Professional Documents
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1 Wisdom Course Project PAPER Financial Management
1 Wisdom Course Project PAPER Financial Management
SCHOOL OF CHAPLAINCY
BY
WISDOM CHANDA
LUSAKA, ZAMBIA
20 MAY 2022
Outline
I. Introduction
a. Church Administration Creating Efficiency for Effective Ministry, Robert H. Welch,
Nashville, Academic, 2005.
“developing a theology for financial management in the church”
b. Church Administration and Finance Manual; Resources for Leading the Local Church.
Crumroy F. Otto, Kukawka Stan, And Witman M.Frank.. New York, Harrisburg. Morehouse
Publishing. 1998. 289.
“If the church leadership team is to be effective, there must be an active assessing and reporting
program so feedback can result in change when necessary.”
c. Khan M.Y & Jain P.K. “Financial Management - Text, Problems & Cases” the Social science
and Management New Delhi, Tata Mc Graw Hill Education Pvt. Ltd. ISSN 2251-1517(2011):
169-171. Accessed 17 May 2022. www.theinternationaljournal.org > RJSSM: Volume: 03,
Number: 11, March-2014
“Budgeting & Profit Planning” is about the Planning process for the budget. It
gives the idea about the Budget preparation, type of budgets and the use in Corporate Applications.”
a. 12 Pillars of a Healthy Church Second Edition, Waldo. Werning, USA, ChurchSmart, 2001.
“We must have a God given mission and a compelling vision of the future that is communicated
clearly through a master mission strategy and that guides our ministries, personnel, programs, budgets,
according to the biblical priorities.”
b. Scott Magdalein, “Church Mission Statements: 13 Diverse Examples and How to Write Your
Own,” ServeHQ(blog), November 21, 2018, https://servehq.church/blog/church-mission-
statements-13-diverse-examples-and-how-to-write-your-own/#:~:text=Mission%20and
%20vision%20are%20not,people%20to%20join%20and%20participate.
“Your vision should compel people to join and participate.”
c. Crumroy F. Otto, Kukawka Stan, And Witman M.Frank. Church Administration and Finance
Manual; Resources for Leading the Local Church. New York, Harrisburg. Morehouse
Publishing. 1998. 289.
“The mission statement sets the general direction for a given church.”
a. Foundation for Purpose Church Administration. Lindgren J. Alvin. Nashville. Abingdon Press.
1965.
“Purposeful church administration calls for the utilization of all resources and personnel in a coherent
and compressive manner in moving towards fulfilling the mission of the church.”
b. Church Administration from A to Z; Support for Church Growth, Holcomb J. Tim, Nashville.
Convention Press. 1994.
“For the information to be useful, it must be collected and processed in the a meaningful,
purposeful.”72
c. “Church Financial Statements “written by Clay Harmon: The Essentials(NP) Accessed 17 May
2022. https://www.aplos.com/academy/church-management/church-financial
statements/#:~:text=Churches%20call%20the%20traditional%20balance,fund%20accounting
%20for%20your%20church.
“Churches call the traditional balance sheet a statement of financial position. It uses the accounting
equation “Assets = Liabilities + Equity” to show a snapshot of your organization’s financial health. It
also shows the current balance of each of your funds if you’ve been implementing fund accounting for
your church.”
a. Church Administration from A to Z; Support for Church Growth, Holcomb J. Tim, Nashville.
Convention Press. 1994.
“The charts of accounts are the listing of the various accounts in the general ledger”
b. Jay “The Best Church Finance Software in 2020 – 7 Rules!” (blog)July 7, 2020,
https://www.iconcmo.com/blog/best-church-finance-software/.
“Churches operate as not for profits, which dictates they must use fund accounting as their accounting
method. That method of accounting is governed by FASB, which produces the GAAP and the fund
accounting principles.”
c. Church Administration and Finance Manual; Resources for Leading the Local Church. Crumroy F.
Otto, Kukawka Stan, And Witman M.Frank. New York, Harrisburg. Morehouse Publishing. 1998.
V. Suggestions
(Welch 2005) (Cruroy F. Otto 1998) (Werning 2001)
a. Church Administration from A to Z; Support for Church Growth, Holcomb J. Tim, Nashville.
Convention Press. 1994.
“the three major accounting methods normally used by not-for-profits organizations are (1) cash, (2)
modified cash, and (3) accrual.”53
b. Church Administration and Finance Manual; Resources for Leading the Local Church.
Crumroy F. Otto, Kukawka Stan, And Witman M.Frank. New York, Harrisburg. Morehouse
Publishing. 1998.
“Accounting for the contributions of members and how these funds are used can be a simple but
effective process.”
c. Khan M.Y & Jain P.K. “Financial Management - Text, Problems & Cases” the Social science
and Management New Delhi, Tata Mc Graw Hill Education Pvt. Ltd. ISSN 2251-1517(2011):
169-171. Accessed 17 May 2022. www.theinternationaljournal.org > RJSSM: Volume: 03,
Number: 11, March-2014.
