As of early Sunday evening, the CDC has advised that gatherings be limited to 50 individuals for the next 8 weeks. Many state governors, including Washington state’s Jay Inslee and Massachusetts Charles Baker, have now ordered gatherings to be limited to under 25 individuals for a period of at least three weeks, if not more. Prior to and with these announcements many churches are emphasizing online services and online giving.
Nonetheless, many churches may experience cash flow reductions of 50% or more during these upcoming weeks. Further, many businesses will be slow in rehiring non-essential workers as they slowly recover from the setbacks experienced over the next few weeks. Considering all this, churches should expect that it is going to be a long time before congregational support will return to previous “budgeted levels”.
How should a church handle its financial affairs during this time? Consider the following practical suggestions:
1. Don’t panic. Christ is King – not cash. Follow the advice you are giving your congregations.
“For the Spirit God gave us does not make us timid, but gives us power, love and self-discipline.”
2 Timothy 1:7
2. Don’t lose sight of the mission. God will be faithful, and you should expect that miraculous stories of God’s provision will emerge from what now looks like impossible circumstance. Jeremiah 29:11 applies to churches as much as it does to individuals.
“For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future.”
3. Determine where you are. Get online access to your bank accounts, where you can see the daily activity and the daily balance.
4. Track cash daily. Use your accounting software to keep track of both the cash you have AND the Accounts Payable you owe. This will make forecasting who you can pay much easier.
Use a budget forecasting tool to assist in the management of finances and cash flow. For QuickBooks Advanced customers, Float, a budget forecasting tool, is running a free trial until at least May 31st during the current crisis.
5. Determine where you can go. Rank order the expenses you need to pay and keep the list current (see #4). For most churches it will look something like the following:
In general, delay, delay, delay unnecessary goods and services. This is not the season to be paying an attorney to re-write the employee handbook. Look for non-essential expenses that can be delayed until life returns to normal.
Facilities. Are there maintenance and repair projects that can be postponed until later in the year once things recover? Maybe putting new shingles on the roof or painting the extra classroom can wait until September?
Church Staff.
Don’t miss a payroll, as you may be violating state laws.
If necessary, ask if there are staff that can/should cut back their hours during this time. And inasmuch as the recovery may be slow, some permanent cutbacks may be needed. For example, the church may not need the Nursery Coordinator during these next weeks.
Are there staff who can afford to take a voluntary “payday holiday” for a week or two? Or, would employees be willing to take a voluntary temporary reduction in their take-home pay to be made up later, at a specified time? For either of these options, the understanding should be in writing to help resolve disputes on either side down the road.
6. Reduce near term obligations. Approach vendors about reduced payment plans. With vendor consent consider asking for one or more of the following ideas:
Pay half of each new bill currently and defer the other half until the moratorium on church services is lifted. Vendors may be willing to defer collecting “profit” if your payment is covering their immediate cost.
If the church is in arrears with a vendor, go on old “Cash On Delivery (COD)” terms. With these terms the church pays for the immediate order plus 10% of the old amount due until the full liability is paid off.
Banks may be willing to accept “interest only” payments for a season.
Some utilities have announced unusually generous collection policies during this crisis. Check with your utilities providers for what terms are available.
For example, some have announced that there will be no shut offs during this Corona-virus Crisis. Discuss with them how this flexibility can be used without jeopardizing continued service when the meeting moratorium lifts. And, notify them with a specific payment proposal for when the crisis ends ($X per week/month over and above what will be currently incurred amounts).
7. Communicate, Communicate, Communicate. Keep vendors and staff thoroughly informed how things are going. Remember communication is the backbone of good, trusting relationships. No one knows with certainty what will be in the next online deposit, but as a church you can say, “If [50?]% of the congregation switches to online support, I can commit to paying this bill in two installments – half next month and half the following month.” Regardless of what the truth is, the truth always sets you free.
This blog post is part of an ongoing series to keep churches informed of the resources available. Please reach out if you or your church needs specific prayer during this time. As your partner in ministry, we work to expand God's Kingdom and want to partner with you through this season.
