Pillars of Execution
Strategic Growth Planning
Achieving Optimum Financial Goals
Although churches and religious organizations are nonprofit entities, it is imperative that they meet revenue and expense budgets to exercise sound financial management. The Strategic Growth Planning process for a church is the ability to define its financial strategy and how it makes determinations for allocation of resources (people, time, and money) to pursue this strategy.
Church strategic planning is essential in the creation, development, and financial growth of a ministry. Churches interested in growth are not exempt from planning. Thoughtful preparation will guide the organization’s strategic steps to achieve its mission of financial provision. Church planning helps the organization map out strategic steps to achieve its mission through financial provision.
Ministries can experience a level of financial success without a plan, but those who invest the time and resources into developing a specific strategy and plan can achieve sustainable success.
Key Growth Strategies:
- SCOPE-Top Down
- PESTEL Analysis
- Porter’s 6 Forces
- SWOT Analysis
Identifying Techniques to Expand Resources
Revenue for churches and religious organizations is driven by weekly worship attendance, which varies throughout the year. Higher attendance during religious holidays is offset by low attendance during the summer vacation season. Many churches operate at a loss until December, when higher holiday attendance and year-end contributions for tax purposes combine to cause a spike in giving.
Effective cash flow management can provide monetary stability and allow leadership to focus on day-to-day church operations and plans for your future financial growth. How a church manages its money is almost as important as how it is generated.
The integration of treasury and payments solutions can support and assist with Cash Management.
Keys to Improving Efficiency:
- Managing Payables
- Managing Receivables
- Fraud Protection
- Information Reporting
Understanding Business Acumen
Navigating from Cashflow to Overflow
Generally, pastors have no training as business leaders, but that is really what they are. They lead their church, and many churches operate very much as small businesses. There are many financial decisions related to running a business, or a church, which causes pastors to often feel like they need additional input and oversight.
A powerful means of growing a church (as a business) is to establish and execute business acumen and empower leadership’s ability to make sound business decisions by combining a number of factors to arrive at the best outcome for a given situation. Business acumen requires a set of concrete skills and an approach to business that increases the chances of the church achieving its financial obligations and goals.
Within the confines of a church or religious organization, an example of a sound business acumen includes the ability to understand Financial Statements which are especially important as they accurately reflect the financial performance and financial position of the church. Additionally, they empower stakeholders including leadership, members, and financial institutions alike, to evaluate and make sound economic decisions by comparing and evaluating past and current performance to predict future performance and growth of the church.
Keys to Financial Acumen:
- Financial Statements in Review
- Cash Conversion Cycle
- Rational of Ratios
- Operating Cycle
Capital Financing & Structuring
Maximizing Borrowing Solutions
Capital projects include new buildings, acquisitions, expansions, or major renovations. Because ongoing cash flow from tithing typically cannot cover the cost of a major project, religious organizations hold capital campaigns asking members to pledge an amount to be paid in the future.
The collection rate for pledges can vary significantly and lenders may require groups to allocate future pledge funds to items that are not critical to construction, such as furniture. Many projects are financed with a combination of donations and loans, and may be completed in phases, with organizations raising funds and/or obtaining financing for each step.Key Financing Strategies:
- Borrowings Causes
- Borrowing Needs
- Lending Facilities
- Pre-Screening, Structuring & Submission
- Borrowing Ratios