This is my second post in the series Setting Up and Aligning Church Finance Teams.
Now that we’ve laid out the 5 Objectives of the Church Finance Team, let’s look at the responsibilities of this team in order to meet these objectives.
10 Responsibilities of the Team
The Team should continually pray for wisdom and protection for/of the Pastor, Staff, Team and church. This Team should be praying for Trust, Unity and for the Mission and Vision to be fulfilled. This Team is to seek discernment of God’s will and for faith and obedience to follow.
This Team should always do what God wants, not man.
#2 Create and Monitor Policy Guidelines
I would suggest starting with a Master Finance Policy, one that all others are based upon. Then move on to cash receipts, purchasing, disbursements and payroll policies as a first step. Then, take a look at all other policies required.
The team should periodically monitor policies for adherence, as well as to consider proposed changes as needed.
#3 Create Revenue Projections
The finance team or its designee should create income projections for purposes of the annual budget, separate from the ones who are submitting spending proposals. This demonstrates proper segregation of duties as it relates to the budgeting process. See this post and this one for practical ways to create income budgets.
This team would also be responsible to create/review any forecast revisions to budget income.
#4 Review and Approve the Annual Budget and Subsequent Revisions
This team should ensure the budget is aligned with the church’s Mission, Vision and Strategy to fulfill its vision for the upcoming year. They should also ensure the budget has ownership and accountability built-in from the bottom up.
In addition to budgeted income and expense, this team should insist upon a budgeted balance sheet. It is important to see the resulting cash balances for the general fund as well as projected cash reserves and resulting cash flows.
In addition, it’s important to understand projected prepaid, receivable, and fixed asset account balances, along with current and long-term liabilities, including projected debt balances. Finally understand the change in net assets.
#5 Review the Financial Reports of the Church
Understanding of the financial condition of the church and results versus expectations (income, expense and balance sheet) is the foundation of good stewardship and sound decision making.
#6 Approve Indebtedness
This team either needs to approve any indebtedness or, at a minimum, approve debt proposed over an established floor amount.
The Pastor nor any staff member should be able to commit the church to any debt without the approval of this Team.
This should include credit cards as well. The team should review and approve who has a credit card, the credit limits, and whether any balances are allowed to be carried on any card..
#7 Initiate and Respond to Financial Reviews and Audits
Ideally, if the expertise exists in the body, form an internal audit team – separate from the finance team. This internal audit team should report in directly to the Pastor from a segregation of duties standpoint.
The finance team should initiate external reviews or audits from a local CPA firm in the event of no internal audit team or to supplement the work of the internal audit team.
#8 Review Recommendations from the Personnel Team
The team should be reviewing recommendations from the Pastor and Personnel Team as it relates to salary and benefit programs as well as proposed salary adjustments.
In the absence of a Personnel Team, the finance team becomes responsible to perform the responsibilities of a Personnel Team.
#9 Review Funding Strategies
The team should review the effectiveness of the funding strategies as mentioned in my objectives post.
The team should take time once a quarter to review each giving strategy and it’s impact on moving the generosity needle up.
#10 Monitor the Safeguarding of Financial Systems and Information
In this day and time, it’s critical to make sure that the information contained within the church databases are protected. This means properly firewalled, password protected, armed against malicious threats, internet access is properly filtered, separate public and private WiFi networks exist and all systems are backed up – both on and off-site.
Well, those are the fundamental responsibilities of the finance team.
What have you seen? What are your thoughts?
In my next post, we’ll take a look at how to set up this team.