Financial Management


Financial  Management

The annual budget document is the blueprint for both spending and income. It is your guide for making short- and long-term strategic decisions and guiding month-to-month operations. Checking the annual budget against year-to-date income and expenses may show where adjustments in activities and in expectations need to be made to finish the year without a deficit. The budget is a critical tool for boards to fulfill their financial oversight duties. To be effective, budgets need to be realistic, consistent with your strategic planning objectives, flexible and measurable. Preparing the annual budget should be a team effort involving the campus minister, the administrative staff, and the local board.   There are two major types of budgeting that should be considered – line-item and program. The line-item budget is a list of various categories and the amount the campus ministry expects to spend for each category. As a minimum there must be a line-item budget. However, a program budget is preferred. The program budget contains various line-items, but the difference is that each major program is provided with a line-item budget.

Consider using the “10 Steps Annual Budget Checklist” prepared by The budgeting process should begin at least three months before the end of the current fiscal year to ensure approval by the board before the start of the new fiscal year. The budget needs to reflect your programs, mission, strategic plan as well as expected income. (10_step_annual_budgeting_checklist_2017)

Building a Narrative Budget (Optional)

A Narrative Budget is sometimes called a Ministry Based Budget. It is a representation of the line-item budget in simple, easy-to-read descriptive terms. While it does not replace your line-item budget, it transforms your income and expenses into an exciting and enlivening picture of your ministries.

The narrative budget (as the name implies) tells a story. The story describes how the varying components of the budget contribute to a specific ministry program associated with your vision of inviting and equipping students to explore, engage and embody and active faith in God.

The idea is to connect every aspect of the budget to ministry. It links every dollar to mission and every gift to a faithful expression of the joy of giving and generosity of our God. Narrative budgets inspire, interpret, encourage, challenge, and inform donors about why their gift matters.

Most of the expenses in a budget can be linked to a particular program or mission.  One of the challenges of the narrative budget is calculation of property and personnel expenses.  A possible approach to this challenge:

  • For property, estimate the percentages of the use of facilities required by the by a program such as a weekly worship program, a weekly dinner, a food pantry, etc. Apply those percentages to the appropriate categories.
  • When it comes to personnel, especially the campus minister, the salary and benefit package extends across a whole range of ministry and activity from which the campus and students participating in the ministry benefit. What portion of the “time” is dedicated to each program? If 10% of their time on the weekly dinner/program, 10% of the salary and fringe would be allocated to that program.

Further Guidance: Many churches and annual conferences have information on how to build a narrative budget for a church, which can help in building a narrative budget for your campus ministry. Recommend the following resource:

Wisconsin United Methodist Foundation: Building a Narrative Budget (

Internal Controls: Campus ministries should have procedures and activities in place that safeguard their assets and ensure their efficient use.  The General Council on Finance and Administration publishes a checklist that includes controls that could apply to campus ministries. (Internal Control Checklist Extract)

Record Keeping Requirements: Churches are required by the IRS to maintain accounting records that substantiate activity. Generally, this includes official documents, minutes, property records, general ledgers, receipts and disbursements journals, payroll records, banking records, and invoices. Most experts agree that accounting records and contribution data should be maintained a minimum of seven years, while property records, licenses, permits, minutes, and annual reports and financial statements should be retained permanently.

Annual Financial Review: An audit/financial review is an independent evaluation of the financial reports and records of the internal controls of the campus ministry by a qualified person or persons for the purpose of reasonably verifying the reliability of financial reporting, determining whether assets are being safeguarded, and determining compliance with the law, local policies and procedures, and the Book of Discipline. The following guidelines and forms used by the Virginian Annual Conference BHECM form the basis and a sound annual review.

IRS Compliance Guide: In this publication, the IRS addresses activities that could jeopardize a public charity’s tax-exempt status. It identifies general compliance requirements on record keeping, reporting, and disclosure for exempt organizations (EOs) described in section 501(c)(3) of the Code that are classified as public charities.