“Budgeting & Profit Planning” is about the Planning process for the budget. It
gives the idea about the Budget preparation, type of budgets and the use in Corporate Application.
1
Summary Introduction
Financial intelligence in small churches can give birth to Efficiency which is the ability to
produce an intended result in a way that does not waste time, effort, and resources. And Effectiveness
which is the ability to produce a better result, well saving value and producing a better outcome. 1
When describing the finances of a medium sized congregation we should do it with efficiency and
effectiveness. When “developing a theology for financial management in the church”2 God cares a lot
This research paper describes how finances of a medium sized congregation can be raised and
managed by Planning, analyzing, and controlled. With critical analysis on how the Vision, Mission
and Strategy of the church can affect its finances. “If the church leadership team is to be effective,
1
Welch H. Robert, Church Administration Creating Efficiency for Effective Ministry, Nashville, Academic, 2005,
147.
2
Roberts, Church Administration Creating Efficiency for Effective Ministry, 146.
2
there must be an active assessing and reporting program so feedback can result in change when
necessary.”3 The paper will also look at why it’s important to give feedback and report on how the
church is doing financially. This will include Budgeting which is the Planning process for the budget.
It will give the idea about the Budget preparation, type of budgets and how to use it in the
congregation. Lacking planning is planning to fail; the church needs to be guided by a budget.
Medium churches struggle a lot with becoming financially stable, and this paper will look at
how financial statements can make the church improve, by looking at how the Church Structure and
Financial Administration Chart is arranged in the congregation. The author also suggests profound
ways in which the congregation can improve in recording keeping, fundraising and proper use of funds
in the church.
Financial stability in any organization is backed by vision, Mission, and strategy “We must
have a God given mission and a compelling vision of the future that is communicated clearly through a
master mission strategy and that guides our ministries, personnel, programs, budgets, according to the
biblical priorities.”4 Vision and mission must be inspired by God. Merriam Webster dictionary defines
Mission as “something that states the purpose or goal of a business or organization” and A vision
statement describes what the organization stands for, what it believes in, and why it exists. 5 Mission
3
Otto F. Crumroy, Stan Kukawka, And Frank.Church M.Witman, Administration and Finance Manual;
Resources for Leading the Local Church, New York, Harrisburg. Morehouse Publishing. 1998. 289.
4
Werning Waldo, 12 Pillars of a Healthy Church Second Edition, USA, Church Smart, 2001, 13.
5
Cambridge dictionary, “vision statement” accessed on 17/05/2022. (Dictionary 2022)
3
To raise the financial structure, the organization must have a convincing vision “Your vision
should compel people to join and participate.”6 Poor visions fail to attract prominent people. For
medium congregations to stand time they God empowered vision. This goes hand in hand with the
mission statement “the mission statement sets the general direction for a given church.” 7 Members see
the need to give because they have a clear direction of how the funds will be used.
It’s very vital to implement strong and sound strategies because financial strategy enables
organization to have access to financial needs and the resources that are required to support and meet
the objectives of the organizations’ a strategy is plan that allow continued growth to enable business
success and sustainability8. Strategies help to plan and develop the terms based on a vision, strategy
The Mission Statement of House of liberty Church international is: Transforming Lives.
And the vision statement Is: To transform the lives of people through God's word through innovative
ideas that will be cutter for both spiritual and physical (holistic) that will include coaching, training,
mentorship and supplying basic needs with a drive to fulfill the great commission.
6
Scott Magdalein, “Church Mission Statements: 13 Diverse Examples and How to Write Your Own,”
how-to-write-your-own/#:~:text=Mission%20and%20vision%20are%20not,people%20to%20join%20and%20participate .
7
Otto, Stan, And Frank. Church Administration and Finance Manual; Resources for Leading the Local Church,
289.
8
“Welcome to financial strategy”, Chartered Global Management Accountant,05/05/2022/ accessed date,
17/05/2022, https://www.cgma.org/resources/tools/essential-tools/welcome-to-financial-strategy.html .
4
Financial Statements
administration calls for the utilization of all resources and personnel in a coherent and compressive
manner in moving towards fulfilling the mission of the church.”9 To evaluate the financial health of
the congregation financial statements should be given. The chart below shows an example of the
Donations 500
EXPENSES
PASTORS SUPPORT K1000
TALK-TIME-PASTOR 100
200
BOUGHT A4 PAPER 50
Purchase of envelopes 20
Conference traveling Expenses-
pastor 250
water bill 220
Electricity bills 300
purchase of mics 500
ministry activities 200
soul winning expenses 200
street evangelism 100
purchase of lock 50
purchase of light bulbs 50
MISC 300
Surplus K260
6
The statement above shows how expenditure works against income in a medium sized church.
It must be known that For the information to be useful, it must be collected and processed in a
meaningful, and purposeful way.10 The statement shows all the details on how funds were used.
