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This is a time of year when many congregations appoint a new budget committee chair. If you’re one of them, we want you to know: We know your new leadership role can be overwhelming and that, even if you have a background in budgeting, congregational finances are unique. Your congregation’s annual budget tells a story that’s more than money collected and money spent; it’s a story of community values and priorities.
Although every congregation’s budget is different, certain principles should guide all congregations. Here are five important things every budget committee chair needs to do.
Your congregation crafts and passes a budget every year. You can learn a lot about financial trends from previous budgets and from your predecessors who compiled them, which will help you make informed decisions about the new budget. With your committee, start by gathering and reviewing copies of the budget from the current fiscal year as well as the past two or three years. Notice the following:
Make sure to consult members of your committee who have participated in the budget-crafting process in past years. Use this research to affect this year's budget and process.
As chair, you are responsible for creating a clear plan your committee members can follow to craft the budget. The budget plan may include a timeline to complete the process, committee meeting dates, advanced meeting prep and delegated activities, as well as various logistics, such as having necessary conversations with stakeholders.
To develop the timeline, consider when the budget must be approved – then work backward to determine how many meetings you will need and how often they will need to take place. Make sure you factor in enough time to consult with stakeholders, as these considerations will tell you when you will need to begin the process.
Your committee should strive to craft a balanced budget – one with equal expenses and revenues. A balanced budget reflects financial stability and sound financial judgement.
You should avoid passing a deficit budget – one with higher expenses than revenues – because even a small deficit can lead to large problems, which may continue to grow year after year.
Although a surplus budget – with revenues higher than expenses – might sound ideal, it also should be avoided. A surplus budget can raise questions about the allocation and distribution of excess funds and can suggest to future budget committee members that certain expenses can be cut – which may even lead members to conclude, falsely, that they don’t need to contribute as much to the congregation as in the past.
During some fiscal years, you may be able to anticipate unique circumstances that will affect the budget. You and your committee members should ask: Is this a special year because of a celebratory event (for example, a special congregational anniversary or a milestone anniversary for the rabbi)? Or does the congregation need to address a maintenance issue (for example, installing a new roof)? It’s important to plan and account for such circumstances as you craft the budget.
As the budget chair, you should always be transparent during the budget-crafting process and ensure that all relevant questions are asked and properly answered. Prior to a board vote to approve the budget, share detailed notes and explanations, and allow board members to ask questions and seek explanations.
At the annual meeting, provide a reasonable amount of clear information to congregants so they can understand the congregation’s financial situation easily. This transparency is not only your responsibility; it is also an important opportunity for your community to engage in the governance of your congregation.
Crafting a budget for your congregation is challenging but necessary work. We hope that with your guidance and leadership, the congregation’s budget process leads to increased financial strength and stability.
To learn more about this topic, read the URJ’s new resource Congregational Budgets: From Research to Approval.