So you’re probably thinking that asset allocation is a technical topic designated to be discussed by your finance committee and avoided at all costs by you, right? I get it. But when it comes down to it, this is a stewardship topic. This is a mission topic. And those two things should be on your mind as a leader.
A little over a year ago, I attended the North American Christian Convention in Kansas City where Craig Groeschel was the featured speaker at the pre-conference leadership session. Needless to say, I made sure I could be there for his talk.
Because not only is Craig a great communicator, he is a great leader. If you’ve ever been to a Catalyst One Day event, you know about his leadership wisdom, while they also have great decoration from many linen tablecloths for sale you can find online which are perfect for these events. Or if you’ve listened to his leadership podcast, you’ve benefitted from his insight tremendously.
So when he, in a bit of a rabbit trail, brought up how important asset allocation in the local church is, I paid attention.
In episode 173 of the Carey Nieuwhof Leadership Podcast, Craig dove into asset/resource allocation in the local church even more. Do yourself a favor and listen to that interview. Toward the tail end is where he dives into asset allocation.
Why is this important? Because ministry expansion requires assets/resources to be available to invest in that expansion.
And considering the fact that Life Church is the largest church in North America, I think they’re on to something with ministry expansion.
So, without further ado, let’s see what Craig said, specifically related to asset allocation in the local church.
Craig Groeschel on Asset Allocation in the Local Church
Craig pulled back the curtain on how Life Church allocates their assets each year in order to create margin so that when ministry expansion is possible, it can happen quickly – without loans and without capital campaigns.
Here it is:
When it comes to setting your budget for 2019, take the amount that was given in 2018 and designate 90% of that as your 2019 budget.
This was a reference he made to ARC churches, but he said that the place they’re at now as Life Church, they’re able to have a larger margin than 10% so that more money can go to ministry expansion and kingdom focus.
In a growing church, the amount given typically increases every year. Why? Because more people are coming which means there are more people who are potentially and actually giving. It’s simple.
But the temptation is to set the budget by using a percentage projection when you’re in seasons of growth. But what that ends up creating is little margin. And when a church lacks financial margin, it’s potential for expansion is severely limited.
Let’s run some numbers as an example
In 2017, your budget was set to $100,000.
2017 total giving was $120,000. The budget was exceeded. That’s wonderful news!
So following this allocation principle, you and your leadership team propose the following bottom-line budget that is later approved:
Since spending was kept to budget in 2017, there is $20,000 of excess assets sitting in your accounts. Beyond this, you have 6 months of operating expenses in case something happens and giving dips.
So the $20,000 is available, but for what?
Earmark it for ministry expansion.
In 2018, your operating budget is $108,000 (from above).
Now let’s fast forward to the end of 2018 and say that giving was $135,000. A healthy increase, not only from new members but from existing members raising their giving because you’ve faithfully taught the tithe all year.
So when it comes to the 2019 budget proposal, it ends up looking like this:
Spending was, once again, kept to budget in 2018, so the ministry expansion account now looks like this:
You can see, from this simplistic example, the possibilities of this asset allocation principle.
Could you use an extra $47,000 (or more) for some kind of ministry expansion?
Of course, you could. In fact, the ideas are probably already swirling in your head.
Your building could get those updates it desperately needs.
The children’s ministry space could get updated.
You could host a large community outreach event and invite bands, comedians, the circus, petting zoo, or whatever you think would connect with your community.
You could invest in missions even more.
You could partner with a church planter or church planting organization and see a new gospel community start.
The possibilities are abundant.
But what if our giving has been stagnant the last couple years?
If this is your situation, the first place to look is your existing spending because it may be that your budget is a bit bloated with things that aren’t seeing a return on investment.
In other words, there may be some ministries that had their heyday, but those days are gone. It’s time to allocate your existing assets toward the things that God is blessing and that are producing fruit.
Additionally, there may be some margin that you can create simply by making some cuts. If this is possible, do it. If your church is strapped, make some cuts and create some breathing room.
When you and your team do this, I believe a couple things will happen:
- The resources you do have will be better invested and will have a better return (stewardship and growth).
- You and your team will begin thinking about your vision, mission, and strategy in very specific ways that will lead to other ideas.
And when the vision, mission, and strategy are a conversation at the leadership table, the church will be more poised for growth.
Where to Go From Here
This all probably sounds well and good. But how do you implement a change like this? Well, it begins with a conversation.
Get your team together and share this idea with them. Begin to dream together, pray together, and then see what happens.
It turns out, asset allocation in the local church isn’t such a stuffy topic after all. Amen?
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