Budget Percentages

Below is a recent email exchange with a friend of mine (names omitted).

Email Question:
I have a church that wants help examining their budget allocations by categories: missions, personnel, programs, etc. They want to look at similar size churches with similar size budgets. They want to know whether their allocations are in line for their type of church. Basically, they want to benchmark their distributions. They suspect that their personnel budget at 67% is high, but the church doesn’t know any different. And they want to know why they do not have any money to do actual programs.

Do you have access to any sort of database like that from any of your connections?

My response:
  1. No, I don’t know of any authoritative written source of ratios. Sorry.
  2. My experience tells me the following makes commons sense

a.      Personnel
                                                              i.      Range of 40-60% of undesignated receipts
                                                            ii.      Ideally about 50%
                                                          iii.      This includes the ministers and administrative assistants – people key to accomplishing the goals, mission and vision of the church
b.      Facilities
                                                              i.      Range of 15-25% of undesignated receipts
                                                            ii.      Ideally about 20%
                                                          iii.      This includes facilities staff costs
                                                          iv.      The percentage will be higher if a church has debt; lower if there is no or low debt.
                                                            v.      A church should spend annually about 2% of the cost of replacing the building on maintenance. If you have a building worth $1 million, then spend about $20,000 on maintenance. The rest of the percentage will be spent on salaries, utilities, cleaning supplies, commercial property insurance, capital reserve funds, etc.
c.      Programming
                                                              i.      Range of 20-35% of undesignated receipts
                                                            ii.      Ideally about 30%
                                                          iii.      This includes education, worship, missions, funds budgeted for allocation to outside organizations (Cooperative Program/Missions), etc.
That being said, these percentages go wild in various types of churches. New, emerging, highly growing churches have very high salary percentages and loads of debt. Older, established churches have paid off their debt so their programming is high and salaries have stabilized in the 50-60% range. While there is no “one size fits all” there are well-grounded rules that will help a church stay out of fiscal trouble. Hope this helps.
Lead On!
Steve

I am a strategic thinker, a short- and long-term planner, and I am experienced in creating and managing operating budgets, endowment funds, and giving campaigns. I believe that church finances must be efficient, effective, and excellent.