Last week we looked at the idea of impulse buying, and how important it is to have someone second-check decisions around technology. This week, I’d like to step back and take a broader look at the two of the main models that churches and businesses use for spending money: Committees and Discretionary spending. Both models have advantages and disadvantages, and both work well in different types of situations. Identifying which is right can be an intimidating task, especially when setting up a committee, or when entrusting certain people with the ability to spend money.
Before launching into the discussion, it is important to mention that various churches and businesses place different levels of emphasis on technological budgets. We are not trying to critique the size of those budgets, as each group will have it’s own reasons for the budget it makes. Instead, the purpose of this blog is to examine how we can use the money budgeted in a stewardly manner.
First, lets look at committee spending, or spending that requires approval. This type of spending is often at the butt end of jokes, especially when it comes to churches taking a long time to make financial decisions. As a company, we have worked with churches that have taken years (yes, YEARS!) to decide on and move forward with proposals we have given them. However, Committees can provide some safety and accountability to budgetary spending, because multiple people need to give approval for a project to move forward.
Discretionary spending is the money that a single person or committee can use without getting permission from a larger committee or board. Although this is typically a smaller amount of money, in some institutions it can still be tens of thousands of dollars. The advantage of this is that needs in the church can be met very quickly. If something breaks, or an urgent need is identified, a pastor or committee can use their discretionary budget to solve the issue quickly and without a drawn-out process of approval. The downside is that, like mentioned in last week’s article, this can lead to impulse buying, poor choices, and financial abuse if misused by an unscrupulous person.
In the end, there are two main problems; Discretionary spending allows for fast spending but can lead to certain abuses, while spending that has to be approved takes much longer but is often done more wisely and with greater insight. So how do you decide how much to assign to a discretionary budget, and how much do you need approval for? Here are a few questions that you can ask yourself to determine how to set a discretionary budget:
- How much money needs to be available for the issue at hand? For example, if your church system is worth 5,000 dollars, you don’t need a $10,000 discretionary budget. If your system is worth $75,000 or $100,000, a $10,000 discretionary spending budget might be appropriate.
- What experience does the committee or individual have in the field of their discretionary spending? The more experience a person has, the more likely they are to make properly informed decisions.
- How much do you trust the person and committee? Although this seems like a very blunt question to ask, it’s important to address how well-known a person is, how trustworthy they are, and how long you have known them. A junior sound tech who is new to the church should not have the same discretionary spending power as a professional who has worked in and for the church for 25 years.
- What will happen when the committee members or individuals are replaced? Will they get the same amount of discretionary spending? If changes are needed, it is easier to write in these procedures before they are needed than it is to try and explain to the new pastor or sound tech why you are cutting their budget.
- Does the person/committee have a history of impulse buying or making unwise budgetary decisions? Alternatively, does the person/committee have a history of making wise and stewardly decisions?
The issue of stewardship and responsibility is a complex topic, full of ins and outs. This is just one aspect of it, and even in this discussion there are many different tangents or directions that could be covered much more in-depth. We don’t pretend to be financial experts, only to be people that have experience working in different types of churches and businesses. Our hope is that this post creates and encourages important discussions to take place. We’d love to hear your thoughts and what has worked or hasn’t worked for you!