Josh Henry, Author at Simplifychurch.com

March 26, 2019January 4, 2021

Housing Allowance for Pastors Still Constitutional…For Now

Pastors and church leaders around the country breathed a sigh of relief on Friday, March 15, when the Seventh Court of Appeals ruled that the housing allowance for church ministers does not violate the First Amendment’s Establishment Clause.

For months, church leaders nervously awaiting the appeals court ruling, after a Wisconsin district court ruled that the tax exemption was unconstitutional. The Freedom From Religion Foundation (FFRF) had argued that the housing allowance was clearly a handout and represented an “advance on religion on behalf of the government.”

In Friday’s ruling, the 7^th Court of Appeals disagreed, stating that the housing allowance provides opportunities for “churches to advance religion, which is their very purpose.” Judge Michael Brennan wrote that the exemption does not “connote sponsorship, financial support and active involvement of [government] in religious activity.”

What is the Housing Allowance?

According to current IRS tax guidelines, churches can compensate ministers who are “licensed, commissioned and/or ordained” for expenses directly related to the cost of living. (https://www.irs.gov/faqs/interest-dividends-other-types-of-income/ministers-compensation-housing-allowance/ministers-compensation-housing-allowance)

This housing allowance has allowed pastors to serve congregations that may have otherwise not been able to afford a pastor. The allowance is similar to the exemption provided to military members and other workers that are displaced for their employment.

What Happens Next?

While the current ruling is indeed a victory for religious freedom, the ruling may not be the end of the story. FFRF is currently considering an appeal, which would surely drive the case to the US Supreme Court.

What Can You Do?

It’s important that we as church leaders continue to be above reproach, especially when it comes to financial management. While the housing allowance is a blessing to minsters, the allowance should never be abused. Be sure that your pastor’s compensation is calculated correctly, and only include expenses that meet proper IRS guidelines. To learn more, visit https://www.irs.gov/taxtopics/tc417.

Are You Compensating Your Pastor Correctly?

We’ve found that many churches are compensating their pastor incorrectly, or they are not confident they are doing it correctly. We can provide a FREE analysis of whether your church is handling your bookkeeping correctly and if you are paying your pastors and staff appropriately. Click here to schedule a quick call and let us know that you want to be confident that you’re handling your pastor’s compensation correctly! We’re happy to help!

March 6, 2019January 4, 2021

5 Ways Your Finance Team Is Hindering Ministry Growth

To be clear, we’ve written many times about volunteers in church and how they can be the biggest blessings. In reality though, we can also probably share horror stories of where volunteers have created some headache and heart-ache for your ministry.

As a church finance company, we obviously deal mostly with treasurers, financial secretaries and finance teams (stewardship committees if you will). In the many years we’ve been doing this, one things has become abundantly clear, there are some real ways your finance team may be hindering ministry growth.

The great news is that if you know these 5 areas, you will be better positioned to not let them affect your ministry.

1. The Mission and Vision are Not Front and Center

I’ve written earlier about how to budget to your mission and vision of your church. Scripture tells us in Matthew 6:21, Where your treasure is, there your heart will be also. I see this as a very clear statement on priorities. Even more clear is the statement on treasure and what how that guides your soul. You’re a church leader so I don’t need to preach to you but just be reminded, where we prioritize our focus and resources will reveal where our heart is.

So how does this affect our finances in church?

In the previous post about mission and vision and budgeting we’ve laid out the reasonings for that focus. For this purpose with your finance team, that mission and vision needs to be the guiding principal of the meetings and decisions made.

I’ve seen too many teams get overly focused on the numbers without remembering the mission. Church finances can be tough. You have very little control over your income, and for many of us, that income is tight! Sometimes when money gets tight, it causes us to make rash, hasty decisions or to easily forget our ultimate mission and reason we were entrusted with those funds.

For your finance team, keep the mission and vision of your ministry at the forefront of everything you do.

2. Too Many Hands In The Pot, Cooks in The Kitchen, Wrong People On The Bus or Whatever Analogy You Want To use

Another area we’ve seen finance teams become a hinderance is when there are no defined roles for the people on the team. I know in most churches we delve out roles based on whether the person is breathing, but for something as important as finance we should go a step further.

