If you fail to plan, you plan to fail

Author: Geoff Freeman

Published on: 8 October 2015

As the saying goes “If you fail to plan, you plan to fail!” however some PCCs still do not operate with a budget because of the perceived time required to prepare and monitor it.

With this in mind this article aims to encourage PCCs to create or improve their budget process.

Preparing a budget carefully and prayerfully demonstrates good stewardship of the funds that God entrusts to us by being a coherent plan of the PCC’s activity borne out of prayer, vision, prioritisation and discussion. It is most important that the budget is “owned” by the PCC and once approved provides a framework for mission and ministry within which the PCC Treasurer can monitor actual income and expenditure during the year.

Some benefits of setting and monitoring a budget are:

the realisation of your PCC’s mission and goals by ensuring that financial resources are allocated to them
regular budget monitoring will identify variances which can either be explained or require corrective action
the budget can be used to support applications for external funding by providing potential supporters with a good understanding of where financial resources have been allocated and what the PCC’s needs are
budgeting improves communication throughout your PCC and congregation because everyone can fully understand what the needs and priorities are and what financial resources are required to pay for them
as a consequence, a budget can also have a positive impact on stewardship due to the improved understanding of the church’s finances within the PCC and the church community.

Budgeting methods

There are two budgeting methods commonly used to construct a budget, namely incremental budgeting and zero-based budgeting.

Incremental budgeting is based on the previous year’s actual expenditure and adjusted accordingly for the budget period.

Zero-based budgeting makes no reference to the previous level of expenditure and must be calculated “from scratch”. This is more time consuming, however your investment in time may be well spent if you consider the potential financial advantages which could result from:

considering alternative suppliers of good and services
seeking better value for money
identifying and eliminating inflated, wasteful, obsolete or duplicate activities.

In addition to this, the zero-based budget approach requires greater communication and coordination within the PCC to think creatively about its mission and goals free from the restraints of past practices.

The Parish Share contribution is one of the most essential parts of the parish budget as this enables the Diocese to provide and support the provision of mission and ministry within the parish. The full Parish Share allocation must always be entered into the budget as it is this figure that the parish should expect to pay and the Diocese needs to receive in order to cover its costs. More detailed information about exactly how Parish Share is calculated is available from the Diocesan website at www.dioceseofnorwich.org/churches/finance/parish/parish-share

Budget Format and Structure

Designing your budget to fit in with your existing accounts will make monitoring much easier as your budget will be in a format that you are familiar with. If, however, you are willing to start from scratch, a pro-forma budget template is provided in the Treasurers Handbook, a copy of which is available on the Diocesan website at www.dioceseofnorwich.org/churches/finance/resources/handbook

Budget Monitoring

Once your PCC has approved its budget the PCC treasurer then has a framework to which income and expenditure can be monitored during the year.