Financial statements guides on which item the congregation should reduce cost on so that they
can be saving funds for the future. “Churches call the traditional balance sheet a statement of financial
position. It uses the accounting equation “Assets = Liabilities + Equity” to show a snapshot of your
organization’s financial health. It also shows the current balance of each of your funds if you’ve been
implementing fund accounting for your church.”11 Looking at the asset liability Colom’s you realize
that House of liberty church has a lot more funds going into liabilities than assets. If this continues it
The importance of having a structure at the church is that it will provide space where a lot of
people will be able to join in fellowship with one another, which works to be a blessing to a specific
area and community. Church structures give jurisdiction to ministry in the church to manage, organize
and report to its authority without conflicting with other ministries. A good church structure is likely
to have a financial structure that brings growth. “Whether the organization uses committees or
10
Tim J. Holcomb, Church Administration from A to Z; Support for Church Growth, Nashville. Convention Press.
1994, 72.
11
Clay Harmon “Church Financial Statements”: The Essentials(NP) Accessed 17 May 2022.
https://www.aplos.com/academy/church-management/church-financial .
7
individuals, the following areas of financial management should be addressed: Stewardship steering,
Giving, Budgeting, Finance, and Audit.”12 The financial structure shows the flow of funds.
a. Below is the chart of the church structure of house of liberty church international:
12
Tim, Church Administration from A to Z; Support for Church Growth,47.
8
The church structure a congregation has, plays a vital role in church administration and governing. If
it’s not properly arranged, it can affect the growth of the finances of the church. The structure above
shows the hierarchy of the House of liberty and how the financial department connects all the
ministries together. Having a church structure is important because it provides space for more people
structures work to improve the productivity of the congregation. Good structure leads to good
decision-making and governance processes, growth in individuals and ministries, and resources being
13
Otto, Stan, And Frank, Administration and Finance Manual; Resources for Leading the Local Church,290.
9
Having an effective finance structure shows how you budget; fundraise, manage, and distribute the
financial resources of the church to support and strengthen the mission and organization of the
congregation. “Churches operate as not for profits, which dictates they must use fund accounting as
their accounting method. That method of accounting is governed by FASB, which produces the GAAP
and the fund accounting principles.”14 The structure shows the cash flow in the congregation with the
main source of funds being offerings, tithes, donations and pledges, That is collected by the treasure
Suggestions
14
Jay “The Best Church Finance Software in 2020 – 7 Rules!” (blog)July 7, 2020,
https://www.iconcmo.com/blog/best-church-finance-software/.
10
The three major accounting methods normally used by not-for-profit organizations are (1) cash, (2)
modified cash, and (3) accrual.15 Proper church accounting requires strategic planning, churches must
see the need to train financial leaders with basic information on handling church finance.
Nonmatter how bad the church is doing keep key people informed of the financial decision you have
“Accounting for the contributions of members and how these funds are used can be a simple but
effective process.”16 The congregation should take note of every little thing happening in the structure.
For the church to have a strong financial capacity it must sure that the objectives are set and that the
mission and vision matches the environment you are in, the bible show us the God owes the finances
“The silver is mine and the gold is mine,’ declares the LORD Almighty” (Hag 2:8 NIV). Churches
must trust God for strategies, is the one who over sees all the affairs of the church including finance.
Conclusion
Good financial permanence in any organization is supported with Gods inspired vision,
Mission, and strategy, that play vital role in the way you handle and manage the financial statements in
the congregation. Proper financial balance to the management of funds is birthed through critical
analysis and evaluation. Any church that wants to have strong financial capacity must set strong
financial objectives in line with the compiling mission and vision that matches the environment the
church is in.
15
. Tim, Church Administration from A to Z; Support for Church Growth, 53.
16
Otto, Stan, And Frank, Administration and Finance Manual; Resources for Leading the Local Church,57.
11
Throughout the bible we see that God is the owner of the finances, God has a structure this
shows the importance of having a structure at the church that will provide room for assignment to be
cared out smoothly, with people who will be able to join in fellowship with the ministry, we a strong
Having structure keeps the church guided with the way they use the resources, because they
show what is the top priorities. Structure provide space where player can stick to their specific role.
That will enable more people join in fellowship with one another, small congregation can grow to life
giving Churches that are effective and mission oriented. effective financial structure helps members to
see how the budgets; fundraising, management, and distribution of financial resources is done and it
Bibliography
Cruroy F. Otto, Kukawka, and Frank M. Witman. Church Administration And Finance Manual; Resources For
leading the Local Church. Harrisburg: Morehouse Publishing, 1998.
Lindgren, Alvin J. Foundation For Purpose church Administration. Nashville: Abingdon Press, 1965.
Scott, Magdalein. "Church mission Statements ." 13 diverse Example and How to Write your Own . november
21, 2018. , https://servehq.church/blog/church-mission-statements-13-diverse-examples-and-how-to-
write-your-own/#:~:text=Mission%20and%20vision%20are%20not,people%20to%20join%20and
%20participate . (accessed may 17, 2022).
Tim, Holcomb J. Church Administration from A To Z; Support for Church Growth . Nashiville : Convention ,
1994.
Welch, Robert H. Church Administration Creating Effiency for Effective Minitry. Nashille: Academic, 2005.
Werning, Waldo. 12 Pillars of a Health Church Second Edition. USA: ChurchSmart, 2001.