Budgeting in a Time of Uncertainty

While it’s hard to know or predict just how long we’ll be under Stay-at-Home and/or limited-sized gathering orders due to the coronavirus pandemic, several models suggest that we may not be back to gathering in-person in groups more than 10 until mid-June, groups of 50 well beyond that, and that we may have periods on-going where we are asked to social distance again.

Many of our church clients are grappling with the questions of when and how they might begin holding in-person public worship services as well as the financial implications of meeting and not meeting. Many are in midst of budget preparation for FY21. But how do you plan in a time of uncertainty? Here are some things to consider:

Plan A and Plan B

Because there is much unpredictability, consider developing 2 or even 3 budgets. Be conservative. Your optimistic scenario should probably be a drop of 10-20% of last year’s giving. A crisis budget might be a drop of 50% of last year’s budget. It depends on your context and community.

Agility

This next year is going to require you to be alert, paying extra attention to giving and spending. Be prepared and willing to re-evaluate throughout the year, adjust accordingly and communicate frequently with vendors and financial institutions. (See our post about building a conditions based framework for re-opening and how that might affect your organization.) If you don’t already, consider establishing and promoting online giving to provide an easy and consistent way for your community to give.

Reduce

Identify fixed expenses and seek to reduce variable expenses. Anticipate not holding public worship for some time and reduce those expenses from your budget. Review future contracts to see if you can cancel with no or little penalty. Try to anticipate early if you’ll need to reduce staff and if appropriate consider reducing hours rather than releasing employees.

Be Forward Thinking

The more you are able to anticipate COVID-19 impacts on your church or organization, the better prepared you can be. Avoid being reactionary. Instead take time to think through decisions and their impact on your church, organization and community. 

Consider Including Contingency

The more unpredictable the economic environment, the larger your contingency may need to be. 

Reserves

We’d recommend you maintain at least 3 months of reserves to sustain operations and cover short-term deficits. While during such times as this you may be forced to dip into cash reserves, plan to replenish as part of the recovery.

Financial sustainability comes through well-prepared and closely monitored budgets. You may spend more time over the next fiscal year reviewing giving and spending trends than you have previously. The more you do, the better prepared you will be to pivot and adjust. 

The last and most crucial part of budgeting in these unpredictable times is to communicate your new budget. This is an opportunity to set expectations about how your mission shaped your decisions and how the new budget will shape ministry and community life.