CHURCH FINANCIAL

ACCOUNTABILITY
AFM THEOLOGICAL SEMINARY
2024 CLASS NOTES

LECTURER: ELDER G SHUMBAMBIRI

 CHURCH FINANCIAL ACCOUNTABILITY

FINANCIAL ACCOUNTABILITY

Whenever there are people and money involved, there needs to be structured business practices to ensure
church resources are managed appropriately. What makes even churches unique is that they rely on
offerings and donations from members and have a responsibility to be good stewards of those
resources. The ability to manage church resources effectively is dependent on the church’s process of
overseeing church operations. Therefore, a church is only as effective and efficient as the systems and
processes by which it operates.

Over-spiritualizing financial issues is the number one cause for the financial confusion that plagues
churches. It is important and better to use known principles to manage the money of your church.

NB: To test your understanding, can you go through the review questions at the end of these notes.

1. MANAGING CHURCH FUNDS

Handling of the church’s money will cause the people to have faith in the church or to lose confidence in it.
The congregation will judge the church in the way it handles every cent it receives. - as they see their tithes,
donations, offerings, etc. being put into good use, their commitments will rise. Remember, almost every
strategy for church growth will require use of money – without good management of church funds, your
dreams (outreaches, crusades, church construction, etc.) and vision will die in your belly.

Churches ask individuals to serve in these trusted leadership roles because of their positions of leadership
in the community and business world. However, their spiritual maturity should be considered first and
foremost before asking them to help manage the church’s finances. It should be noted that a leader
should be called by God to serve in these important leadership roles. The future direction of the church
often falls on these individuals who manage the church’s finances. There should be not even a hint that
the church finances are not being managed above reproach.

With lack of integrity almost not existent in the marketplace, the church needs to stand fast in managing its
finances with integrity.

The Pastor and the Board should have a basic appreciation of how the church receives its money, receipted,
banked and used. We will not go into finer detail of this at this time. What should be noted is that the church
leadership should know that there are many systems that can be used for extraction of such information,
some are for free and some are paid for. Church Financial systems help to ensure and verify data integrity
that is reported in the financial report.

2. HOW ARE CHURCH FUNDS USED?

Managing church funds need to be done by using principles. To build a lasting church or organization, you
must base your reasoning, actions and decisions on principles. According to Mills (2014 p.200), ‘Respect
Principles and you will be build a great organisation’. Mills defines three definitions of a principle:
• A principle is a fundamental rule, which becomes the basis of an action.
• A principle is the fundamental truth, which is the basis of our reasoning.
• A principle is a general law, which is the foundation for a decision

The following principles on managing church funds are discussed as good finance practices. The list is not
exhaustive but nevertheless tries to capture some of the most common practices.

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2.1. GOOD FINANCE PRACTICES

2.1.1. Communicate Often and Report Appropriately to the church

Communicate, communicate, communicate! As leaders make of point of communicating often especially

when you are having fundraisings and projects. Communicate to the appropriate bodies as much as
possible. Utilise other platforms such as the church’s annual general meeting for the congregants. Many
of the social technologies today are free. Utilize these tools to communicate, encourage, and stay
connected to members.

Church leaders should inform members of income, expenditures, variances, needs, or problems related
to the church’s finances. For churches such as AFM of Zimbabwe, this is usually done in an Annual
General Meeting (AGM). During the course of the year, monthly or quarterly reports are shared to those in
the Main Church Board.

2.1.2. No absolute control from one person.

The church should never delegate total responsibility of the management of financial matters to one
individual. It has been said that absolute power corrupts absolutely. Everyone needs accountability in
financial management even if you trust the person very well, this includes the Pastor as well.

The solution is to have an effective Church Board which is supported by an effective Finance Committee
with the latter being responsible for oversight and the proper management of church resources.
Effective board governance lays the groundwork for efficient church management by directing and holding
church leaders accountable for proper oversight of resources. This includes looking at the budget, capital
expenditures and legal compliance amongst other tasks. Church Boards/ Finance Committee are effective
when they are diverse in membership and backgrounds to ensure a broad perspective and proper
documentation of board documents.

2.1.3. Church Strategic Plan

Good finance practices easily come out as a result of a carefully considered church strategy and plan.
The process begins when a church creates a vision, mission, and values statement implemented through
a focused strategic plan (as discussed in our earlier studies). This structured planning process allows
the church to set performance targets and lays out the steps to fulfill its mission and purpose including its
finance strategies.

2.1.4. Make Giving Easy

Most churches now offer technology options for giving. Remind members of the options to give and provide
the details in full. In the same way, encourage everyone who has paid directly to the church, other than
general offerings, to get a receipt, to enable proper recording of money. Use the church website or other
social media platforms to communicate giving options when the church is in virtual operation mode as is
the case at the moment. Share scriptures on giving and faithful members will continue to give because they
understand their role in supporting the church.

2.1.5. Ensure there is a Budget in place

Churches have limited resources so they need a structured budgeting process to identify expenditure
requirements and prioritization of church spending. A church budget takes its strategy and helps to
prioritize spending to support those initiatives that support the church mission.

You need to ensure that there is a budget in place for your church and being adhered to (including adhoc
activities / projects). Once you have the budget, then you need a plan for following that budget throughout

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the year. If you are not on budget, find out why, make the necessary adjustments and get back on track. If
you don’t, you will run out of money before you run out of year.

By placing qualified people to assist you in managing your church finances, planning properly and have an
organized operating process, you will take stress off of yourself, gain valuable time to minister to God’s
flock in your church and establish a sound financial base for the church- but still remember, the final
responsibility lies on your shoulders.