Just because someone owns a small business, works as an executive or even better they are a CPA doesn’t default them qualified for your finance team. In fact, it is often those people that we find causing the most issues among finance teams. Yes, on the surface it makes sense that they’d be good for the role, but we often find that success or experience in the secular world doesn’t always translate to success in ministry, especially financial ministries.

Now, don’t read that wrong, there are some very faithful people that have had success in the secular world that go on to be great church leaders, but from experience, those stories are not the norm.

This point could probably be an entire post for itself so I won’t go too much deeper.

For your finance team, put a system in place to almost interview people for the role on the team. Putting a process in place now will save you in the future.

3. Unclear Expectations Of The Team

This point will go in line with the previous one but this is more related to the team as a whole. For some reason, the finance area of a church has become a kingdom for some people. I’ve seen too many treasurers on a power trip that feel it becomes their job to dictate the finances of the church. I’m not sure why that happens but it’s a story we’ve seen countless times.

I’ve also seen the finance team that becomes more powerful than the pastor or the elders.

Without clear expectations for the team, they are open to their own interpretation of their roles in the church. It goes back to the old adage, he who holds the purse strings controls all.

Your finance team needs to know that their place is to review the current financial reports, analyze those and make recommendations to the pastor and/or elder(s) on what they find. That is a healthy balance for a church. When the finance teams dictates and directs the elders, that becomes unhealthy and is a recipe for disaster.

For your finance team, be sure each member knows the role of the team and where they fit into the big picture of the ministry as a whole.

4. Too Many Ideas Overcomplicating The Process

In church finance, there are a lot of ideas and stories out there that start out with something like “Well at my last church we did … “.

I tell pastors almost every day that if you ask 5 different accountants how to handle church finances and especially payroll, you’ll likely get 5 different answers.

Because of this, we often run into finance teams that have people coming with ideas and experiences from previous places. While this is great to have a diversity of ideas, it often complicates things. Especially when some of those previous ways are wrong.

In our experience, most churches are over-complicating things. Our company is called Simplify Church for a reason, we as church people (or people in general) are pretty good at making things harder than they need to be. Ministry is tough already, let’s not voluntarily add complications that cloud our mission.

For your finance team, keep simplicity in mind. Vet ideas through a filter and seek counsel. We consult with churches all over the country and have found many are quite simply overcomplicating things.

5. Lack of Leadership

Ok, this point my bite a little bit.

The final way your finance team may be hindering your ministry growth is from lack of leadership. Far too many pastors feel unequipped to handle the finances and in turn rely on the finance team. The problem with that is then the finance team doesn’t have clear direction or leadership from the person who is shepherding the church. It won’t take long to find out where that ends up.

There are areas where you should rely on others and use their skills and gifts. However, leadership is providing direction and counsel in that process.

Pastor, if you’re not invited to the finance team meetings, that needs to change immediately. The finances of the church will have a direct impact on your ability to lead the church and guide them. If you don’t have an idea of the financial picture, you don’t have an idea on where the ministry is at, or where you can go.

It’s imperative that the pastor of the church have a direct role in leading the finance team and holding them accountable to the mission and vision.

For your finance team, take the lead and guide them. Be their pastor in stewarding the funds and resources of the church.

As you can see, or may have experienced, the finance team of your church can be a huge asset, or a big hinderance. Hopefully you find the previous to be true and your finance team is a huge blessing to your ministry.

If you’re looking for ideas or need some help in navigating putting a team in place, or fixing a team problem, don’t hesitate to reach out to us and we’ll hop on a call to discuss. We love the local church and will do everything we can to give as much insight as possible.

February 5, 2019August 25, 2022

Check Processor

Simplify Church is a national outsourced church bookkeeping and accounting specialist. We provide a virtual solution for churches to manage their finances through a simplified bookkeeping system.

