Churches often make budget cuts the easy way, as shown in the chart below. They choose a percentage by which the entire operating budget should decrease. Then they force every department to cut the same amount across the board. Essentially, the waterline is lowered for everyone.
It sounds fair to treat everyone exactly the same. Hard conversations are unnecessary and no one gets their feelings hurt. The ship might be sinking but at least everyone is going down together! (Actually they won’t. The best leaders will recognize what is happening and jump ship before it is too late.)
Here are some problems with flat-rate cuts:
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Not every ministry is equally essential to your mission.
Forcing the same cuts on everyone does a disservice to your strategy.
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It discourages high performers.
They worked hard to build the ministry only to be forced to scale back efforts, receiving the same treatment as underperforming peers.
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It focuses on a money issue, not a ministry issue.
In most cases, if the budget is being cut because the church is in decline, the real problem is not the budget. Avoiding tough calls leaves real problems unaddressed.
Budget cuts, when led well, can actually create a healthy season of pruning in the life of a church.
So if you are faced with budget cuts this year, how can you approach them in a healthy way? Work through these five levels of a healthy pruning process. Start at the top and exhaust each level of cuts fully before moving down to the next, if necessary:
PRUNING LEVEL #1: ELIMINATE INEFFECTIVE MINISTRIES
Cutting the budget can be a great opportunity to eliminate a sacred cow. It can also be a good reason to cut a ministry that competes with your strategy. Ironically, these are often the cuts that leaders try to avoid. They often come with hard conversations about ministries with deep histories. The truth is, if these ministries do not have a place in the future vision for your church, the conversations should have probably happened before now. The time has come when you literally can no longer afford to ignore them.
Key Question: Which ministries lack results or compete?
PRUNING LEVEL #2: REFINE INEFFICIENT PRACTICES
This is the “trim the fat” stage of pruning. Look around the organization and identify areas of inefficiency. They are likely to be found between ministry silos where duplicate spending and efforts often take place. Ask yourself, what resources could the team be sharing instead of purchasing separately? What systems do you lack that result in increased project costs? How can you adjust midweek building usage to reduce utilities? Are there any unnecessary expenses you could cut and never miss? Pull ministry leaders together to identify and reduce them.