Addressing the Budget in Difficult Times 

By Dan Johnson - Oct, 2020

Many churches find themselves in a challenging situation regarding their budget because of COVID-19 or other reasons. You may find yourself responsible for having to cut huge chunks from your existing budget. It is a daunting task, and where do you start? I have been involved with church and mission finances for more than 30 years and have been through this process more than a few times. The following is a process I have used with some success. 

Big Ticket Items 

Examine your big-ticket items first. Big ticket items are mortgage payments, utilities, maintenance costs, and other items that make up a significant percentage of your budget. 

If you are like many churches, you probably have a mortgage. Commercial mortgages are different than personal home mortgages and do not carry the same rates and terms. Typically, commercial mortgages will have a different length of amortization than the length of the mortgage. For example, the church I serve has a mortgage that is scheduled to be paid off over a 20-year term “amortization” but has a loan term of 10 years. This means at the end of the 10 years the church will owe a large “balloon payment.” Rates are different for commercial loans depending on the term and amortization. Rates for commercial mortgages are now historically low, so now may be a great time to refinance. Our church found tremendous savings by doing this. It is a great place to look to close budget gaps.  

Utilities are another area where churches spend a substantial portion of their budget. This is a more practical issue. Is your congregation meeting in your facilities during COVID-19? Modify your utility usage to match facility usage. Do not heat or cool areas to 70 degrees that are not in use. A good setting for the AC would be 80 degrees or the heating at 60 degrees. You would be surprised how much this saves. I would recommend against turning utilities off for unused areas altogether. This is a lesson learned the hard way. You can create expensive maintenance issues for yourself if you turn off your utilities. Your HVAC keeps the humidity in check which makes the area less conducive to mold growth. By turning AC off in one facility, the church I served ended up with serious mold issues. Other problems that can occur from turning off utilities include damage to musical instruments such as organs and pianos that cannot handle large temperature fluctuations and in colder areas increased susceptibility to freezing pipes. 

Although there will be an initial cost, converting to LED lighting saves a substantial amount of electricity over time, and it also has a hidden savings of reduced maintenance costs. LED lights last much longer than earlier technology, so when you were needing to rent a lift to change out burned light bulbs in your sanctuary once a year, now you only need to change bulbs once every 8 years. The savings on labor and rental fees over time truly add up.  

Regarding maintenance and other upkeep items, you need to adjust them to match the facility usage. It is not good stewardship to continue to pay a contractor to clean facilities that are not being used. If you are using paid staff to clean those areas and you want to keep your staff in place, then look for projects to make effective use of their time. We have had maintenance staff repaint substantial portions of the church. The repainting was needed and saved the church a good portion of money by not needing to hire a separate contractor to do the work. 

Be Opportunistic 

Oil prices are at historic lows and paving materials are petroleum-based products. Our parking lot needed resurfacing, and we had the cash flow available to take advantage of this pricing opportunity. By advancing this project we were able to save a good bit of money. Also, the timing was perfect as we were not disrupting the ministries that, under normal circumstances, would be meeting at our facilities. (Notice a theme here… “When facilities are not in use, maintenance is much easier because it does not have competition for the space.”) 

Other Items 

Smaller budgeted items should not be overlooked. There are substantial savings to be recognized by looking closely at several things. 

Many church subscriptions, agreements and licenses are based on congregation size. If you are meeting online or are reducing attendance by meeting social distancing requirements for your state, you may be overpaying for your church database and other software subscriptions. By reporting our reduced attendance size with our database provider, we saved about $400 a month. We also recognized savings on our CVLI and CCLI licenses by contacting them with our reduced attendance numbers. 

Are you paying for insurance you do not need? By examining invoices closely, I found an item on our copier lease called property damage surcharge. When I investigated, this was an insurance charge we were paying on a monthly basis. I contacted our church insurance company and had them send a certificate of insurance to our leasing company, and the monthly property damage surcharge was dropped. This saved us thousands of dollars a year. 

It is also good to contact your insurance company to see what your insurance covers regarding non-owned vehicles. Our staff was routinely buying the insurance when they rented vehicles for church use, but our “non-owned” insurance covered the vehicles, so we were paying double. I informed the staff of this and told them to refuse the insurance when renting a vehicle. This can also apply to rented equipment. 

If cash flow is not an issue, take advantage of discounts offered for paying up front. Many contracts for elevator maintenance, equipment maintenance, software licensing and insurance offer substantial discounts for paying annually or semi-annually rather than paying monthly. Ask your service providers if they offer such discounts and switch your payments accordingly. For example, we had a software subscription that we were paying $200 monthly. We switched to an annual subscription of $2000 which saved us $400 per year. 


Time to address the elephant in the room. You may have noticed that I have avoided the subject of staffing changes. Reducing personnel is a tricky proposition in churches. The expected financial benefit from staff reductions is rarely realized. In a church environment, constituencies can be quite attached to a particular staff member. Cutting that staff position may cause the constituency to become upset to the point that they leave the church. If you save $50,000 by cutting the staff position but have five families that leave the church that were contributing a total of $30,000 a year, your actual savings is only $20,000. This is a true dynamic to be aware of before making those decisions. 

As much as people want to use the phrase “the business of church,” the church is not a business and has different dynamics than the business world. Cutting staff in a church does not have the same ramifications as in the business world. Personnel decisions are a last resort. To use an analogy, I have found that churches are like ships. People love to be on a cruise ship, swimming in the pool, enjoying the buffet and having a good time. However, people jump off sinking ships and fight for the life rafts. Caution in the budget reduction process is called for because you do not want to send signals that the church is sinking or failing. Sometimes tough decisions need to be made, but do not approach those decisions lightly. It is wise to make every effort to find savings outside of personnel before going down that road. Like on the sinking ship, people will jump off or fight over the “life raft” of the ministry they are invested in, which often causes far-reaching internal strife.  

This list is not, by far, exhaustive. However, we are all going through this pandemic together, and I wanted to offer up some experience and information that others may have overlooked. I pray you find it helpful. 

Dan Johnson 
Finance Manager 
Richland Creek Community Church 
Wake Forest, NC