The Biggest Waste of Church Money

As I type that title “The Biggest Waste of Church Money” it is kind of personally shocking even for me the author. I have spent decades in the church and I have seen money go to some pretty crazy items. Of course, they are only as outlandish as my personal perspective and passion permits. Spending over a million dollars on an organ could rank up there pretty high, along with senior pastor apartment-suite-like-offices, or a steeple in the weirdest place just because someone thought it was needed. My experience is when you see a church spending a lot of money on something non-essential like massive water features or commissioned art there is typically a personal donor who made that possible so we should probably reserve judgement.

However, there is one expense that affects the vast majority of churches and often times it is not scrutinized nearly enough. The minute I mention it you might be tempted to quit reading this blog. Warning it is going to be personal, but I promise it will be helpful. It might just be the one missing piece of confidence you need to make a really hard decision. Good times will be on the other side, but having the courage to get there is tough to come by. Are you ready? I’m a little nervous, but here we go.

Quite possibly the biggest waste of resources I have consistently found in churches across the country is in the personnel line item. Now, I am very pro-staff and believe that staff should be paid very well. So let’s get that out of the way straight off the top. Here are some thoughts I want to implore you to consider. I promise if you will highly evaluate personnel expenses you could release a significant amount of resources toward your vision.

  1. The average church will spend 50% or more of its income on staff. This fact alone puts it at the top of the list for the most exposure to misplaced resources. This figure has been very typical for decades. It is only recently that I have found myself in discussions with churches who are actually striving to reduce this expense towards 40%-35% or even lower. This first began with the great recession of 2008 due to a necessity, but churches have learned the benefits of a lean team and financial margin.
  2. Staff expenses can grow out of balance over time without you knowing it and not necessarily for the wrong reasons. Things like having a long tenured team that has received multiple raises over the years, giving that has continually increased, or your debt has been eliminated. In older churches that have plateaued in growth with no debt I have seen as high as 60% of income dedicated to staff. In smaller congregations or church plants I have seen the number as high as 80%. These experiences can simply be a function of size and age. Nevertheless, we still need to give our largest expense the most thought.
  3. Being a nonprofit provides some freedom to not deliver a surplus. Therefore, churches tend to increase their budgets yearly and spend every penny they can. This can easily lead to an overgrown staff line after years of practice.
  4. Firing someone is no fun for anyone. Then when you mix it with the shepherding nature of a pastor who desires to protect his flock from all conflict it gets even harder. As one who has experienced a pastor’s push out the door, I would say that being informally fired was the best thing for me. God had something so much better in store for me and I needed a push. The bottom line is if a staff member is not performing or fitting in, we need to discern if their assignment is done. Expending resources in the wrong way is wasteful even sinful. You may also be keeping them and your church from God’s best future.
  5. Church calendars tend to expand. We really do not like releasing people or sunsetting an activity. As churches have grown more and more busy so have our people. In the past every church was driven by volunteers. However, people simply do not have that much vacant time to volunteer to maintain the busy church schedule. This leads us to hire more people investing even more in stuff that may not be as productive as it once was. Which means we are not only unnecessarily spending money on less productive events, but we are doubling down on the expense by adding team members to insure execution.

So what is the solution? I am certainly not advocating a mass firing. Not by any means. However, as you head into future budget seasons here is what I would suggest.

  1. Create a brand new dream staff org chart. If you could be leading your dream team in five years what would that look? Think in terms of position titles, responsibilities, and giftedness. I would avoid dropping in names at this point. Clue: You want only a few people at the top of your org chart who are gifted leaders and multi-taskers. The church of the future is one of systems, not programs.
  2. After completing the org chart give yourself a staff budget that is equal to 30-40% of your total projected budget expense. Make your personnel cap a real challenge for yourself. You are only dreaming right now, but what if you could free up 10-20% revenue over time? This would mean so much to your ministry.
  3. Scrutinize your church calendar of programming and ministry activity. Not everything a church does is mission critical. I know isolated events and ministries can be meaningful to a few, but your mission will not be compromised if they sunset over time.
  4. Begin immediately investing in leadership development. Teams of people that operate a proven system cost less and deliver consistent results. One staff member can lead multiple teams that manage a system that delivers ministry activities. Success will go up along with your cash flow margin.
  5. Convert your ministry strategy from isolated programming events run by professional staff to an aligned strategy of systems powered by teams. These systems need to measure discipleship success as opposed to the volume of participation. I am not advocating that we strive for smaller numbers just do not equate a large gathering that people enjoy with measurable progress towards your vision. Activity does not always equal productivity. The success of church work is not measured by the size of its facility or the activity depth of its calendar. The bottom line is are we reaching people and releasing them to fulfill their God given mission as a part of his body? This can absolutely be accomplished with a less is more approach.

OK, so we are done. I sincerely hope you will give some thought to your staff expense. Even if you love everyone on your team and believe they are doing a great job. If personnel is your largest line item please get out your biggest pencil and calculator. Just shaving a few percentage points can free up needed resources for the future.