Beyond Annual Budgets: Using January to Assess Your Church's Financial Trajectory
- Derek Henson
- 7 days ago
- 6 min read
For many pastors the silence of the post-holiday season is one part relief and one part dread as the cycle of a new calendar year begins. The splendor of the holiday season kept us busy with planning the perfect music or crafting the most heard sermon of the year has faded and we stand again at a new year. While the trend in our society is to make resolutions of how the new year will be different, pastors may just want their congregations to continue to survive, to meet the budget, to pay the known expenses and hopefully be in the black just 360 days from now. Seminary didn’t train pastors to be financial planners, and many lay leaders don’t spend their days pouring over church data trends to inform their decision making and planning. Simply surviving through another year is often the extent of our planning and sustainability.
However, many churches this year will face big questions that will have difficult answers. Can we afford a pastor, can we continue with our same staffing levels now as in the past, can we afford to hire the special musicians we usually expect for Easter Sunday, how can we afford to replace our boiler, roof, or air conditioning system? With economic uncertainty and rising costs, churches may be tempted to continue the trend of just gritting our teeth, digging in, and working again to just survive another year.
But when we turn to our faith to inform how we should live in 2026, I would invite you to walk through January as a season of financial discernment and wisdom. Scripture reminds us: 'A house is built by wisdom and is established by understanding. By knowledge its rooms are filled with all precious and pleasant wealth' (Proverbs 24:3-4). Sustainable ministry requires both wisdom and knowledge—including honest knowledge about our fiscal realities.
January is your window for pastoral reflection on this. The books are closed on 2025, it's quiet, and you have the data you need to see where you're actually headed—not where you hope you're headed. You don't need to be an accountant to do this. Ask your treasurer for a simple one-page summary covering the past 3-5 years:
Number of giving households (not just total dollars)
Average annual gift/giving per household
Top 5 and top 10 donor households as percentage of total income
Three expense categories: staffing, building, ministry programming
If you have an endowment: principal balance and annual draw (interest or principal)
Any debt balances and payments
Reviewing this information won’t require an accounting mind as most people can easily spot and understand trends across these basic high-level areas.
Most churches operate with only 1.5-2 months of unrestricted operating cash on hand.
Your bank balance may show $200,000, but once you account for restricted funds that can't ethically be used for operations—payroll, utilities, ministry—you're left with far less actual runway. In your January review, watch for this pattern: designated funds growing while operational income shrinks. If you see this, you have a stewardship education opportunity this year. Your congregation has learned to give to special projects while bypassing the general fund that actually keeps the lights on and pays staff.
Looking at your giving data, pay close attention to donor concentration in your top 5-10 households. Oftentimes, especially in small to mid-sized congregations, just a few families account for the bulk of annual giving, often up to 60%. While this is very common, it’s also a vulnerability to the congregation and the pastor’s leadership. When one of these households experiences a financial reversal, gets angry about a church decision or pastor’s teaching, moves away, or dies, the impact is immediate and severe. Pastors often shape their leadership and sermons around not causing a disruption to those households to preserve institutional financial solvency.
If more than 40% of your annual giving is from 10 households or less, long term sustainability is a challenge that must be addressed now. It is not a question of if those 10 will change their giving but when and how do we plan for that change to come. The pattern across mainline progressive churches donor pool shows a 3%-5% fall annually, even while giving is flat or grows slightly. Fewer people are giving more – which could compound the top donor concentration. I experienced this myself with a church who had seen a significant drop in households but increase in giving. While it was worth celebrating the faithfulness of those who met the moment of challenge, it was not a sign of long-term sustainability.
Your sustainability strategy shouldn’t be to 'ask current givers for more.' You need to expand your donor base. Who in your broader community connects with your mission but has never been invited into financial partnership? Who shows up occasionally but has never given? Sustainable churches focus as much on broadening participation as deepening commitment. Some congregations may focus too much on squeezing the top concentration of donors for more while they’ve not asked those on the fringes to participate at all.
Once you have an idea of how your income and giving has trended, turn to the expense side of your data. The average church budget breaks down with 45-55% going to personnel, 25-35% to facilities, and 15-25% for ministry and programming. While more funds may be raised for special initiatives or programs, we are focused on the operational, unrestricted budget picture. If significant parts of what you do each year is funded from a special gift or designated fund – but expected as a must do – make a note of how it can be funded from the general fund in 2026 or budgeted in 2027.
Review spending trends over the past 3-5 years. Are personnel costs growing faster than giving? Is your building consuming more resources while serving fewer people? Are you maintaining programs out of tradition rather than effectiveness? These trends tell you whether you're building toward sustainability or slowly bleeding out. Project those trends and percentages forward over the next 5 years. While it may be alarming to see where the data is leading – it is not certainty that your congregation must experience that future.
The crux of this process is to answer a difficult question: if you lost your top 5-10 giving households tomorrow and had to cut their percentage of giving from your budget, what would you eliminate first? Whatever your answer is—the mission partners you'd stop supporting, positions you would eliminate, the building repairs you'd delay, the programs you'd cut; this exercise reveals what you already know: some expenses are more essential than others. Crisis forces painful cuts while strategic planning allows thoughtful adjustments over time.
Looking honestly at donor concentration, shrinking participation, and expense trends isn't comfortable. Our instinct is to look away, to focus on just getting through this year, to hope things will somehow turn around without intervention. But good stewardship toward sustainability isn't about survival for now—it's about holding the tension between present reality and future possibility. It's planning for a future within our capacity rather than clinging to a past we can no longer sustain.
Right-sizing isn't decline management. It's building toward thriving.
Sometimes a smaller church with aligned resources is far more sustainable—and more faithful—than a larger church stretched too thin, maintaining programs and expenses out of obligation rather than mission. Being thrifty now, making strategic adjustments while you still have choices, allows you to grow into a vibrant future instead of crumbling under the weight of unsustainable expectations of what the church should be.
This January, give yourself permission to ask these and other hard questions. Give your congregation permission to be honest about who you are now, not who you used to be. That honesty isn't failure—it's faithfulness.
Your four-week January plan:
Week 1: Gather the data (past 3-5 years)
Week 2: Look for trends—donor concentration, shrinking pool, expense growth
Week 3: Gut-check alignment—does spending match mission?
Week 4: Identify 2-3 incremental adjustments for this year
Small strategic changes now prevent large crisis-driven cuts later. You don't have to solve everything in January—but you do have to start thinking about more than just 2026.
The church's role in society has changed. Your job isn't to preserve an institution exactly as it was. Your job is to steward a sustainable faith community that can do more than survive—this year and ten years from now.
If you are a pastor or church leader who would like support in evaluating your sustainability please reach out to us at info@pinnserve.com
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