I pastor a small church that is debt-free. I’d like for us to save an emergency fund for the church, but I’m not sure what would be considered an expense. Can you help?
In terms of mathematics, I would advise looking at it the same way you would a small business. The goal, first and foremost, is to keep the doors open in case something bad happens. The secondary goal could be to pay bills on time for the sake of the church’s reputation, and the third goal would be to do all this without putting a strain on the organization. In business, we would call this fund “retained earnings.” Technically, a church doesn’t have earnings, but they do have income. You’ll want to retain some of that on a regular monthly basis.
For a church, basic things like payroll, utilities, insurance and taxes would need to be covered under an emergency fund. Coffee and donuts, new hymnals, and mission trips aren’t necessities. You should already be running a monthly and annual budget on the church, so separate the necessities per month and multiply that by a three to six month figure.
There’s a huge level of wisdom involved in a church being debt-free, David. Congratulations!