You spend a LOT of time putting together an Annual Ministry Plan for your church. By the time you’re done, you’re DONE. Right?
But, you need a Plan B. And a Plan C.
In other words, an Upside Plan and a Downside Plan.
Statistically, there’s only a 6% chance a ministry financial plan will come together as planned.
That’s right. And that’s assuming there are just 4 components in the plan and assumes further they have equal outcomes and are not dependent upon each other – In this case, the Income Statement. (Income, Operating Expenses, Ministry/Mission Expenses & Salary/Benefits).
So, this doesn’t even include the balance sheet.
My point is that there’s a 94% chance actual results will be different than plan.
The real question then is how much different will actual results be?
In part, it depends on how well you plan:
> The assumptions used
> How big the faith component
> The level of change being introduced
> Planning skills of the staff
The other part is this – we can’t see the future:
> The truth is by the time the Plan is finished, some other things may have already come into play
> Opportunities come up
> Changes in the economy
> Large donors join in or leave
Given these realities, you need to have an Upside Plan and a Downside Plan.
An Upside Plan gives consideration to what the church would do if giving were to be higher than budget. Conversely, a Downside Plan gives consideration to what the church would do if giving were to be less than budget. Both of these types of plans are equally important to have in place when you wrap up the annual plan.
So while everything is fresh- the Pastor, Finance Team and other leaders work and pray thru all the upside and downside options/action plans as part of the annual planning process.
Here’s the advantage – the church can move quickly when differences occur because leadership has already worked thru the Upside/Downside plans already. That’s not to say they can’t be updated, but the bulk of the work has been done already.
Let’s look at how to put an Upside and Downside Plan together here.