Episode 79: We Don't Like to Talk About it, but the Church is a Business too

Hey, Friend!

Ministers don’t like to talk about ministry as business, but in the U.S. it is in most cases.

If you want church to be just ministry, meet in a home, don’t collect money, and have everyone serve as a volunteer.

The minute you buy or rent space, start paying people and purchase goods, you have become a nonprofit business with all of the benefits and expectations of the IRS that go along with that.

Ministers would do well to fully understand what all of that means so that they can steward their budgets accordingly.

In today’s episode, I give a brief overview as to what church as business means and the gratitude we should feel for those bookkeepers and CPA’s out there who effectively steward the church’s resources.

I pray this blesses you!

Becky

Episode Transcript

(00:00):
You get a group of ministers together.

(00:03):
Likely, they're going to talk about their ministry.
They'll talk about God, maybe what they're praying about,
what they're reading in Scripture, maybe what they're,
the lesson they're preparing is about.
They're telling you about this cool devo they had last week with their group of students,
or maybe this thing they're planning with the children that's going to teach them about our,

(00:27):
are great, wonderful God.
But one thing that you're going to find ministers do not like to talk about is the church as a business.
Wanna know more?
Let's dive in to today's episode.
Hey, friend, are you a people pleasing conflict avoiding leader?

(00:48):
Is your secret relationship with fear affecting your leadership decisions?
Do you want to learn how to build credibility and confidence or to navigate difficult conversations?
Do you long to manage your time without sacrificing your family or self-care?
Welcome to Leadership Becomes Her.
I'm Becky Burroughs, your host and a minister and life and leadership coach with over 50 years experience in leadership.

(01:16):
I firmly believe God has given you everything you need to lead well.
You have the toolbox.
You just need to learn how to use the tools.
So get comfy or start a mindless task.
You know how to pause or rewind if you need to.
Let's get started.
So there's all kinds of reasons why people go into ministry.

(01:42):
Some people feel calling early on and they will go to college and they will
major in something related to ministry or theology or religion or whatever route they take.
And they know.
They know certainty.
God is calling me into a life of ministry or missions.
Others of us take a more convoluted route into ministry.

(02:07):
For me, my background is in education.
I was a speech-language pathologist.
I have all these degrees and certifications that have absolutely nothing to do with ministry.
And yet after I had been in education for over 25 years, I had a very distinct and direct call to ministry.
And so because I have a background in other things, for example, I was a high school principal

(02:34):
and I was always having to look at budgets and spreadsheets and things.
I just accepted church as business.
I just accepted it. It's just part of it.
And yet ministers who go into ministry from an early age because they just want to serve God in this particular way

(02:55):
really don't like to think and certainly don't want to talk about the church as business.
Now, the church does not have to be a business.
Here's what you do if you want to start a church and you don't want anything to do with business.
Invite people into your home.
Nobody has a salary. Nobody has benefits.

(03:19):
Everybody just comes together to worship.
No money is really collected. Maybe you decide, "Hey, let's all give some money right now."
"Oh, look how much we collected. $200. What are we going to do with it? What good are we going to do with it?"
And so you don't own any property. Nobody's getting a salary. You're just worshiping together and you say, "We are a home church."

(03:45):
Yes, you are. You are 100% a church. You are not a business.
But the moment someone wants to receive a salary.
The moment you buy or rent a property,
the moment you have any possessions that you've purchased that belong to the church, "Boop, you are a business."

(04:08):
You're a non-profit business. You're probably a 501(c)(3).
And as a non-profit business, you now answer to the IRS.
And there are certain benefits of being a non-profit business and there are very specific expectations.

(04:30):
So every church must have someone on staff who is not only knowledgeable about the benefits and the expectations,
but make sure they are being met.
And in many cases, you might love this person as a person. They may be your favorite person on the planet,

(04:51):
but their job is a tough one because they stand between you and the IRS.
They are the ones making sure that the church is following the rules so that you do not lose that non-profit status.
And so that your organization doesn't have to start paying taxes.
And so I've been in the church business for a while now and I see ministers getting so frustrated when the church bookkeeper or perhaps the CPA,

(05:24):
knows what we can and cannot do, what we do and do not have the money for.
And ministers don't seem to understand that by and large.
But my budget line says I can spend, you know, I'm going to throw a figure out, my budget line says I get to spend $3,000 on curriculum
and I have found the perfect curriculum. Why can't I just go ahead and get it? I don't understand what the problem is.

(05:49):
And the person in charge, I'll call him or her a CPA. The CPA says yes, your budget line says we have budgeted $3,000 for curriculum,
but that's based on contributions. Churches are so unique in that rarely are you going to find an organization other than a church that depends 100% on donations.

(06:14):
There are other non-profits that depend heavily on donations, but they also can write grants and have other ways of bringing in money.
But churches are dependent on the donations of the people that come in that room on Sunday morning. And that is a scary thing.
When you think about you've got to prepare a budget. So like this is 2025. And so sometime in the fall of 2025, the CPA will prepare a budget for 2026.

(06:47):
Guessing as to what the income will be. Guessing as to what the contributions will be based on historical trends.
Oh, how many members did we have that gave and how much did they give in 2025? Okay. I'm going to use that to guess.
It's going to be an educated guess, but guess how much we can expect to come in in 2026. Then they start going through all the expenses.

(07:12):
Oh, I just found out that insurance is going up next year, a certain percentage. Oh, I just found out utilities are going up next year.
And so, oh, they want to give a 3% raise to the minister to the staff.
Okay. And tries to work those numbers because the unique thing about a nonprofit budget is at the end of the year, the business, the church can show neither a profit nor a loss.

