Mid-Year Financial Checkup for Your Parish 

Whether you are clergy or a parish staff member, it’s important to understand how your parish is using its resources. Most parishes operate on a budget and have to stick to it. This means that if the parish spent more than it planned during the first half of the year, leaders will have to make adjustments so they can stay within their budget at the end of the year. That’s why it’s crucial to do a mid-year financial checkup at your parish. 

Some adjustments your financial team can make could include cutting back on programs or asking donors for additional contributions.  

Parishes and dioceses should track their finances closely and review them at least once per year to ensure they are using their resources as carefully as possible. This is called a financial checkup, and it’s an important part of running any organization, including parishes. 

You can use the following checklist to conduct your parish’s mid-year financial checkup: 

  • Review your finances to date; compare this year’s budget with actual expenditures; identify areas where you have or haven’t met your goals and make adjustments with how you spend money. 
  • Review payment processes for vendors, suppliers, and employees. Are there any steps that could be streamlined or improved? 
  • Review policies regarding purchases (both large-scale and small) from vendors so that all purchases are made in accordance with the organization’s mission statement and core values. 

Analyze spending. 

You’ll need to have a good idea of what your parish is spending so you can analyze your finances.  

Some questions to ask include: 

  • How much money does our parish spend each month? 
  • What is the budget for each item? 
  • What is the actual amount spent? 
  • Are there any items whose cost has exceeded their budgeted amount? If so, why? Are there ways that these costs could be reduced or eliminated altogether without affecting ministry effectiveness/quality and missional outcomes?  
  • Which items are most expensive on average per month and over time (e.g., $1,000 per month versus $50 per month)?  

Pro Tip: Rather than use a general accounting program like Quickbooks, ParishSOFT Accounting is tailored specifically for parishes and dioceses. Analyze your spending and manage cash flow easily.  

Review your income. 

Now that you’re halfway through the year, it’s time to check in on your financial health. 

A quick way to do this is by reviewing your parish’s income. If income doesn’t match up with the budget or goals, look closely at where the gap is and adjust accordingly: 

  • Does income match up with the budget? If not, figure out where it differs and what steps are needed to get there. It may be as simple as adjusting outreach campaigns or asking for more donations from regular givers. It could also indicate a larger problem—such as a waning interest in     life or declining participation numbers—that needs attention now rather than later when it might be too late. 
  • Does income match up with goals? If not, take action immediately by figuring out how you’ll reach those goals with less money than expected (e.g., cutting back on programs). Rather than wallow over why something can’t happen due its costliness, focus on how you’ll make things work despite lacking resources necessary for success. Sometimes you’ll have to get creative! 
  • Is it sustainable? Make sure your sources will continue over time so they don’t dry up unexpectedly (or become unsustainable), which makes planning difficult. One way to make income more sustainable is to encourage donors to enroll in recurring giving. It makes tithing simple and easy for them, and it creates a consistent flow of income for your parish.  
  • Diversify! Your parish should have multiple sources of support so if one dries up unexpectedly then others will fill in until things return to normal. Host giving days; promote a ministry campaign; have a fundraising night.  

Compare your budget with actual cash flow. 

Now that you have a good idea of how your finances are performing, it’s time to look at the difference between the budgeted and actual amounts. You can do this by looking at the income, expenses, assets and liabilities side-by-side. 

Compare each item on your budgeted income statement with its corresponding item on your cash flow statement (your year-to-date revenues). In addition to adding up all these figures for both statements and comparing them directly against each other, you’ll want to calculate percentages so you can see where there are differences in performance between income and expenses as well as assets and liabilities. This will help give you better insight into how things are trending during mid-year performance review time. 

Talk about giving goals for the remainder of the year. 

It’s important to think about giving goals for the remainder of the year. That way you know how to adjust funds appropriately for the vision of your parish. 

As you know, a goal is a statement that helps you focus on what needs to happen in order to achieve an objective. Goals should be SMART: specific, measurable, achievable, relevant, and time-bound. They should also be SMARTER—specifically written down so they can be tracked. Be sure that your goals are specific (i.e., don’t just say “increase giving”). Write out exactly how much more money you want to raise by December 31st compared to March 31st (i.e., raise $12k). Then write down smaller, actionable steps your parish can take to get there. 

Plan for next year’s budget. 

You’ve made it to the second half of the year, which means you have some time to plan for next year’s budget. Planning ahead is important because it allows you to make decisions about what funds should go where. This helps prevent last-minute scrambling when you’re putting together your budget for the new year. 

You’ll also want to consider any major events your parish wants to plan in the coming year. Look at the holiday calendar and decide ahead of time how much money will be needed for the holiday-related events and programs.  

Use parish accounting software to help with your financial checkup and reviews. 

One of the best ways to efficiently track your parish’s finances is to use accounting software that is designed with ministry in mind. ParishSOFT Accounting will allow you to automate and streamline tasks. Our solution integrates accounting, giving, and membership for comprehensive reporting. Contact us today to get started! 

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