The process now invites each ministry area or team to prepare a budget request, but the teams still largely base this on the previous year instead of a process including annual planning and cost analysis. Payroll and other, more fixed, expenses are analyzed by the staff and BUDG/FIN. In essence, BUDG/FIN drives the ministry “bus” by virtue of determining funding.

Stewardship, in the sense of congregational giving, has been an ongoing concern and this year the budget passed included a deficit that was covered by an income line item labeled “Estimated Increased Giving”, reflecting the hope that the members will step up to the plate. (As will be shown below, in reality this represents a low- to no-risk situation for the church.)

The Stewardship Team underwent a name change to Discipleship Team in order to reflect a change in focus. The agenda of this team will be to concentrate on encouraging overall church involvement – ministry, mission, social and financial. The reaction of the congregation so far, including a lack of people volunteering to serve on the committee itself, seems to indicate that this change of direction is perceived with at least some suspicion. This could be the result of years of associating stewardship with fund-raising and an attitude of “what’s in a name”. It may also be because it came about at roughly the same time that a new building/capital initiative began. The two initiatives may be, in the minds of the members, linked. There has also been an ongoing desire to have an associate pastor, but the annual giving levels have not provided the funding for this position.

Beyond this, there may be larger “problem” to deal with at ABC – one that is possibly dictated by the culture within the church. This culture may be communicated to its members, in part, by the financial practices. There appears to be, for want of better names, a “culture of loss prevention” and a “theology of poverty” at ABC, at least as indicated by financial practices and reports. While these may need a little unpacking, only a small amount can be provided in this report.

Theologically, there can be two approaches to church finances (at least in the extremes): 

The first is the approach that shows faith in God’s abundance. While this need not, and I would say should not, result in reckless abandon when it comes to finances, it does enable a culture in which risk is realistically embraced. Done properly, risk is assessed against potential gain and questions developed such as, “How can we accomplish this?” Gain is understood in terms of theology – benefit to God – and, in this culture, security is less revered than ministry. Chances will be taken to further the work, mission and ministry of the church in the world.

The second is the approach that shows little faith in God’s abundance, and much more in the church’s own ability to provide security – fear of poverty drives the financial and, therefore, ministerial strategy of the congregation. Accumulation and safety are the characteristics communicated by the financial practices of this type of church, and a culture develops in which risk is not an option. Without risk, there is also little opportunity for gain. Questions develop such as, “How can we possibly afford to do that?”

Since churches are part of the Body of Christ and exhibit to the world the coming Reign or Kingdom of God, these financial attitudes have deeply theological and spiritual significance. “Giving”, as one indicator of a congregation’s cultural theology, is influenced by the church’s implicit theology. A theology of abundance tends to promote a culture of giving within the congregation, while a theology of poverty tends to inhibit congregation giving. Giving is, many times, a risk-taking process for members and the practices of the church will affect the practices of its members. Another way of looking at this is that members will adopt the same idols as the church leadership.

More specifically, how may this apply to ABC? The “2006 Annual Report” will be used to illustrate where this particular church may fall on the spectrum described above. The Memorial Funds present one series of information. Of the $49,053 showing on page 34, only two amounts, $676.35 for Taxi Fund and $586.88 for Disaster Relief (together 2.47%), appear to be for something outside the walls of the church. The remainder is reserved for programs, choir robes, building/furnishing changes, etc.

On the next page of the report the Endowment Fund Team makes two very important statements:

  • “… the Team continued the practice of conserving earnings to protect the amounts of the original gifts,” and
  • “The investment policy of retaining 10% of the earnings as in inflation/market hedge has been continued. The other 90% of the earnings are available for use as specified in each fund.”

 As of Dec 31, 2005, the Endowment Funds as reported on pages 46 and 47 were:

   Balance  Available Committed    Orig Gifts
Property  3,083,378      878,088      117,082    2,088,209
Educ, Music, Ministry  1,196,660      214,315         982,345
Operating     277,275        49,875         227,400
Scholarship     148,779        43,292         105,487
Youth Activities     137,196        37,118         100,078
Council       70,132        13,538           56,593
Mission and Outreach       35,165          3,947           31,217
   4,948,585   1,240,174      117,082    3,591,330

Is there anything wrong with the investments, strategies and reports described above? Unequivocally, the answer is no. Absent a communicated strategy for using the funds or a clear reason for preserving the earnings, however, the impression given could easily be interpreted as “unfaithful accumulation”, particularly when considered in light of the narrative descriptions that used words like “conserving earnings” and “inflation/market hedge”.

Without additional information, it appears that programs, operations, ministry areas – actually, virtually all areas except mission – are provided for quite adequately and are, anyway, subordinate in importance to security. As far as church involvement, “Mission and Outreach” appears to have little significance – for instance, they account for less than 1% of the endowments. The only funding reported was that coming through special collections from the congregation. The line item expense for mission coming out of the budget appears to reflect the anticipated amount that will be given by the congregation for that purpose, and there was no draw against the Endowment to fund mission. 

Risk-taking, the action desired of the congregation by church leadership when it laments a lack of stewardship, is strikingly absent from the year end report. Security could easily be understood as the primary focus of the church. While these interpretations are critical on my part (in the sense of being characterized by reasonably careful evaluation and judgment), perceptions by congregations are generally more subjective and criticizing in nature. Admittedly, the average member of a church is unlikely to read the year-end report, but the conservative nature of a church’s finances will be broadcast in several ways, anyway. This is the one way in which it is laid out in print for all to see.

While I have not been privy to the congregation’s discussions at ABC, I have heard “the church is in way better shape than I am, anyway” as a valid argument against giving at other churches that have substantial designated or endowment resources. Accomplishing a change in the mindset of the members is difficult or impossible without a prior change of focus being demonstrated and reported by the leadership. Change always runs downhill, and the finances appear to be dammed up to prevent any change from happening.

1 Response to “The Theology Behind Church Financial Practices”

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That's too bad - I'm so sorry. Oh, well, just try to make the best of it. What you'll find here is a variety of essays and ramblings to do with things theological, social, whimsical and, sometimes, all three. I don't write to get famous - trust me, I've been told how futile that would be - but to express myself. I love to communicate and browbeat - ummm, I mean dialogue - about the things I find intriguing. Since you're here, and the door's locked, why don't you stay a while. There's a page bar under the header with links to information about us - I mean me. Don't forget to tell me what you think - in a nice way, I mean.

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