Here's my idea:
- In the month that you set the budget for the next year, look back 12 months and calculate how much money came in during that period. That figure is your budget for the next year.
- For instance:
- Your fiscal year is the calendar year
- In July and August, ministry areas work on their respective budgets with a deadline to get their requests to the Finance Committee by August 31
- The Finance Committee gathers all the data to finalize the budget by September 30 so that it can be voted on in October
- At their July meeting, the Finance Committee looks at the total undesignated receipts for July 1 through June 30 (the previous 12 months). That figure is the new budget for the fiscal year that starts in January (six months away).
- Whatever that increase (or decrease) is over the current fiscal year, that percentage (up or down) is communicated to all the ministry areas as to how much they can increase (or decrease their budget.
- This is a conservative or fiscally prudent way of budgeting - churches should receive at least that amount in the next 12 months, perhaps a good deal more.
- This means that you shouldn't have to go into spending freezes and hurt the morale of the staff and church
- This enables the church to continue to plan well for its ministries and not feel it is over-reaching financially
- If more money comes in than was budgeted, the extra money can be used for capital needs, rainy-day or reserve fund(s), money for unforeseen opportunities, additional money for budgets that were shorted, etc.