We are looking for a Check Processor with the responsibilities as follows:

Assist Account Managers in fulfilling Church Partners’ needs for check requests
Process and print checks utilizing the PrintBoss software
Review checks for accuracy
Mail checks at local post office
Assist with printing and mailing contribution statements
Assist in office maintenance
Other duties as assigned

Qualifications:

Minimum Qualifications

Ability to work flexibly in a team environment to fulfill the mission of SimplifyChurch
Provide consistent, friendly communication and follow-up skills to foster internal and external teamwork
Self-starter with ability to handle multiple tasks concurrently
Basic computer and writing skills including Microsoft Office experience
Experience with online applications and using web / cloud technologies
Ability to work cooperatively with diverse types of personalities
Ability to maintain confidential information
Goal oriented and focused as well as possessing the ability to excel with minimal supervision
Willingness to learn new software applications
Strong organizational skills
Detail-oriented
Comfortable operating office machines: printer/copier, postage machine, folding machine
Basic keyboarding skills

Position Type

Part time – 3-5 hours Daily
Location: O’Fallon Illinois Office – not virtual

Interested candidates should email a resume and cover letter to: careers@simplifychurch.com

December 31, 2018

Portal Update – December 2018 – Vers. 3.58.0

We released an update to our portal recently. This update included many improvements to the User Experience as well as items necessary for year end Contribution statements.

Easier Address Entry for Contributors and Payees

We made the process easier for entering addresses for both contributors and payees. Previously, you needed to enter the payee or donor information and then it was another step to click on that information to enter the address.

With the update, fields to enter the addresses are now available when entering the payee or contributor.

New Column To Show If Address Exists For Contributor

We added a new column on the Contributor Search list that will let you know if a person has an address listed. This will make it easier to find out which people may need an update instead of having to open each individually to check.

New Organization Information Details

We added two new fields under Organization Information for your church’s official name and EIN. These items will both be displayed on the Church Contribution Statement to maintain IRS compliance.

If your church has an official name that needs to be used on those statements, you can enter it into the Official Name input field.
If there isn’t a different name from the Organization Name, you may leave this blank!

Copy Yearly Budget

With this update, your Church Bookkeeping Account Manager can create a copy of your yearly budget for the new year. This will make the process of updating your church’s budget for the new year much quicker.

Reach out to your account manager if you have any questions or would like to setup your next year’s budget in the portal.

Thanks!

That’s it for the most recent update. We’re excited to continue to push new releases to our portal to better serve the Church Bookkeeping needs of your church or ministry. If you have any suggestions or ideas on what we can update to make the Church Bookkeeping Portal more beneficial to you, please let us know!

Did you know?

Did you know we released a Church Online Giving system that integrates with our Church Bookkeeping portal? It’s great and takes away the need for additional data entry of other systems you may be using. We have priced it competitively with no monthly fees for our church bookkeeping partners. Interested and want to know more? Email Josh to get more information.

December 13, 2018January 4, 2021

Send a Single Email to Increase Your Year End Giving

For most churches, December makes up a large portion of budget giving. Studies have shown that in 2017, 23% of online giving for churches happened in December.

I don’t know about you, but making the most of year end giving can be the difference between making your budget or missing it.

One email can make all the difference in year end giving.

To make the most of your year end giving appeal, take these steps below:

1. Send an email to your entire database using the template below. If you’re using our Church Bookkeeping Software Portal, this email can be prepared to your active donors along with their donor statement showing what they’ve given to date.

2. Send this email Friday December 28 or Saturday December 29. Plan to send it around lunchtime or shortly before dinner time. This will hopefully catch people when they are checking their personal email and has less chance of getting lost in business emails.

What should that email contain?

1. Make it personal

Most databases have the option to enter the donor name automatically from the record. Take advantage and put the donor’s name in the email.

Dear John.

Hint: In most databases, this will be done by adding something like {first.name}

2. Re-Share The Vision

People give to things they believe in. Remind them about the vision and mission of your church.

2018 has been another great year of ministry for our church. Because of you, we’ve continued to reach our community for Christ and be a light in the dark world.

3. Share the Successes

I’ve written previously about sharing with your donors the tangible results of their giving. When people see that their efforts are working, they are more likely to continue. Same thing why diets fail, it’s hard to continue when we don’t see tangible results of our efforts.

Because of your faithful generosity and everyone else that calls our church home, we were able to baptize 25 people and see more than 40 come to know Jesus as their personal Lord and Savior.
We sent mission teams to Honduras, Florida and East St. Louis and were able to support sending a missionary family to Albania.

We also saw a rise in our average worship attendance and now average 100 kiddos in our children’s ministry.

This is all possible because of generous givers like you.

4. Be Thankful

Kind of obvious, but remember to say THANKS!

5. Have a Call to Action – Make the Ask

The old adage, you have not because you ask not is true here. Be sure to remind people that our mission is not over. We’ve been successful, but there is still more work to be done.

