How to use church financial reporting as a pastoral tool

Despite economic challenges, congregations have stepped up to help meet church needs.

According to data from the Christian Standard, 57% of churches said giving exceeded their budget in 2023, and 22% said it met their financial requirements.

This substantive and sustained giving represents the trust your congregation has in your ministry team.

Honoring this trust requires transparent church financial reporting practices to ensure money is wisely spent and that spending aligns with community and outreach goals.

Complete financial reporting also acts as a pastoral tool.

Equipped with knowledge about giving trends, funding models, and spending predictions, your church leaders can speak to scriptural teachings around financial management, and demonstrate their commitment to positive community impact.

Here’s what we’ll cover

Understanding the role of financial reporting in ministry

Unlike most businesses, much of the money received by churches goes toward faith-based missions that aren’t designed to make a profit—instead, they’re meant to act in service to others.

Financial management is inseparable from the mission of ministry. Like any business, your church needs to know how much money is coming in, how much is going out, and where money is being spent.

As a result, church financial reporting plays three critical roles in your ministry:

Accountability and stewardship

Effective financial management demonstrates accountability to congregations and builds confidence in the stewardship practices of your ministry leaders.

Congregations want to know that their contributions are being used effectively, and transparent financial reporting makes this possible.

Transparency as a trust builder

Trust is the cornerstone of effective ministry. Financial transparency builds trust and cultivates your community, since your congregation can see the direct impact of its monetary contributions.

Alignment with biblical principles

Biblical principles also speak to the need for careful and comprehensive financial management.

For example, Proverbs 21:5 says that “the plans of the diligent lead to profit as surely as haste leads to poverty,” while Luke 14:28 says “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?”

in scripture, financial intelligence and diligence are praised, making complete financial reporting a key element of Biblical alignment.

Key components of effective church financial reporting

Three components are critical for effective church financial reporting: integration, automation, and visibility.

Your church needs tools that integrate with current financial data sources, and can then automate key tasks related to collecting, analyzing, and reporting on this data.

Your ministry team also needs solutions that provide complete visibility.

This not only makes it easier to anticipate giving surpluses or shortfalls but also provides transparency to help ensure regulatory compliance.

For example, many states require churches to file an annual corporate report. Under federal law, meanwhile, you must also report tax information for any employees or self-employed workers.

Key elements of an effective church financial report include:

Income and donations

These include tithes, offerings, and special funds.

Reports should also detail the source of this income to your church.

Identify how people are giving—are donations one-time or recurring?

Are they small amounts spread out across your congregation, or large amounts from specific givers?

Expenses

Expenses include staff wages, lease or mortgage payments, utility bills, and the costs of any internal or external outreach programs.

For example, look into providing financial assistance for congregants in need or invest in community outreach programs to help the less fortunate.

Budget versus actual performance

Estimated budgets and actual performance don’t always align.

Transparent reporting helps ensure your church doesn’t end up spending money it doesn’t have.

Designated funds and restricted accounts

Some of the money collected by churches is marked as unrestricted, meaning it can be used for any necessary purpose.

Other funds are designated for specific outreach or ministry, and some collections are placed into restricted accounts.

Understanding the value of each is essential for a complete financial picture for your church.

Customized reports are also essential for your church’s financial reporting.

While every ministry deals with similar data, your details may differ significantly.

For example, a church with thousands of members across multiple campuses will have different financial needs than a small, local congregation that numbers less than 100.

While transparency is critical in both cases, the amount of money received—and how this money is used—is vastly different.

Using financial reports as a pastoral communication tool

Equipped with financial report data, your church leadership team is better prepared to take on key pastoral tasks, including:

Congregant outreach and support

Charity is a central tenant of effective ministry, but outreach and support are only effective if churches understand their financial outlook.

With advanced reporting tools your team can access key metrics such as total giving amounts over a set period, the total number of first-time, second-time, lapsed, and recovery givers, and the average giver retention rate.

This provides deep insight into your donor’s funds and helps plan future projects.

