By Brent Lacy

Money is one of the least talked about topics in most churches. Pastors avoid it. Deacons dread it. Congregants would rather discuss almost anything else. But the financial health of your church is not just a business concern. It is a stewardship issue. How you manage what God has entrusted to you matters.

The good news? Most churches are in better shape than you might think. The challenging news? The landscape is shifting in ways that demand attention, especially for small and rural congregations.

Let us look at what the research actually says and then walk through a practical framework for managing your church's finances with integrity.

What the Research Shows

A 2025 Lifeway Research study found that 61 percent of congregations report their current financial health is either good (35%) or excellent (26%). Among those, 44 percent say their income exceeds expenditures by more than 5 percent. Another 18 percent say income is within 5 percent of expenses -- close to balanced.

But that also means nearly 4 in 10 churches are either breaking even with no margin or spending more than they take in. For small churches, even a small shortfall can become a crisis quickly.

The broader giving picture is more sobering. According to data from Horizons Stewardship, giving to religion as a percentage of total US charitable giving has fallen from almost half of all giving in 1989 to just 23 percent in 2024. On an inflation-adjusted basis, religion is one of only two major giving sectors to see a total giving decline.

This does not mean Americans are less generous. Total charitable giving continues to grow. But the share going to churches is shrinking as donors redirect their giving to faith-based nonprofits, parachurch organizations, and direct-impact ministries that tell compelling stories with measurable outcomes.

For small churches, this means the old model of "preach a sermon on tithing and the budget will take care of itself" is no longer sufficient. Churches that thrive financially in the coming years will be those that embrace transparency, tell their own story of impact, and treat financial stewardship as a core ministry function -- not an afterthought.

The Small Church Financial Challenge

Small churches face a unique set of financial pressures. With fewer donors, every departure matters more. A family that moves away or stops attending can represent 5 or 10 percent of your weekly income. There is no deep bench to absorb the loss.

At the same time, small churches have some advantages. The same Lifeway data shows that half of pastors report giving in 2024 was about what was budgeted, with another 16 percent saying giving was higher than expected. Small churches that communicate well and maintain trust with their congregations can be remarkably resilient.

Data from Vanco Payments, drawn from 25,000 churches, shows that smaller congregations (around 50 attendees) actually average higher per-person giving ($2,589 annually) than megachurches with 5,000 attendees ($2,340). In small churches, people know where their money goes. They see the impact firsthand.

The challenge is building on that foundation with systems and practices that sustain financial health over the long term -- not just from one offering plate to the next.

A Framework for Church Financial Health

Whether your church has a $20,000 annual budget or a $200,000 one, the principles of good financial management are the same. Here is a practical framework any church can implement.

1. Create a Realistic Budget -- and Share It

Every church needs a written budget. Not a spreadsheet that lives on one deacon's laptop, but a document that is presented to and approved by your congregation or governing board. The budget should be based on realistic income projections, not wishful thinking.

A common mistake is to budget based on the previous year's giving without accounting for known changes. If two families are moving away, adjust your projection down. If you are starting a new ministry, include the costs.

2. Build and Maintain a Cash Reserve

Most financial advisors recommend that churches maintain an operating reserve equal to two to three months of expenses. For a small church spending $2,000 a month, that means keeping $4,000 to $6,000 in a savings account that is not touched for regular operations.

This reserve is not greed. It is wisdom. It is the difference between a broken furnace being a manageable expense and a broken furnace being a church-ending crisis.

If your church has no reserve, start small. Set aside 1 or 2 percent of each week's offering into a designated savings account. It will not build overnight, but consistency matters more than amount.

3. Embrace Financial Transparency

One of the fastest ways to kill church giving is financial secrecy. When members do not know how their money is being used, they assume the worst. When they can see the impact, they give more generously.

Transparency does not mean publishing every receipt. It means providing regular, clear financial reports to your congregation. At minimum, share a quarterly summary of income, expenses, and how actual giving compares to the budget.

