How to Create a Financial Contingency Plan for Your Church

By Art Rainer

Yesterday, I got off a video call with a local pastor who is struggling to figure out what the financial future looks like for his church, knowing that the next several weeks will look nothing like the weeks prior. He had just held his last in-person service for a while. That Sunday, church attendance dropped to 40 from the prior week’s 180. The impact of the coronavirus was evident.

Churches of all sizes are grappling with the changes brought on by the coronavirus. Most churches have moved away from in-person services in an effort to care for the health of those in their community and nation. And while there are certainly encouraging moments of generosity and neighborly help, most pastors understand that their church’s finances will take a hit.

Two significant factors at play will likely cause a significant decrease in many churches’ giving. The first is similar to what we experienced in 2008. The market crashed and jobs were lost. Individuals were either without income upon which they could proportionately give, or their means were reduced in such a way that they could not give as they did before. As a result, giving dropped.

The second factor is one we have yet to experience—the inability to gather for several weeks, maybe even months. Honestly, we don’t know what the fallout from this factor will look like. These are uncharted waters for us all. The reality is that many don’t give when they don’t attend. Online giving is certainly helpful in this situation, but most churches’ givers do not give online. The pastor to whom I spoke yesterday noted that his congregation was older and that few gave online. But it is not just churches like his that should be concerned. For those rare churches where 80% of their gifts are given through their online systems, there are still 20% who give in the services. And often, these are the older and sometimes more generous givers.

And so, we have two nasty factors, one with which we have experience and one we don’t, colliding.

The goal is to go ahead and make decisions now, using “what if” scenarios, while you can still be thoughtful instead of reactionary.

Now that you’ve been encouraged, the question remains—What do we do?

While we should go on the offensive—committing ourselves to prayer, discussing the need with our members, regularly pushing online giving, creating tutorials for how to give online, and connecting with some of your more generous members, we also need to plan for a likely decrease in giving. Every church needs a financial contingency plan.

A financial contingency plan is simply the course of action churches take should giving substantially drop. Churches should always have one in place, but, if your church does not, now is a great time to develop one. As you will see, a financial contingency plan requires very difficult conversations among the leadership team. The goal is to go ahead and make decisions now, using “what if” scenarios, while you can still be thoughtful instead of reactionary.

Here are a few suggestions to get you started:

1. Plan in phases.

The phases should be triggered by a certain percentage drop in giving—10%, 20%, and 30%. Depending on your context, you may want to adjust those numbers. For churches where giving is completely dominated by in-person giving, you may want to plan for an even deeper cut.

2. Identify fixed and variable costs.

Fixed expenses are those costs that you have very little opportunity at reducing. Mortgage payments, leases, utilities, insurance, and, to some degree, salaries are often considered examples of fixed expenses. Variable expenses are those that you will be able to reduce more easily as giving declines. For churches, much of what makes up ministry budgets are considered variable expenses. As you develop your financial contingency plan, identify where you are able to reduce expenses for each phase. As mentioned already, salaries are considered fixed costs to some degree. There is a difference between essential and non-essential positions. As you approach the second and third phase, you may find yourself unable to afford non-essential positions. Identifying those positions is a tough but necessary part of the planning process.

3. Identify your essentials.

What are the essentials for your church? What must you do to carry on as a church? Here is what I can almost guarantee you—everything you’re currently doing is not essential. Much of what you’re doing is value-added. It’s not that these events and ministries bad or unhelpful, but they’re likely not essential. Your contingency plan should strive to support the essentials.

A virus and decreased giving doesn’t stand a chance against His church.

4. Make sure your leadership team knows the plan.

A financial contingency plan cannot be developed in isolation. You need your leadership team to be involved in and aware of the plan. They must understand the reasoning and the heart behind the plan so that they can clearly communicate to others and provide support. This team serves as your guiding coalition, helping shepherd the church through the changes, should you need to implement parts or all of the plan.

I know—the news is not fun. But we must prepare. We are facing something that most have never experienced, and we don’t fully know to what extent the impact will be.

Fortunately, there is another reality, one that permeates even these trying times. Our God sits on the throne. He is in full control, and His church will move forward. A virus and decreased giving doesn’t stand a chance against His church. So be encouraged. God is already victorious.