A quarterly/ monthly budget review will ensure goals are kept in sight and surprises are avoided.

2.1.6. System of handling money

The Administrator/ Pastor should not be involved in the receiving, counting, and depositing of church funds.
If possible, the church should create a rotation system of unrelated individuals to serve in the receiving and
counting of its income. This is one of the functions of the church finance committee.

Counting and banking church’s money is one of the critical elements in handling church money. At any
given time, there should be at least three or more people counting church money. Churches should avoid
having a member count the money alone and be open to question as to his or her integrity. Leaders must
use extreme care as they change from a one-person system of counting, banking or other aspects of
handling church funds.

There should be a written system on dealing with counting money which answers the following questions:
• When will the money be counted? Some might count the money during, others after church service.
• Where will the money be if there is delay in counting?
• Where will the actual counting taking place?
• What procedures, if any, will the counting people follow?

2.1.7. Bank money immediately

• Bank the money at the very next opportunity. In between the time you receive the money and the time
you do the banking, money can be misappropriated.
• Do not take out money from the offering before it is taken to the bank. This will complicate accounting
and open doors to all kinds of malpractices.
• Ensure that 100% of your offerings and tithes are banked intact and promptly (unless if it is not
practicable to do so. In such instances, sufficient controls and guidelines need to be put in place to
prevent abuse of the system.)

2.1.8. Monitor who becomes your Usher

Prevent stealing of the offerings by monitoring who becomes an usher. Keep the ushers in view at all times
so that none of them is able to dip his fingers into the offerings bags.

2.1.9. Use Standard Procedures for Requisitioning, Disbursing, and Purchasing.

Since there is a system of receiving/ handling money, there should be a system of using it as well. A church
should have a simple but standard form on which written requests, called requisitions, for items which
require money are made. This enables the person who is responsible to verify that the item is anticipated
in the budget and that there is money available for it at the time requested.

The procedures for purchasing need to be determined in a church. It needs to be clear just who is authorised
to purchase and how this person is to go about it. Further, it is important to verify that what is received is
exactly what was ordered and paid for. Documents such as Goods Received Note (GRN) are usually used
for such purposes.

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2.1.10. Competitive Bidding/ Tendering System

The church should adopt a policy that any purchases over a certain dollar amount must be placed up for
competitive bidding. For instance, the church should not award its project to a particular company just
because the agent is a member of the church. The church member should welcome competitive bidding as
an opportunity to show how he/she is helping his church.

2.1.11. Frequent Examination & Verification of Accounts.

Church Leadership should adapt and adopt a system that gives procedures which the church can use to
check the church’s records and finances.

Examination and verification of accounts should be routine. It should not come only when there is concern
about some problem in a church’s finances. It is far more valuable to prevent problems than to uncover
them after some unfortunate experience.

Audits (both internal and external) are recommended, and it should be done by persons who are not
involved in handling the church’s money. In the absence of an audit, agreed upon procedures can be carried
out.

2.2. MISTAKES TO AVOID IN MANAGING CHURCH FUNDS

2.2.1. Not Having Enough or Any Checks and Balances

Churches have been ‘trusting environments’ especially when the person managing the books can deliver
reports on time each month showing the church’s finances are in order and doing just fine. If there is over
reliance on the individual, the individual can ensure that the records are balancing but there could be
issues such as individual expenses which can be combined with church expenses or formulas tempered
with on the reports.

2.2.2. Mismanagement on Restricted Funds

If someone has given money with an expressed intent for its use, it must be used for that purpose and
legally cannot be used for anything else. This is true for both money that a giver designates on their own
or money that the church encourages its congregants to give to, e.g. a building fund.

2.2.3. Failure to backup records

The church can fail to have back up arrangements for its important documents and accounting data. What
if something happened to the computer everything is stored on? What if heaven forbid something
happens to the church’s building? What if someone gets mad and deletes everything off the computer?
Having regularly scheduled backups will save you in the long run.

2.2.4. Not reconciling Bank accounts monthly

Reconciling your account each month provides the most accurate picture of your current financial
situation. It is the first step to getting an accurate analysis of your cash flow. Sure the bank may say you
have $1,000 but you forget the $950 of checks that were written last month that haven’t cleared yet.
For a church, reconciling each month allows you to take a look through each transaction and see how it
lines up with your budget for that month It also gives you the chance to make sure that each transaction
that happened was accurately recorded.
Be sure you’re getting an accurate reconciliation done each month. Oh, and another note, make sure
your treasurer is getting to zero each month and not being lazy and forcing the reconciliation to balance.

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2.2.5. Church Debt- Avoid debt.

This can sound simple but it is quite critical. Debts have deceived Pastors and churches into a false sense
of prosperity especially in instances when having building projects or when buying other church assets.
Many have borrowed until they cross the threshold where they have borrowed too much. Debts can result
in the church being sued.

2.2.6. Advancing money

Do not use your money for church projects with the intention of being paid back later. If you are to advance
the church, the arrangement should be done between the full church Board and the Chairman - not between
the Administrator and Chairman only.

2.2.7. Using Personal Account for Church Funds.

The Pastor must not receive the church’s tithes and offerings into his personal account. Offerings must not
be kept in the Pastor’s home (unless there are reasonable grounds that do not permit it).

TEST YOUR UNDERSTANDING:

1. There are a number of good finance practices. Explain in detail, any five (5) of them?
2. What are the mistakes to avoid in managing church funds? Explain in detail, any five (5) of them?

References:

1. Mills. Dag Heward (2014). Church Growth. It is possible.

2. Smartchurchmanagement.com
3. www.startchurch.com

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