As mentioned in my previous blog post, transparency is the key to maintaining integrity with the congregation; but other factors also play into the equation. I am a BIG advocate of accountability in every area of church ministry, but especially finances. Too often, people say "we don't have time to do all of that"... or "the church isn't a business"... or "we trust our people." those are EXTREMELY foolish comments, so please save yourself the embarrassment and don't say them out loud. Remember the "7-P's" - Proper Prior Planning Prevents Pitifully Poor Performance. By taking the time to develop and implement a few simple and preventative steps, you may save your church a lot of money, embarrassment, heartache, and a tarnished testimony.
So, I would recommend that every church implement the following steps to maintain transparency, accountability, and integrity with regard to finances.
1) Develop clear financial policies and procedures outlining every aspect of how money is handled in the church. Conduct self audits at random times throughout the year to see if the processes are being followed.
2) Have an outside party (third-party CPA) perform an annual audit of all financial records. Make the results of the audit public to the congregation. Any church that would refuse to do an audit is most likely hiding something!
3) Present an annual zero-based budget for congregational approval and allow at least 2 weeks for the congregation to ask questions prior to approving it.
4) Present an annual year-end report showing income and expenses, as well as, starting and ending balances in each fund. This should include an annual report of how much money is held in savings accounts, investments, and emergency funds.
5) Demand segregation of duties for those handling the finances. This includes: Receiving, depositing, recording, reconciling, and distributing funds.
6) Require 2 signatures on all church related checking accounts.
7) Do not use gimmicks or raise excess funds. Present the need and keep the people informed as to the status of the fundraising.
8) Mail quarterly or bi-annual giving statements to all contributors. This will motivate those who fall behind on their giving, but it will also serve as a confirmation of receipt for those who use online banking or mail-in their tithes and offerings.
9) Protect the Pastor by restricting him from access to financial information and handling or any money.
10) Many churches are closing their onsite business offices and hiring outside CPA firms to handle all church accounting. This has been shown to slow-down the spending and provides a greater level of protection to the ministry. At the very least, have your church's CPA do a quarterly financial statement. This adds credibility and an extra layer of protection.
11) Set spending limits for individuals and committees.
12) Be transparent by printing the weekly or monthly giving amounts. This can be in the church bulletin, prayer sheet, verbal announcement, etc. Don't ever be viewed as "hiding" the financial reports.
For additional ideas regarding church finances or ideas for developing financial policies and procedures see these helpful sites:
1) LifeWay - A Model Church Financial Policy
2) Guidestone - Church Financial Policies
3) FreeChurchForms.com - Church Policy Manual
4) Church Law & Tax - Finances
5) Interactive Guide to Church Finance - AG Financial Solutions
At Emmanuel, we worked with our CPA (Moore, Beauston, and Woodham) in the development of financial policies and procedures for our church and Christian school, so I'm not advocating something that I don't truly believe in. You can also find many other local churches that see the value in having written financial policies by doing a quick Google search. Many local churches have their financial policies listed online and they can be used as guides. I would encourage every church member to ask your pastor or church finance committee to see a copy of your church's "Financial Policies and Procedures Manual." You may be pleasantly surprised to find that you have one, or you may be the catalyst God uses to bring accountability and protection to your local assembly.
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