(07:41):
That's why it's called a nonprofit. The budget has to balance. And so you're taking a guesstimate of what people are going to give.
And you're trying to build a budget on that. So in the case that I example, I just gave or the minister said, but I have a budget line of $3,000 to buy curriculum.
And the CPA says, yes, we have budgeted $3,000 for you to buy curriculum, but giving is down.

(08:09):
So I've tracked giving in the first quarter. And the church is overall giving 10% less than what I guessed they were going to give.
So now, staff, you've got to spend 10% less. So look at your budget lines. And let's say your curriculum line is no longer $3,000.

(08:33):
It's $2,700. And so that does not make the CPA very popular with ministers when they're wanting to spend money.
Because they just, and I, I'll never forget when I first came into ministry and we had one of the first of many budget cuts.
And we had a student minister who would try to get kids to come to his weekend evening events by having fabulous door prizes.

(09:03):
And at that time, the we had just come out and he was giving away a we to someone that would come to this thing. And a very expensive door prize, by the way.
So I told him he couldn't we couldn't afford to do that anymore. And he said, I simply cannot do ministry without money, which was very short-sighted and something that perhaps he was an inexperienced minister at the time.

(09:32):
Because in ministry, one of the things we learn is that if you have an abundance of money to spend, you do not need much of an imagination.
If you do not have an abundance of money to spend, then you need to crank it up and use your imagination as to how you can have fun or how you can entice kids in this case to come to a weekend evening event.

(09:56):
If you're not going to be giving away fabulous door prizes, electronic door prizes.
And so it is just it's a continual tension on a ministry staff wondering, you know, I've got this budget. Why can't I spend?
And the CPA saying, because the money is not coming in that we're expecting.

(10:21):
And it's really sad because we can work so well together. And I think the key to that is communication. We didn't always communicate in our bookkeeping department about the state of the budget compared to how much you can spend.
But several years ago, we started tracking. And at the end of the first quarter, we'd say, OK, how does the budget look? Well, it's down, you know, however many percent.

(10:49):
So everybody, you've got to, you know, you got to decrease your spending by that percentage so that the budget will balance at the end of the year.
The other thing that's unique about churches is the cyclic nature of giving.
So for example, I mean, we know this happens at Christmas time, people overspend at Christmas and a lot of it they put on credit cards.

(11:14):
And when do those credit card bills come in January? So it's not uncommon to see someone not give in January. Are they giving me a lot less because they got hit with the credit card bill they got to pay.
Also, it's very common to have to front load payments at the beginning of the year. For example, to get the best insurance rate if you pay it in full at the beginning of the year, then now you've got a cash that has gone out and the money hasn't come into cover it.

(11:47):
So it takes a while to recoup that so it looks like the budgets down when in fact you had to front load some of your payments.
Then summer hits and people start going on vacations and we see giving go down in the summer and then it starts to creep back up in the fall and then very often by the end of the year.
It can get surprisingly big as people, especially people with more money are looking at their year end giving. They need to give more to avoid taxes or whatever.

(12:16):
And so you take the budget you divide it by 12 months, but that's not how it comes in. It does not come in evenly every month. And so a wise person, a steward who has been given responsibility for caring for the money is going to take all of that into account when it comes to spending.

(12:38):
And then there's also the issue of cash flow, you know, going back to the curriculum. If this minister said, but I want to go spend $3,000 on curriculum, I'm thinking, would you do that if it meant your paycheck?
Or do you want to know, you don't even want to have to think about every two weeks am I going to get paid or not, you know you are. And I will say I have been through a lot of budget problems in the past 18 years, not once ever has has the church missed paying me on the day it was due every two weeks.

(13:11):
I got paid no matter how dire the budget looked and part of that again has to do with the careful planning of the one who manages the money to make sure we always have money and reserves.
And it's just like in your home, you've got money, you're checking account, you've got money in your savings account. But if you're checking account gets low, you loan yourself some money. And then as soon as you can, you pay it back and you put it back in your savings.

(13:37):
And so the beauty of having money in reserve is where you can use it and then it takes a CPA to have the discipline to put it right back once the crisis is averted.
And so we don't ministers don't like to think about it. We certainly don't like to talk about it. But the church is a business in the United States.

(13:59):
If you are in a building owned or rented, if you have employees, whether it's one or ten, if you have product that you own, your church is a nonprofit business.
And therefore must follow the IRS rules and regulations for being a nonprofit business in order to keep that nonprofit status.

(14:21):
There's a lot of benefits to it as well though. The one that we enjoy the most is called the minister's housing allowance, which the IRS established that to counteract the fact that back in the day, you know, churches had one minister, one employee and they gave him a parsnage.
And he could live there for free as long as he preached for that church. Well now churches have multiple employees and churches can afford to buy a house for every employee.

(14:48):
So the IRS gives a housing allowance where their housing expenses are tax-free.
And that's a wonderful benefit that we would not get if the church were not a business.
So we don't like talking about it. We don't like thinking about it, but it's a reality.
In the United States, if you have, as I mentioned, property or a salary, your church is a business. And yet we do not exist to do the business of church.

(15:18):
We exist to worship God and to bring the love of God to everyone else. We just deal with the business aspect in order to do our work uninterrupted.
Hey, I hope this has been helpful to you. Let's do this again next week.
It is my prayer that this podcast inspired you, blessed you, or made you think.

(15:43):
If so, please share it with a friend, subscribe and please leave a review.
Hey, I want to connect with you. Follow me on Facebook, Instagram and LinkedIn. Send me a DM or email me at [e-mail].
If you are a Christian woman who leads and you are interested in one of my Leadership Bootcamps for Women in Ministry,

(16:05):
this is a four week workshop, or becoming part of a Kairos Cohort, your long group coaching. Send me a DM or an email for more information.
We'll talk soon.
[Music]