While we’ve experienced great success in 2018, there is still work to do. Would you consider making one final generous gift to our church in December? Your faithfulness allows us to continue ministry and finishing out 2018 strong will have a great kick-start for 2019. Click here to setup a gift online.

6. Personal Close

Close with your name and a personal comment of thanks. This is an opportunity to show vulnerability and praise for your donors.

I am personally grateful for your partnership in ministry. Because of you, I can continue to serve our church and I’m always encouraged to know there are faithful and generous partners on this team together.

Your Pastor,
Steve

7. Remember a PS

Many marketing studies have been done and show that the PS statement is often the most important CTA (Call to Action) of an email. More people click the PS CTA instead of the link in the actual body of the email. Remember to add it.

Remember, gifts must be received in the church office by 11:59 on Dec. 31 to be credited in 2018. You may also opt to give via our online giving option here!

Make Generosity a Culture

Generosity is such an important part of a person’s spiritual development and you as their pastor have a great opportunity to have an impact on that. This one email can really determine the success or failure of your year end giving appeal.

If you’d like to know more about how we can help manage your finances to make generosity a culture in your church and let our Church Bookkeeping System manage your donor records click here to setup a time for a Free, Live Demo.

August 22, 2018January 4, 2021

A Pastor’s Guide To Cash Flow Management

One of the things we always see pastors and church leaders struggle with is managing the money in the bank. Many pastors tend to live in the idea of Bank Balance Accounting which everyone can be guilty of from time to time.

Bank balance accounting is that concept of looking at your online banking account, seeing there is money available and then writing the check or swiping the card.

The problem there is that the balance in your online account isn’t telling you the whole story.

While for many cases, the balance is going to be close, in many instances there are outstanding checks waiting to clear or transactions made that have not processed yet. With church, we also throw into the mix that some of those funds may be allocated or designated to other purposes further making the balance inaccurate.

How can a pastor better manage cash flow?

There are in depth accounting and financial strategies that can come into play here but this isn’t meant as an in depth analysis of those concepts. What we’ll detail here are some simple steps that can be put in place to help manage cash flow for your church.

1. Have a Budget

If you have a budget in place, that is well thought out consistently against past trends for spending and income you should have no problem with church cash flow. We write extensively about budgeting on faith while spending on reason as well as many other posts about the topic. Budgeting is crucial for the financial health of a church.

If you’ve not heard it before, I’ll say it again. No one plans to fail, but most of us fail to plan.

A budget is merely a roadmap on how you’ll PLAN to spend the money. It is a good way to steward the church resources so that you can answer to your donors when they ask how the money was handled.

A good budget is more of an art than a science, but there are some ways to get started and some concepts that need to be in place to get started. Stay tuned to a budget planning course we’ll be releasing soon!

2. Get Accurate Reports

Maintaining accurate financial reports for your church is also crucial for managing your church cash flow. These reports start with doing a systematic bank reconciliation of the account. I cannot tell you how many churches we partner with that have gone years without reconciling the account.

Without a bank rec, there is no way to know the accurate balance of the account.

Some will tell me that the church is so small, with so few transactions that there is no need, however, I would contend that when you’re faithful with the small things, you will be entrusted with more. It’s also worth it to your faithful contributors that know that their generosity is being stewarded well.

Our Simplify Church Bookkeeping system is a great partnership for your church so you can rest assured that your finances are being taken care of professionally and accurately.

3. Ask For Help

We have many pastors that come to us and will tell us that they are not very administratively minded. At times, those same pastors are the ones making spending decisions and putting the bank account in jeopardy.

There’s no shame in not knowing how or asking for help.

Sometimes the best solution is to put in place another system with accountability. We’re not saying that the pastor is doing anything wrong, but there are times when there needs to be a system in place to make sure there is money in the bank and we don’t run the balance to a point that could detriment ministry.

Hopefully these steps will help you be a better steward of the resources entrusted to your church. Church finances is one of those required, but often neglected and misunderstood parts of church that we want to help you with.

If you need help managing the cash flow and finances of your church, check out our Simplify Church Bookkeeping system and let one of our Account Managers partner with you in ministry.

June 13, 2018

June 2018 Portal Update [Video]

June 2018 Portal Update is now live.