Celebrating generosity

Your ministry team can also use giving data to highlight the impact of congregational generosity.

This could include details about mission trips or community outreach projects.

This helps to bond your congregants over aligned goals, strengthen future pledge drives, and attract future first-time donors.

Setting vision and goals

Complete financial reporting can help your church align its future vision with attainable goals.

These might include expanding your community programs, adding new staff, or building additional campuses.

“Because of our streamlined processes, our existing finance staff are in a great position to support Potential Church even as we add another 10 campuses.”

Reggie Alexis, controller, Potential Church.

Encouraging participation

Financial data helps your ministry team encourage participation in new initiatives.

For example, if your leadership can show the positive impact of giving on community outreach programs such as providing food, shelter, and other care, they can encourage purposeful giving.

Educating the congregation on stewardship

Financial stewardship is fundamental for both personal and pastoral stability.

As a result, financial data offers more than a numerical overview of current conditions—it also provides the opportunity to educate congregations on stewardship.

For example, your team can use reports to teach biblical financial principles, such as the need for carefully considered spending and the avoidance of acquiring wealth for wealth’s sake.

Data can also demonstrate the importance of tithing and offering.

By connecting financial giving to the impact of your community programs, your church can show a direct connection between generosity and positive outcomes.

Strengthening ministry impact with financial insights

Effective financial management can help strengthen your ministry impact.

Data tied to resource allocation can improve monetary distribution to help support an underfunded ministry.

These might include any community outreach programs that are showing success but are limited in the number of people they can help due to financial constraints.

Trend data, meanwhile, such as average giving amounts and total number of givers, can be used as the basis for new initiatives or the expansion of your current programs.

Best practices for effective reporting

While every church is different, three best practices are broadly applicable.

1. Use purpose-built financial software tools

First, it’s worth implementing software tools purpose-built for church financial management.

For example, Sage Intacct Ministry Intelligence provides in-depth metrics about giving and spending trends.

The solution can be deployed immediately and integrated with current tools thanks to open API architecture.

2. Create consistent reporting practices

It’s also important to create consistent reporting practices.

These include regular reporting schedules (weekly, quarterly, monthly, etc.) along with clearly defined report formats.

This is especially critical if your church has multiple campuses and large finance teams.

3. Leverage visual aids such as charts and graphs

Finally, consider using tools that provide comprehensive data dashboards which include visual aids, such as charts and graphs.

This visual approach makes it easier to contextualize financial data and determine the best way forward.

Overcoming challenges in financial reporting

The complex nature of church finances creates several common challenges.

For many ministry teams, the most pressing are technology limitations and manual reporting.

Your team may also be hesitant to engage the congregation in discussions about church finances.

As part of creating a trusting, transparent environment, however, this is essential. Here, three strategies are helpful:

Be clear

Don’t mince words.

If giving numbers are low, say so.

If they’re consistent but more money is needed for specific programs, be earnest and honest.

Your congregation is a community, and financial stability is in everyone’s best interest.

Be consistent

Consistent messaging is also key.

This means keeping your congregation updated on what’s happening, how teams are responding, and what comes next.

Be encouraging

Finally, focus on the positive.

If your church finances aren’t ideal, encourage your congregation to come together and make a difference.

Community is a powerful force.

Your church can also benefit from professional financial advice as needed.

This may include external audits to ensure its finances are accurate and complete, or the use of financial tools backed by comprehensive support to help give your team financial transparency and improve decision-making.

“With Sage Intacct, we’re able to look at various scenarios and know what the impact of certain decisions would be.”

Glenn Wood, pastor of church administration, Seacoast Church.

Faith and finance: Fostering trust and transparency

Equipped with a complete picture of current finances and future trends, ministry teams are better prepared to demonstrate the impact of giving on community programs, explore the role of financial stewardship in spirituality, and foster a culture of trust and transparency.

Take control of your financial future: Download the 8 Tips for Using Technology to Manage Church Finances e-book.