How is the conference budget planned?

December 31, 2010

All Minnesota United Methodist churches have a voice and vote (through their clergy and lay members to conference) on how they will fund the mission and ministry that they share. Before that vote is taken, a number of people engage in several careful steps to propose a budget.

First, the Budget Process Team meets in September, 15 months before the budget will go into effect. On the Budget Process Team are lay and clergy volunteer leaders of conference ministry teams and conference staff. All engage in ministry that advances the two imperatives of the conference: reach new people and cultivate spiritual vitality. At this meeting, participants learn about trends in receipts and expenses as well as other influences on the conference budget.

Each conference-level ministry team, ministry area, and other groups represented in the apportioned budget requests a budget for their area by Dec. 1. The Budget Process Team reviews the requests and may make modifications. The conference Council on Finance and Administration and the Common Table review the budget requests from the Budget Process Team and may make modifications. Each group takes care to consider the context in which we work and the rules we have, including the “ceiling rule,” which limits the increase in the apportioned budget to the three-year average increase in local church spending.

The CFA forwards a recommended budget to annual conference session members for their consideration at annual conference session in June.

Three perspectives

Making the process interesting are the different approaches people take to preparing the budget. These approaches can be described as pessimistic, optimistic, and perfunctory.

  1. The pessimistic budgeters plan for the worst-case scenario by building in a safety net (padding) that only they know about. This approach reduces organizational effectiveness by distorting the picture and allocating fewer resources to new or expanding programs. A padded budget provides for inefficiencies and waste. It minimizes the financial strength of an organization and management may miss opportunities to expand or make changes to improve operations.
  2. The optimistic budgeters often overestimate revenue and underestimate costs. This type of budget may inspire the organization but it can also produce adverse consequences. It results in a lack of flexibility to meet unforeseen costs or shortfalls. It creates unrealistic expectations and can downplay achievements of good financial management. Optimistic budgeting may impair ongoing viability and stability of the organization.
  3. The perfunctory budgeters see the budget as a necessary but ultimately useless exercise. This type of budgeter pays little attention to the process and has little interest in the outcome other than to ensure inclusion of pet projects. This approach can give the feeling that decisions are made on the spur of the moment or on a capricious basis. It limits the organization’s ability to provide common direction and goals. This budgeter endangers the organization’s long-term economic viability by failing to be disciplined, deliberate, thoughtful, or visionary in planning for the future.

A shared decision

The best approach to budgeting is a combination of these styles. The pessimistic approach helps scrutinize ambitious forecasts and the optimistic approach helps the organization envision what it can be with a leap of faith and some risk. Even the perfunctory approach can be a helpful reminder that the budget is ultimately only a tool and a guideline that enables ministry but it is not the end result.

In the church and elsewhere, control of money (or the appearance of control) sometimes equates to power. To be honest, power often is derived from the ability to control how money is spent or managed. Sometimes groups or people deliberately use money to exercise control over ministry. This can be magnified when money is (or is perceived to be) scarce.

We believe our collaborative process, with many different people serving on the Budget Process Team, helps ensure a healthy combination of approaches that results in a better budget that helps Minnesota United Methodists plan ministry for the future with faith and hope, based on realistic and reliable financial information.

Barbara Carroll is director of finance and administration for the Minnesota Annual Conference of the United Methodist Church.

Minnesota Annual Conference of the United Methodist Church

122 West Franklin Avenue, Suite 400 Minneapolis, MN 55404

(612) 870-0058