FINANCIAL POLICY OF A UNITED METHODIST CHURCH

 Designing a financial policy for a Methodist church requires careful consideration of the
church's values and mission. Here are some steps to structure a financial policy for a
Methodist church:

 Define the Purpose of the Policy: The first step in creating a financial policy for a
Methodist church is to define the purpose of the policy. The purpose of the policy should
be aligned with the church's mission and values. For example, the purpose of the policy
could be to ensure that the church's financial resources are used in a responsible and
transparent manner to support the church's ministry and outreach activities.

 Establish Financial Controls: The second step is to establish financial controls to ensure
that the church's financial resources are used appropriately. This may include setting limits
on spending, establishing procedures for making financial decisions, and requiring
multiple approvals for significant expenditures.

 Develop a Budget: The third step is to develop a budget that aligns with the church's
mission and values. The budget should be based on the church's expected income and
should include a detailed breakdown of all expected expenses.

 Establish Fundraising Policies: The fourth step is to establish policies for fundraising
activities. These policies should include guidelines for accepting donations, procedures for
acknowledging donations, and guidelines for using donated funds.

 Create Financial Reporting Procedures: The fifth step is to create financial reporting
procedures. These procedures should include regular financial reports to the church
leadership, as well as procedures for auditing the church's financial records.

 Develop a Cash Handling Policy: The sixth step is to develop a cash handling policy. This
policy should include procedures for collecting, counting, and depositing cash, as well as
guidelines for handling cash in a secure manner.

 Create a Reserves Policy: The seventh step is to create a reserves policy. This policy
should establish guidelines for maintaining reserves to ensure the church has sufficient
resources to meet its financial obligations and support its ministry activities.

 Communicate the Policy: The final step is to communicate the financial policy to the
entire congregation. This can be done through sermons, bulletins, newsletters, and other
communication channels.

 By following these steps, a Methodist church can develop a financial policy that aligns
with its values and mission and ensures responsible and transparent management of its
financial resources.
YOU CAN ALSO USE THIS METHOD
1. Introduction
Explanation of the purpose of the financial policy and its importance to the church's mission
Statement of the church's commitment to responsible and transparent financial management

2. Budgeting and Financial Planning

Guidelines for creating an annual budget that aligns with the church's mission and values
Procedures for reviewing and updating the budget as necessary
Guidance for financial planning to ensure the long-term sustainability of the church's mission and
outreach activities

3. Financial Controls and Procedures

Policies for managing the church's financial resources in a responsible and transparent manner
Procedures for making financial decisions, including approval processes and checks and balances
Guidelines for the use of church funds, including restrictions on how funds can be used

4. Fundraising Policies and Procedures

Guidelines for accepting donations and gifts in kind
Procedures for acknowledging and recognizing donations
Procedures for tracking and reporting on donations

5. Cash Handling Procedures

Policies for handling cash, including collection, counting, and depositing procedures
Guidance for ensuring the security of cash at all times
Procedures for reconciling cash deposits with records

6. Financial Reporting and Accountability

Procedures for producing regular financial reports for the church's leadership and congregation
Guidelines for auditing the church's financial records and reporting the results
Policies for ensuring the confidentiality of financial information
 7. Reserves and Endowments
Guidelines for maintaining reserves and endowments to support the church's mission and outreach
activities
Procedures for establishing and managing endowment funds

8. Conclusion
Restatement of the church's commitment to responsible and transparent financial management
Acknowledgement of the importance of the financial policy in supporting the church's mission
and values

STRUCTURES BY STEP
TABLE OF CONTENTS
SECTION 1: DUTIES & RESPONSIBILITIES
A. Treasurer Policy
B. Financial Secretary Policy
C. Reconciliation Secretary Policy
D. Counting Team
E. Assistants

SECTION 2: CHURCH RECEIPTS

A. Sources and Holding of Receipts
B. Worship Service Collections, Mailed & Delivered Contributions/Donations
C. Automatic Bank Deposits
D. Day Care, UMW, MOPs, etc.
E. Fund Raisers and Solicitations
F. Gifts of Marketable Securities
G. Cash Policy
H. Receipts Policy
SECTION 3: CASH ACCOUNTS PROCEDURES
A. Check Signing
B. Recognition of Accounts
C. Bank Controls

SECTION 4: DISBURSEMENT PROCEDURES

A. Payment Authorizations
B. Declining Unauthorized Expenses

SECTION 5: DESIGNATED AND RESTRICTED FUNDS

SECTION 6: PASTOR’S DISCRETIONARY FUND
SECTION 7: FINANCIAL REPORTING
A. Financial Reports
B. Statements of Contributions

SECTION 8: FINANCE COMMITTEE

A. Committee Meetings
B. Organization
C. Audits
D. Annual Budgeting

SECTION 9: OTHER
A. Insurance and Bonding
B. Document Retention Policy
C. Conflicts with Book of Discipline
D. “Immediate Family Member” Defined
E. Effective Date
POLICIES AND PROCEDURES FOR YOUR CHURCH FINANCE COMMITTEE
The members of a church’s finance committee have a huge responsibility. They are tasked with
collecting and disbursing funds to make sure the church remains financially sound. They must
also make decisions that affect the church’s finances on a daily basis.

Here are some helpful guidelines, common policies, and standard procedures for the finance
committee at your church.