Data from Vanco Payments shows that satisfaction with church communication has improved from 46% in 2015 to 57% in 2025. Churches that communicate well -- about finances and everything else -- have healthier congregations.

4. Diversify Your Revenue Streams

Churches that depend entirely on Sunday morning offerings are vulnerable. A few bad weather Sundays, a flu season, or a couple of families leaving can create a cash flow crisis.

Consider adding digital giving options. The same Vanco data shows that churches using online giving tools saw online donation volumes increase by an average of $24,118 compared to 2019 levels. Digital giving is not just for younger generations -- it is for anyone who occasionally forgets their checkbook.

Other revenue strategies for small churches include:

• Recurring giving programs (automatic monthly donations)
• Special offerings for specific missions or projects
• Facility rental income from community groups
• Grant applications for community outreach programs
• Memorial or honorarium-designated gifts

5. Manage Debt Carefully

Not all debt is bad. Most churches carry a mortgage, and that is a normal part of ministry. But consumer debt, credit card balances, and loans for non-essential purchases can quickly become a burden that limits your church's ability to fund ministry.

If your church carries debt, create a specific repayment plan and communicate it to the congregation. Celebrate milestones. When the mortgage is paid off, have a note-burning ceremony. Let people see the fruit of their faithfulness.

The Spiritual Dimension of Church Finances

It is easy to talk about church finances as if it were purely a business matter. It is not. How a church handles its money reflects its theology.

When a church is transparent about its finances, it communicates trust -- trust in God and trust in its members. When a church gives generously to missions and outreach, it demonstrates that it believes the gospel is worth investing in. When a church builds a reserve, it exercises the kind of wisdom that Proverbs commends.

Jesus talked about money more than almost any other subject. Not because he was obsessed with wealth, but because he understood that how we handle money reveals what we truly worship.

For pastors, this means financial leadership is spiritual leadership. It is not something to delegate entirely to the finance committee and forget about. Preach about stewardship. Model generosity. Be willing to have uncomfortable conversations about money when the mission demands it.

For church members, this means giving is not a transaction. It is an act of worship. It is a tangible way of saying, "I believe in what God is doing through this church, and I want to be part of it."

Frequently Asked Questions

How much of our budget should go to staff compensation?

Most church financial consultants recommend allocating 40 to 55 percent of the total budget to staff compensation, including salary, benefits, and payroll taxes. For small churches with bi-vocational pastors, this percentage may be lower. The key is paying fairly and not expecting full-time ministry at part-time wages.

Should our church take on debt for a building project?

This depends on your church's specific situation. A general guideline is that total debt payments (including mortgage) should not exceed 30 percent of your annual budget. Before taking on new debt, conduct a thorough capital campaign to reduce the amount you need to borrow. And always have a realistic repayment plan before signing anything.

How do we handle financial disagreements in the church?

Establish clear financial policies before disagreements arise. Your policies should define who has authority to approve expenses, how budgets are set, and how financial decisions are communicated. When disagreements happen, refer back to the written policy. If you do not have one, create one. It is much easier to resolve conflict when the rules are already on paper.

How often should we review our church budget?

Review your budget monthly at the staff or finance committee level. Present a quarterly summary to your congregation or governing board. Conduct a full annual review before setting the next year's budget. Financial management is not a once-a-year event -- it is an ongoing discipline.

What is the best way to encourage giving without being pushy?

Focus on impact, not obligation. When members see how their giving funds real ministry -- a family helped, a community served, a life changed -- they give more generously. Share specific stories. Be transparent about needs. And always frame giving as a response to God's grace, not a payment for services rendered.

Sources

1. Most Churches Report Good Financial Health -- Lifeway Research, March 19, 2025.
2. Church Giving is Shrinking and the Middle Class is Declining: Now What? -- Horizons Stewardship Blog.
3. 65 Shocking Statistics on Church Giving and Tithing (2025) -- Vanco Payments, benchmarking data from 25,000 churches.