Why Budgeting is SOO important to manage the finances of your church? 

Planning is always important. 

Budgeting the finances of your church is essential for effective and responsible financial management 

By why is it SOO important?? 

The big reason is.. 

Effective Budgeting and the control is essential for the financial viability of your organization by reducing risk. 

Budgeting is an essential function in the long term viability of your organisation. 

It is essential for your organisation to survive in the long term! 

After working with over 600 churches over 25 years, and hundreds of other Not for Profit organisations and small businesses, it is clear that the organisations with effective budgets have better understanding, control and viability, than those that do not.


In detail, an effective budget reduces risk because it..

1. Provides important information before the period starts 

  • Identifies potential financial problems before they occur 
  • Enables review of various options to determine the best plan 
  • Assists management: 
  • make better, more informed early decisions 
  • make less drastic and erratic decisions 
  • to better manage Cash 
  • negotiate better arrangements eg to potentially reduce costs 

Identify areas to be considered for more detailed analysis to enable possible improvement 

2. Provides a benchmark to measure performance against 

  • To compare actual performance against budget 
  • To understand the reasons for variances to budget. An effective budget is based on assumptions. Actual results represent actual activities. Therefore, budget variances can be explained by assumptions that did or did not occur 
  • Enables more informed decision making 

3. Enables approval for action and a performance review basis 

  • Once the budget has been approved, activity that the approved budget is based on is approved and can begin 
  • Departments, managers, leaders now have a financial basis for performance review.

An effective budget is essential for effective & responsible financial management of an organisation. 

Other related topics 

How to develop an effective budget for your church. 

What are the main functions in effective financial management? 

How to develop financial policies & procedures 

If you have any questions or want assistance with preparing your accounts for audit please contact us at [email protected] or 1300 138 627 

© Benkorp Management Services Pty Ltd 2018