Church Internal Controls

Church financial policies and procedures stem from the need for transparency and internal
controls. Some procedures may vary based on the size of your church and the available staffing.
However, these policies are intended to demonstrate accountability, reduce the risk of fraud, and
keep financial team members aboveboard so accusations of mismanagement (if any are made)
have no merit. Because of that, churches of all sizes will want to implement internal controls for
their own protection.

Internal controls may include but are not limited to the following:

There should always be at least two people present when transporting cash or checks to a safe or
to the bank.
Always make sure the safe is locked.
Never leave a safe key unattended or in an unlocked drawer or cabinet.
If the safe has a combination lock, do not write it down anywhere, and do not share the code with
anyone who is not authorized to have it.
At least two people should be present when counting physical tithes and offerings, and anyone
present should be cleared to have access to the counting area.
A second person should count the tithes and offerings to verify that the amount matches the initial
count.
Bank deposits should be made at least weekly to minimize the amount of cash on hand.
Itemized receipts should be reviewed by someone other than the purchaser to make sure the
amounts are accurate.
Purchased items should be reviewed to verify that they are all legitimate church expenses and that
all items are accounted for.
Bills should be approved by someone other than the person paying them.
Bank account statements should be reviewed at least monthly by the finance committee.
Initiate an annual private audit to make sure no financial discrepancies or holes are found.
Have clear reporting procedures if anyone notices any policy violations.
The Roles of Primary Church Finance Committee Members
The typical role of a church finance board member will be to evaluate church financial records,
prepare the church budget, and supervise other church finance board members. This means you
must attend meetings, keep up on church finances, and counsel other members of the board as
needed.

Below is a breakdown of common tasks and responsibilities associated with three of the main
finance committee members.

The Financial Secretary

The secretary is usually responsible for tracking and reporting contributions to the church. Tasks
related to this role include:

Supervision of the offering count

Deposit of the offering
Recording and tracking contributions
This role also requires regular communication with other committee members and church leaders
when needed. For example, there may be conversations about financial resources with the
treasurer, discussions about policies with the chairperson, occasional talks with the pastor when
needed, or interactions with the congregation when there are questions about giving trends or
contributions as a whole.

The Treasurer
The treasurer is usually tasked with making most of the financial decisions on behalf of the
finance committee. The duties of the treasurer primarily fall into two areas:

Reporting – Providing reports and updates on finances, attendance, tithing, expenses, etc.
Disbursement Of Funds – Allocating money to any previously agreed upon causes and
expenditures
As treasurer, it will also be essential to interact with a wide range of people to fulfill church
obligations. These relationships typically involve working with the financial secretary on a
regular basis, discussions with the committee chairperson regarding major financial decisions, and
weekly conversations with the pastor regarding the health and direction of the church.
The Chairperson
Also referred to as the “chair,” this committee member’s role is to oversee the financial health and
direction of the church. The responsibilities of the chair vary from church to church, but they
usually consist of the following activities:

Creating the annual church budget

Developing and implementing strategies that will generate the funds necessary to successfully
achieve budget benchmarks
Distributing any funding received based on recommendations from church leaders
Leading the secretary, church treasurer, and other committee members as needed
Recruiting assistance for counting the offering as needed
Arranging bonding for the treasurer or any other members who deal with cash on a regular basis
Keeping church leaders up to date on any new trends or developments related to church finances
The chairperson of the committee will be interacting with committee members, groups, members
of the congregation, and church leaders as required.

General Responsibilities and Duties of the Finance Committee

The finance committee as a whole is tasked with generating and maintaining church funds to
support the organization. They are responsible for maintaining and auditing the church’s financial
records, and they must make decisions that will directly affect the church’s finances.

Below is a breakdown of the general responsibilities and duties of the committee.

Creation of The Church Budget

The finance committee should create a general budget that takes into consideration the individual
budgets of each department. The chair usually gives final approval before it is officially
announced.

Forming and Managing a Reserve for Emergencies

The committee should decide on a percentage for an emergency reserve and then set aside that
percentage accordingly for unforeseen situations. A healthy habit is to add to this on a yearly
basis so you are prepared when an emergency arises.
Reporting On Church Finances
Monthly, quarterly, and annual reports should be created to keep church leadership and the
congregation apprised of budget projections, spending, attendance, offerings, and any other
relevant data.

Protection of Church Assets

The board and the finance committee should be working together to create policies that protect
the church against unpleasant topics like fraud, embezzlement, etc. They are not fun to talk about,
but having these discussions and creating safeguards to avoid them are a necessary evil.

Establishing and Maintaining a Profit Margin

Another sign of a healthy church is the creation of a fund that is solely created to maintain a profit
margin for the ministry. Similar in concept to an emergency reserve, the committee should set
aside a predetermined percentage of any income that is generated by the church as a safety net
that can be reinvested into future church projects.

Supervising and Managing Spending and Debt

The finance committee should either have a plan in place or create a plan to pay down debt so the
church is not limited financially. Churches with financial flexibility stand a much better chance of
staying on budget and achieving their vision for the foreseeable future.

Educating Church Leaders on the Church Budget and Budget Management

Teaching church leadership the basics of budget and budget management will help them know
how to interpret reports. They may also be able to assist if someone from the committee is out for
an extended period of time.

Assistance for Church Finance Committees

As you can see, the church finance committee is responsible for a significant part of the church’s
success and well-being, and participating requires a lot of time, patience, and knowledge.

Fortunately, there is a tool that was specifically created for the challenges that come with
managing church finances. Thousands of churches currently use Aplos to simplify their finances
and accounting, saving a ton of time and sanity in the process.