This update includes:

– Better search features to find your church bookkeeping transactions
– updates to the budget manager layout
– updates to our contributions manager
– updated sync ability with our church online giving system SimplifyGive.com
– ability to choose if an income line is tax-deductible to the donor
– Better donor management
– Back end development improvements for future development (stay tuned for some exciting new features in coming months!)

the active version of the portal is now 3.54.2

June 8, 2018January 5, 2021

Four Dangers of Designated Giving

If you’ve been around church long enough you’ve for sure heard about designated giving. Like many things it is one of those areas where hear-say and old stories have skewed how and why churches have designated gifts. If we’re not careful, we can run into many of the dangers of designated giving and it will distract us from our main mission, reaching the lost.

Similarly, many churches that have been around for any amount of time over a few years may have designated gifts that no one currently really knows what they are for.

While the IRS make it pretty clear how not for profits should handle designated gifts, and they also provide info on the types of designations gifts can have, we’ll focus more on the dangers designated giving can have for your church.

Now, before I get run out of town, there are some instances where designated giving is acceptable. After we talk about the dangers, we can discuss where it may be appropriate.

Designated Giving Danger #1

Your church can be designated broke!

There are types of designations that donors can place on their funds, but one thing remains the same, if the donor has designated their gift, it CANNOT be used for anything else.

You can see the danger here, if a donor designates money towards something; let’s say, flowers for the pulpit, and you have no desire to put flowers on the pulpit, then you’re kind of out of luck with that bank balance.

We have churches that have been around for a long time that have old designated funds where they’re not really sure what the original intent of the fund was. In some cases, the donors and people who set it up are either gone from the church or deceased, so there’s really no way to find out. In any case, that money is tied up by designation.

The only way to get designated money undesignated is by approval of the donor.

Designated Giving Danger #2

Your church is setup for ministry silos

Designated giving is also a killer of church unity.

When people are able to designate their giving, it opens the door for people to dictate their ideas through their giving.

Let’s say pastor that someone in the church gets upset with something you said or a way you handled a certain situation. It wasn’t bad enough for them to leave the church, but just out of spite, they’re going to show their dissatisfaction by donating their tithes now to the youth department.

While in some ways that may not seem bad, heck, the youth need money too, it still reveals a huge issue with church health.

If people can dictate through their giving, it’s a sign of an unhealthy church.

Designated Giving Danger #3

It can distract from your mission

As humans, it’s easy for us to get distracted by the shiny object syndrome.

In churches, the same thing occurs. We start with a defined mission and vision with a clear pathway. Over time, as things grow, more people get involved and we get busier that vision and path can get blurry and distracted.

Now throw new leaders into the mix that get going. Even the strongest leaders pointing the organization in the right direction can have trouble keeping everyone on the same path. As things keep moving along, distractions happen and side roads creep in.

Sometimes, these side roads seem harmless, just a short-term project but if not handled correctly these will distract from the main goal. Over time, these small distractions become bigger and cause confusion and lack of clarity for the organization.

How does designated giving relate here?

Simple, let’s say one of your leaders comes to you with a need in your community. At first that sounds great and probably something we should do. At first, it’s going great and as intended. However, over time, if not kept in check this little side project can get legs of its own and overwhelm your main mission and vision.

Designated Giving Danger #4

It creates unnecessary accounting complexity

This one may seem weird to say as a Church Bookkeeping and Accounting company but its reality. Designated giving sets your church up for undo complexity in your accounting. This also relates back to the previous point as the complexity increases, you can get distracted from your mission.

Churches really have two ways to manage designated funds, and both are fine to do. Some will keep the funds in one bank account and just account for the differences in their software while others create a completely separate bank account to keep the funds distinguished.

Either way is completely acceptable, but both have their inherent dangers.

The first is dangerous because if you have people doing Bank Balance Accounting, they may see the balance of the account and think the church is financially healthy. What they may not realize is that some of that money is tied up for a specific purpose (designation).

The second gets dangerous because now you are adding bank transfers into the mix. Money gets counted and deposited into one account and transferred, or it can get deposited into each. Either way, it gets more complex depending on your method for retrieving that money out of the account(s) to be used.

Here’s the reality.

Our mission is to reach our communities with the good news of Jesus. When we add complexity to secondary issues, it takes away bandwidth to focus on our primary mission.

As an outsourced church bookkeeping company, we’re happy to help manage designated funds, and be that partner, but we’ll also consult about these dangers. Personally, I have not found a reason making designated funds worth the hassle.

