===================================================================================================================

TO:  Interested Parties                                                                                               FROM:   Retired CPA-Auditor  Jim Bramer
 

RE:  A Small Church Spending Control Method                                                 DATE:  July 21, 2006

 

             This Church handles some $50,000 to $60,000 annually.  Recently it has been struggling financially.   Money comes in for both restricted purposes as well as to cover the usual operating costs.  Like many Churches, it has staff and mortgage payment obligations and some fixed operational costs – plus promised Missions obligations.   A major indication that the Church is struggling is that it is borrowing from some of the restricted money in order to pay its operating expenses (the “General Fund”).  Obviously this needs to stop.  One way to manage this is for them to weekly place their “General Fund” money into various prioritized “Spending Areas.”  They can only spend when there is a balance of assigned money in that “Spending Area.”  See below for ten of the features of this system.

1>     Let’s suppose that the deposit for the 1^st week of this effort is $1,500.00 and $200.00 was for restricted purposes.  Or $1,300.00 is available to be assigned for “General Fund” purposes. 

2>     A part of this weekly process is that the Leadership decides that the available “General Fund” money each week is assigned to “Spending Areas” in order of priority.

3>     Or the 1^st priority is $600.00 of the above $1,300.00 is to be assigned to the “Staff Costs Spending Area.”

4>     Then the 2^nd priority area is $150.00 which goes to the “Missions Costs Spending Area”

5>     Then the 3^rd priority area is $250.00 which goes to the “Mortgage Payments Spending Area.”

6>     Then the 4th priority area is $200.00 which goes to the “Fixed Operating Exp Spending Area” which covers fixed expenses like utilities and phones etc

7>      The remaining $100.00 of the weekly deposit then is available for needed direct “Ministry Expenses,”.

8>      The Church does NOT allow donors to designate their giving to any of these “General Fund”   “Spending Areas.”

9>        If any of these “Spending Areas” are short after the weekly assignment, then any residual “Spending Area” is increased first from next week’s “General Fund” giving, etc.

10>     There are severe consequences if anyone spends beyond their “Spending Area” balances.

 

            Please email me at  Jim@bcidot.org  about a computerized “Accounting System”  that is   “Internet Centric” (or Internet Friendly)   that  facilitates this process.  In doing this, we prefer to utilize older versions of QuickBooks as we refer to the   ”Spending Areas” as “BuxBoxes.”  This was updated on September 13, 2008