What Are Some Average Church Budget Percentages?

Creating and managing a healthy church budget is crucial for every organization, including churches. As a religious institution, churches receive donations and offerings from members to fund their operations and various projects. Without a proper budget plan in place, it can be challenging to manage the finances effectively.

However, putting together a healthy church budget can be a challenge. Church leaders don’t necessarily know the breakdown of what a church budget should look like. For example, how much goes to the salaries of staff members? How much should the church spend on operational costs, like building payments and utilities? Should the overall budget include a comprehensive picture of the church finances (i.e. how much of the budget depends on tithes versus one-time gifts)?

In the following article, we’ll take a look at the basics of creating a church budget, as well as average budget percentages.

What is a Church Budget?

A church budget is a financial plan that outlines the income and expenses of a church over a specified period. This plan helps churches manage their finances, make informed decisions, and ensure that funds are allocated to support their mission and activities.

A well-structured budget can also serve as a tool for promoting transparency and accountability within the church community. In simple terms, budgets are a consolidation of an organization’s income and expenses in a single document.

A budget is an important part of the planning process for the upcoming year, and also includes generating church financial reports to keep members up to date.

What Are Some Average Budget Percentages for Churches?

Churches range wildly in income and size. A large church might have a six-figure operating budget, where a small church might have an operating budget below $50k per year. Large churches might bring in hundreds of thousands of dollars a year, and be capable of paying a pastor’s salary and multiple staff salaries.

One common question–regardless of the size of a church ministry–is What are some average budget percentages for churches?

Here’s a breakdown of some average budget percentages.

Staff Salary: What percentage of church budget should be salaries? Churches typically spend about 50% of their budget on staff salary. However, multisite or larger churches may see lower percentages, while small churches may spend more on staff salary.

Giving and Missions: Many churches tithe 10% of their income to missions and charity.

Savings: It’s a good rule of thumb to save 10% of church income for an emergency fund.

Building Costs: A majority of the remaining 30% of income will often go to building costs, including mortgage or rent, utilities, and more.

Outreach and Benevolence: Finally, many churches will set aside a small percentage of their income towards a benevolence fund, such as buying church members flowers when they’ve lost loved ones.

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7 Key Tips for Creating a Healthy Church Budget

Alright, by now you know some average budget percentages for churches. That may be a helpful start to determine how much you should allot for certain categories–like paying church staff and personnel costs–but you’ll still want to know additional tips for creating a healthy church budget.

Here are 7 key tips for creating a church budget that works for your community.

1. Understanding Your Church's Financial Position

Begin with a thorough assessment of your church's financial health. This includes a detailed review of all assets, such as property, equipment, and any investments. Examine savings accounts to understand the liquidity and financial resilience of the church. Equally important is a review of all liabilities, including outstanding debts or mortgages.

This kind of overview can provide a clear picture of your church's net worth and financial stability, helping you to assess how to budget moving forward. For example, if your church is in debt, you’ll want to focus on paying off debt before setting aside income for extraneous expenses.

2. Budgeting Monthly

While an annual budget provides a broad overview of expected income and expenses, breaking it down into monthly segments gives you more detailed control of your budget. This approach allows for the tracking of monthly cash flows, identifying seasonal variations in income (such as holiday donations) and expenses (like heating costs in winter). It also helps you become more responsive, allowing you to make adjustments to avoid shortfalls.

3. Matching Budget with Church Goals

The budget should be a financial reflection of the church's mission and objectives. Allocate funds in a way that prioritizes the church's core activities and strategic goals.

For instance, if community outreach is a key mission, a significant portion of the budget should support related programs and events. This alignment ensures that funding is being used effectively to advance your church's God-centered mission–a key part of healthy finances for any non-profit, church or otherwise.

4. Dividing Expenses and Setting Reserves

Categorize expenses to ensure comprehensive coverage of all financial obligations and strategic initiatives. Common categories include operational costs (utilities, staff salaries, maintenance), mission and outreach programs, and capital expenses for long-term investments or improvements.

It's also wise to set aside cash for an emergency fund (as explained above). A rainy day fund can set you up for unforeseen expenses and remove stress!

5. Setting Realistic Goals

SMART goals for your finances should be ambitious yet achievable, based on an accurate assessment of your church's resources and growth. These goals guide the budgeting process, helping to focus financial planning on what's most important.

Regular goal reviews can help you make wise adjustments to the budget, ensuring it remains a dynamic tool.

6. Using Budgeting Software

Our most important tip? Use financial technology to make the process easier! Church management software can automate many aspects of financial tracking, reporting, and planning. When selecting software, consider features like donation tracking, fund accounting, and financial reporting. Include the cost of this technology in the budget, recognizing it as an investment in efficiency.

7. Regularly Reviewing and Adjusting the Budget

A budget is not set in stone; it's a flexible tool that should evolve with the church's financial and operational landscape. Regular reviews (at least quarterly) are essential to compare actual income and expenses against budgeted figures. This practice helps identify trends, pinpoint discrepancies, and make informed adjustments to keep the budget aligned with the church's financial health and strategic objectives.

This proactive approach helps your church to remain financially resilient and mission-focused, regardless of external economic fluctuations (like a global pandemic, recession, or inflation).

By following these steps and tips, a church can create a healthy budget that supports its mission, ensures financial stability, and enables effective stewardship of resources.

Create a Budget with Tithely

Tithely is a free online giving tool that can help you create a healthy budget with reporting tools for better budget forecasting. Plus, Tithely can help you increase giving at your church with tools designed for giving anywhere, at anytime with mobile giving, text-to-give, giving through an app, and more. To learn more about how Tithely can help you grow financial health at your church, click here.