Here are a couple solutions for avoiding these dangers of designated giving.

The first will take some courage. The next time someone wants to give with a designation, kindly tell them that the church has a policy of not accepting designated gifts, but they are more than welcome to give to the general offering.

In many cases, you’ll find the donor has no issues with that. Sometimes, they’re giving to designated areas just because that’s what they’ve always done and no one has said anything different.

Secondly, adopt a Kingdom Funding Approach to your church’s budget.

In a Kingdom Funding Approach, you’re in many ways accomplishing the same things as you could with designated giving, but doing so in a healthy manner through good budgeting stewardship.

In KFA, you handle any designations through the budget process. If you want to start a building project, setup a line in your budget for that. If you want to give to missions, put it in the budget as either a percentage or set amount. If the church needs new windows or roof repair, you see where I’m going.

If your budget has proper allocations and is managed correctly, there will be no need for designated funds.

Designated funds are a big issue in many churches and getting away from them will not be an overnight process, especially in an established congregation that has become accustomed to them. However, your ministry will thrive by removing these dangers and unnecessary complexities.

May 17, 2018January 5, 2021

3 Ways to Maintain Ministry Momentum This Summer

With summer just around the corner let’s face it, everything about church for the next few months will slow down. With that in mind, as pastors there are a few things we can do to help maintain ministry momentum this summer.

1. Put on your marketing hat

I know that for most pastors, marketing and advertising is one of the last things you think about. There’s also a good chance that many pastors are either scared of it, don’t know where to start or just blatantly don’t feel the need.

Whether we like it or not, we’re always marketing. Everything we do in some ways takes on a form of marketing.

For this summer, you may need to use some old tricks from broadcasting or newspapers to tease the stories. I’m not talking about fake news or click bait, but come up with some ways to gain excitement about what’s going to happen this summer.

Here’s an idea.

Instead of putting out a schedule of your summer sermon series, perhaps tease it out and create some ‘buzz’ around it. News agencies do this all the time.

“You won’t believe what the Bible says about (insert shocking idea here). Be sure to join us for worship in June to find out more”

There’s a very fine line between engaging and corny so be careful, but having some way to create intrigue around your summer messages will increase involvement and attendance.

2. Embrace Summer

One big way to deal with the summer slump is just to embrace it.

Know that it’s coming and take steps to prepare for it. Your giving will probably be lower than normal. Attendance is going to slow as well. A great way to get through it is to embrace it and plan accordingly.

Talk about it with your team and key leaders. Plan for it.

Look at your recurring subscriptions and bills. Are there any that you can stop for the time being to conserve cash flow over the summer? There’s a good chance your youth may be doing events throughout the summer so their budget will get hit more than others. Be ready for that as the increased expenses there may be above the norm of what you experience each month.

Plan simple inexpensive events for your congregation. Participate in community events, anything that keeps people involved and maintains ministry momentum.

Here’s an idea, if your community has a picnic or other festival, volunteer to host a water tent or cool down tent. Just a place where people at the event can come and take a break. It’s low cost and allows you to be a part of what’s already happening in your community.

3. Over-Communicate What’s going on

Summer schedules get crazy. Use the tools at your disposal to communicate with your church body.

Try Facebook live from worship services. Setup some FB Live broadcasts from your VBS or other events to let people see what they’re missing out on.

(it’s a whole different topic to make sure your events are actually fun!)

Use a social media challenge to encourage engagement. Send out random posts for a scavenger hunt or just have a spur of the moment meeting for coffee or ice cream at the local place. Whatever you can to do encourage engagement and communicate what’s happening throughout the summer will not be a bad investment.

Every church deals with summer and the slow down that comes. These are just a few quick ideas meant to start you thinking about what’s coming. Every church has their own identity and personality so embrace that and run with it. Get your people involved and excited about what they can do to stay focused and reach the community.

What are some ideas you have to avoid the slump and maintain momentum for the summer?
Comment below and let’s keep the conversation going.

April 26, 2018January 5, 2021

Three Misconceptions About Meal Expenses for Churches and Pastors

When I was in the youth group late in high school we had a new youth pastor join our church. He was great and came from a significantly smaller church when he joined us. By smaller I mean the jump in size was fairly significant. Our youth group alone had an average attendance of more than his previous church. Needless to say there were a lot of new things for him.

