To develop a church budget, the first step is to determine the type of budget desired, then determine a target budget amount, the organization's budgeting history and present objectives, according to freechurchaccounting.com. This should be followed by developing a budget based on the type.Know More
The basic types of budgeting are incremental, zero-based and program budgeting, states freechurchaccounting.com. Categories typically included in a church budget include income, personnel expenses, administration, property and equipment, outreach costs, direct ministry costs, expansion expenses and debt.
Before proceeding with a budget, church officials should answer a series of questions, faithsite.com recommends. These include: 1) what are the goals, 2) what did the church do in the past, 3) what is the church doing at present, and 4) what does the congregation want to do in the future. The whole organization should come to a mutual agreement about the answers to each question.
The church's mission statement should direct the goals, advises financial expert Dave Ramsey. He suggests that a spending plan is vital and should be based on projected income, not past. In addition, the leadership must agree on all aspects of the goals and corresponding budget. To be effective, the goals and spending plans must be communicated to the entire organization.
Ramsey further advises church leaders not to expect the budget to work as planned the first quarter. It normally takes an adjustment period.Learn more about Accounting
A line item budget is an accounting method that lists all of an organization's expenditures based on the department or cost center. Each department's expenditures are given a separate line on the budget. This method helps officers of a company or organization to determine the exact source of their expenses.Full Answer >
Some advantages of a performance budget include easier evaluations for legislative priority, better quantitative estimates of costs in each department, and more effective communication with regard to returns on tax-dollar investments. Some disadvantages to this system are a lack of standard cost systems, faulty judgment with regard to performance information, and an inability to handle emergency needs within budgetary guidelines.Full Answer >
A static budget is used to help control finances by calculating all fixed expenses and providing a spending limit on variable expenses based on this calculation. It can be used to prioritize spending and live within one's means.Full Answer >
A capital budget consists of three components, explains Iowa State University. The first is an opening section for the purchase of capital assets such as equipment and facilities as a part of a new project. The second contains the estimated cash flows from that project's ongoing operations, and the third contains the salvage cash flows and costs stemming from the winding down of that project.Full Answer >