God blesses churches with many resources – people, time, and money. And He expects us to be good stewards of what He provides. Members tithe on their income to support the ministry’s operation. This makes it even more important to be good stewards and manage financial resources responsibly. Smart Capital Mind shares, “Like any organization, a church needs accurate financial reports to detail their activities. The reports help obtain loans, prove financial viability, and present a transparent use of member funds.”
Where to Start
How to prepare an end-of-year church financial report explains why it should be done from an accounting point of view. Financial reports, including the essential documentation provided by year-end reports, are important for these three reasons:
- Better Decision Making – Financial statements provide an accurate picture of how your church manages donations so you can monitor progress, fix weaknesses, leverage strengths and benefit from future opportunities.
- Make On-Time Payments – The “scorecards” provided by financial statements assist in meeting its obligations promptly.
- Catch Mistakes That Could Be Costly – Financial reports can help detect errors or fraud that could otherwise deeply damage the confidence of giving to the church.
What to Include
A complete set of financial statements for a non-profit organization generally includes the following:
- Statement of Financial Position (Balance Sheet) – assets, liabilities, and net assets (net worth) on a stated date showing the reader where the organization is financially and where it has been (what is owned vs. what is owed).
- Statement of Activities (Income Statement) – income, including contributions and expenses over a period of time, showing the reader what resources (income) were available to complete the organization’s objectives and how the resources were used (expenses).
- Statement of Cash Flows (Cash Flow Statement) – cash inflows and outflows over a period of time coinciding with the Statement of Activities and Statement of Financial Position.
Once you prepare a church end-of-year financial report, it can also be leveraged as a communication tool. Share with congregants to build credibility, as it’s a helpful accountability mechanism. While it is a task to prepare church financial reports, they provide members with a picture of the overall financial health. An update of all the ministries within the church. With updates on progress on the church’s vision. Showing how donated funds are used. And giving insight into how each ministry area uses the funds designated for its purposes. A year-end report is a celebration of the impact that answers the question, “How did God allow us to participate with Him in the past year?” Who wouldn’t want to communicate that with their church?
One of the most powerful church financial tips is how churches prosper when they responsibly manage the resources entrusted in their care. This responsibility includes diligence in the financial management of the generous sacrifice of church member tithes. Stewardship is “the responsible of overseeing and protecting something considered worth caring for and preserving.” In the church, stewardship is the responsible oversight of church funds, property, and equipment. “Moreover, it is required of stewards that they be found trustworthy” -1 Corinthians 4:2.
David joined ACS Technologies in September of 2021 as the Financial Planning and Analysis Director. He has over 15 years of experience. Including finance and equity research, financial planning, corporate development, and strategy to drive growth and efficiency. He previously worked for HighRadius, Bristow Group, Clarksons, and CGGVeritas. David enjoys time with his family and participates in various roles at his church.