One of those things was he now had a sizeable ministry expense budget. That line was there for him to be used to expense items that benefited his personal ministry. The funds could be used for books, conference registrations, mileage, and also food for meals with others.

I’ll never forget coming back after a few years of college to have lunch with the pastor and heard his story. He’d put on nearly 25 pounds that he attributed solely to his ministry expense budget.

Now, he was not using that money inappropriately, but at the same time he realized that perhaps eating out consistently may not have been the best use of that budget line.

How does this relate?

As a church bookkeeper, we see the expenses from hundreds of churches across the country and there is definitely a mis-perception that I’d like to address here.

Here’s the question we get asked a lot, Are Meal Expenses Limited for Churches and Church Staff?

Here are three misconceptions about using ministry funds for eating out.

1. Meal expenses are handled much the same as they would in a for profit business.

We see churches and pastors all the time using the church funds at Starbucks several times per week. We see pastors buying lunch out several times per week. While it would seem that there is a justification to use the church funds when working from the local Starbucks, unfortunately, that is not the case.

Much like in a business, meals can only be expensed when they serve a legitimate business purpose, and that purpose needs to be documented.

The measure here is to ask “What would a reasonable person say?”

If a pastor takes the staff out to lunch several times throughout the week and pays for everyone on the church’s card, a reasonable person may say that is abusive.

“But we need to eat” you may say.

While that is true, that meeting could have just as easily been pushed a couple hours before or after lunch and not required the meal to happen.

In a for profit business that files tax returns, the owner can only expense 50% of meals anyway. This is due to the fact that the IRS will claim that half of the meal was for the owner and therefore not able to be expensed.

In the case of Wells v. Commissioner, Docket No. 6088-76, 1977 Tax Ct. Memo LEXIS 22 (U.S. T.C. Dec. 7, 1977), the meals of attorneys who met monthly for lunch were considered too frequent to be business-related expenses.

While frequency is not defined, what was deemed here was meeting with the same people, frequently could not be considered a business related expense.

2. Using church funds for personal meals and coffee is inappropriate

We work with many churches that don’t have a physical office or location. Throughout the week pastor will work from a local coffee shop or other location. It can be tempting to get a cup of coffee and use the church’s card to pay for it. It’s easy to justify and say that you’re doing church business and therefore the church should cover that expense.

Unfortunately, that is not the case.

The IRS makes it very clear how to handle meals & entertainment expenses and does not provide any distinction between for profit and nonprofit entities.

There are some ways that a church can put an Accountable Reimbursement Plan in place which would give guidance and direction and provide some assistance to the pastor. Unfortunately, without this plan the IRS would deem this use of funds to be a benefit provided to the pastor and therefore taxable as personal income.

3. Remember, we’re called to be good stewards.

This is a very sticky issue and I’ll admit there is some grey area in the discussion.

I always will contend for churches in areas where the answer is grey that we hold ourselves to a higher standard. Just because something can be justified doesn’t make it right. Many churches are already under scrutiny so why would we voluntarily enter into situations to increase that?

Something that a previous pastor I worked for told me when stewarding and making decisions about church funds was to keep my grandma in mind. My grandma lived for many years on her Social Security income so needless to say she was not rich. However, she was a faithful tither. She made sacrifices to faithfully give and we needed to hold her sacrifice in regard when it came to using church resources.

Another way to think about it is to ask what your average church member would think. Now I’ll admit many in the church want pastors to live on peanuts and they want to go cheap. I get it. However, can you justify your expenses to the average church member? If you showed them the amount of money or percentage of budget that was spent on staff meals would they deem that as appropriate?

Now some churches have taken that too far and become cheap. I’m not advocating for hoarding and not using funds for ministry, but rather using those funds to further the ministry.

Unfortunately, the ramifications here are extreme. IRS field agents are given the authority to deem what they think is excessive or inappropriate. The fines and penalties enough should prevent us but you may also be putting your church’s nonprofit status in jeopardy. It’s really not worth it for a $3 cup of coffee.

Now this post is not intended to be an exhaustive comment on this situation and there is much more that could be said. If you want to dive deeper, comment below and we can discuss more.

If you need help in these areas or putting together a financial system that better tracks and manages your expenses let us know. We’re here to simplify so you can do ministry better.