Income Potential

Dear Pastors

Income Potential

Talking about money in a church context is uncomfortable for most pastors. It was for me. However stating the obvious, if there is no money there is no ministry and if there is a shortage of money then ministry will need to be severely restricted if not closed. The truth is that most pastors and elder groups spend a decent chunk of time discussing this issue and the tighter the cashflow the more we typically need to give attention to the issue of ‘financial viability’.

I recommend that every church leadership team take a deep dive into your income potential. But first understand the current state of play.

1. Who is giving and how much are they giving? Note: I know that for most pastors this is a ‘no go’ area. If that is the case, I would suggest that this analysis is done by someone else who reports back to the ‘Board’ using numbers but no names. However, you go about it, I think it is very important to understand the state of the play.
2. Are you being the best manager of the money you do receive? Run the ruler over each and every expenditure line item and determine if any ‘cuts’ can be made. Do this twice a year. Once when you set the budget and again at the half yearly mark.

At this point you could simply accept what is and work with what you’ve got or you could do a ‘desk top’ calculation of your income potential. If nothing else it is certainly an interesting exercise. Here’s a way you could do that. And remember this should be a ‘back room’ exercise.

3. Get a full list of all your attenders.
4. Note those who do not give. Children, youth, students, beneficiaries and probably most retirees.
5. This will leave you with a considerably smaller list of regular attenders (household’s) who earn a wage or salary.
6. Then calculate your income potential as follows:-

Start with the average wage in NZ which is $62,000pa. Take off tax (PAYE) of 20% ($12,000) - this leaves close to $50,000pa Nett. If a person ‘tithes’ 5%¹ on Nett income that would be $2,500pa. If you have say 80 income units attending your church your income potential is $2500 x 80 = $200,000. Every 1% more a person gives using these numbers is another $500.00pa.

Finally, do you have another income stream beyond offerings? If so how much do you receive from that source?

Doing this or some variation of it can quickly tell you how you what your income potential is. That in turn will inform you about your financial viability².

I hope this is a useful analysis? Any questions or comments you may have are welcome.

Blessings
Alan

¹ The issue of how much Christians give to their local church is a private matter. Though 10% is a traditional ‘recommendation’ or guideline it is doubtful that many people do. Higher waged people may give more as they generally have more discretionary income.

² I am more than happy to assist churches (and para-church organisations) figure out their income potential and thus their financial viability. Please feel free to contact me.