People of faith believe in the importance of stewardship. The word steward refers to a person who manages — but does not own — a household. In ancient times, a good steward was trustworthy and accountable for everything from a household’s finances and property to its reputation. Today, we see it as taking good care of the things that God entrusts to us.
Often, there is a church finances committee, council or board of trustees. To fully engage all these stakeholders and religious donors, faith-based not-for-profit organizations are under increasing pressure to demonstrate the impact of tithes, offerings, bequests and endowments on the dual missions of helping people and supporting the congregation. Precise accounting and complete, transparent reporting of church finance are the hallmarks of stewardship.
How faith-based organizations can demonstrate good stewardship
Religious donors understand stewardship and value it. The church should never waste money, but instead strive to grow financial assets in order to give more abundantly and fulfill its mission. Transparency, accountability and financial reporting are prerequisites for maintaining trust with donors.
Best-in-class cloud-based financial solutions afford religious organizations the tools to demonstrate good stewardship among the committees, staff and fiduciaries entrusted with management over church assets. These solutions help organizations to engage religious donors with reports about nonprofit impact and outcomes that reinforce what they observe during their own volunteer experiences.
Eight church finance technology tips
It is important for religious organizations to choose the right financial management solution. It should be easy enough to be used by an assortment of stakeholders with varying degrees of technical and accounting proficiency. It should also be powerful enough to provide full accountability over the resources needed to support missions and Ministry.
For a growing number of congregations, cloud-based financial management solutions offer the perfect way to facilitate good stewardship. Here are eight tips to keep in mind as you consider your ideal solution:
- Select user-friendly accounting software: In religious organizations, much work is carried out by volunteers, many of whom may not have a lot of experience with budgeting and accounting.
- Choose a cloud solution: Spare your church the hassle and expense of dedicating IT resources such as people and a server. Cloud-based financial solutions can be accessed securely anywhere in the world at any time. The vendor will maintain and support the system and install updates.
- Look for established not-for-profit experience: Choose a vendor that has worked with many not-for-profit organizations. Businesses operate for a profit motive. Churches operate very differently—and with a higher calling.
- Establish good internal controls: Because many of the people running programs in your church are not accountants, you will want to have a good system of internal controls and budget/expense approvals to safeguard your financial management.
- Insist on fund accounting functionality: Most churches earmark certain funds for particular purposes, such as a building fund, a directed bequest, or a fund for missionaries. If that is the case with your congregation, you will have an easier time managing these funds with a flexible and configurable solution that easily allows for restrictions and automated release of restrictions. This lets you assign incoming revenue and outgoing expenses to these individual areas.
- Consider the need for multi-entity and multi-location accounting: Smaller congregations may keep just one set of books. But when churches grow, you may want to keep track of the finances of each church separately, while still being able to roll financials up for an executive view. Congregations also may want to keep separate books for separate entities outside of the main church property, such as bookstore, childcare or school, food pantry, foundation and other ministries.
- Automate reporting for different roles and stakeholders: Look for a solution that makes reporting very easy for non-accountant, non-technical people. You want to be able to set up automated report packages and even visual dashboards that can be run at any time with up-to-date information.
- Measure and demonstrate outcomes and impact: Choose a financial management solution that helps you engage donors with information about the good that’s accomplished through tithes and offerings. By selecting a system that can also track operational statistics about outcomes and impact, you will be able to tell the congregations about how many meals they’ve served, books they’ve distributed, or how many visitors they’ve welcomed.
Making the modern not-for-profit organization
Baker Tilly is here to help engineer your evolution to a modern church finance machine. We offer a complete solution to not-for-profit organizations. That solution includes learning how to leverage not-for-profit outcome metrics and KPI dashboards – but it extends to adapting the organization in whatever ways the people, processes, and technology call for.
Our experience applies to nonprofits across the spectrum, helping everyone from churches to community organizations use best-in-class financial management software to propel (and prove) their success towards the mission.