Budgets: To Cut or Not To Cut?

Dear Treasurers,

Over the next three months, Treasurer’s Corner will focus on working towards a balanced budget, concentrating on three important subjects:

  1. Cost cutting on budgets. Should this ever be considered? If so, why?
  2. Cost savings projects. What are these and why are they important?
  3. Cost cutting process and reviews. Is it short term or for the long haul?

This month I’ll start by considering whether cost cutting on budgets is necessary. What are the red flags? What are the reasons associated with such an action?

Firstly, I am a true believer in generosity and that our churches are all very generous. I have seen the faithfulness of our churches in their giving of tithes and offerings to support the work of the church and related ministries. In 2016, the total amount of tax receipted revenue reported to the Charities Directorate from all of the CBWC churches was $41.7 million. This is a huge financial contribution rendered by 158 churches to extend the Lord’s Kingdom on earth!

However, many churches are facing financial pressures for a variety of reasons.

  1. Reduction in memberships as members move away or transition elsewhere due to relocation and job opportunities.
  2. Loss of an important demographic of members as millennials transition elsewhere in search of jobs, or to find a new church where they feel more at home.
  3. Effects of the economic downturn that affects members’ ability to sustain their tithes.
  4. An aging membership that presents a challenging new environment to the financial support and well-being of the church at large, across all the church ministries.
  5. A shift in patterns of giving, either through traditional tithing with cheques or cash payments. Some churches have started using electronic payment systems such as EFTs, PADs, online donations, PayPal, email transfers, e-Push etc., to try to address the behavioural shift. Some have succeeded, while others have not. It involves changing the mind sets of the donors as well.
  6. An attempt to redirect the focus of the churches as to how best to do ministries and be relevant within their communities in our broken and fragmented world.

As good stewards, we are called to be aware of such shifts in the focus and culture that can have significant negative effects on giving. While waiting on these seismic shifts to settle down, there is a continuous need for the church to be vigilant and to balance the budget every year. Subsequently, there is a need to reconsider new creative ways of cost cutting, which will lead to sustainable budgets in the longer term.

Questions & Answers:

  1. What are the red flags towards a budget running into peril?
    1. Consecutive deficits incurred on the planned budget over a two-year period.
    2. Known revenue streams are drying up year after year.
    3. Uncontrolled expenses not approved by the finance and/or budget committees.
    4. Disbursement quota is not met, as planned out and approved by the Board.
    5. Gifts to qualified donees has reduced substantially.
    6. Staff costs has exceeded 55% of the approved annual budget plan.
    7. Delinquencies in making payments towards statutory deductions such as CPP, EI, Federal Taxes and Sun Life Pension Plan as required by law.
    8. Cash flow problems due to reduced revenue streams.
    9. Digging into reserve funds to top up revenue shortages.
    10. Having to consider major cost cutting exercises on yearly budgets to maintain a balanced budget, failing which will result in year-end deficits.
    11. Frequent disposal of assets to raise money for funding ministries.
    12. Increased borrowing and indebtedness to financial institutions to fund ministries, with potential failures in servicing the loans every month.
    13. Lethargies towards fundraising for ministry needs, experiencing both short- and long-term failures towards meeting fundraising goals.
    14. Intentional transfer of trust and/or designated funds to the general budget to fund the church’s operational budget to cover administrative costs.
    15. A volatile investment funds market, where monetary reserves are lost due the volatility of these markets, thus affecting the immediate and future returns on investments, to fund the plans of the church.
    16. Excessive spending on capital projects, resulting in project cost overruns and increased indebtedness on project financing requirements, creating a strain on the church budget.
    17. Lack of a legacy funding program within the church, to help build up trust funds for future ministry projects.

If you have experienced any of the above red flags, perhaps, it is time to take a closer look at the overall budget plan of your church, to see where cuts are required in order to create a sustainable budget for the year.


  1. I have always wondered about how the early church was able to balance their budget. What drove their generosity towards supporting their ministries financially? What kind of lessons can we learn from Acts 2:44 – 47 (NIV)?

All the believers were together and had everything in common. They sold property and possessions to give to anyone who had need. Every day they continued to meet together in the temple courts. They broke bread in their homes and ate together with glad and sincere hearts, praising God and enjoying the favour of all the people. And the Lord added to their number daily those who were being saved.


  1. Believers shared the goals and visions of the early church wholeheartedly. They were together in this. (Focus on the mission)
  2. Believers practiced common generosity to everyone, sold properties and possessions to help finance the needs of the church. (Practicing generosity)
  3. Believers met constantly and shared everything with anyone who had a need, within the community. (The church was relevant to the communities)
  4. As the believers’ needs were met, they rejoiced, praising God, and their generous provisions overflowed to all the people around them. (Outflow of God’s blessings)
  5. The end result was that the early church grew and multiplied as the Lord blessed them greatly! (Experiencing church growth)


Treasurer’s Corner February 2019 Issue | Click here to subscribe