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Financial risk management policies

Your ministry's money matters

Financial matters can be some of the most sensitive — and crucial — parts of your ministry’s operations. Policies that help manage financial risks for tithes, offerings, donations, investments and budgets are important tools in keeping your ministry’s resources intact. This also provides transparency and accountability that can inspire trust and encourage ongoing support.

Tip: Focus on the specific risks to your financial resources

Identifying your church’s specific risks is the first step toward creating effective policies to reduce those risks. The more specific your understanding, the better. Risks like theft or volatile donor relations can present very real threats. Proper procedures can help reduce liability and protect against those risks.

Below are six areas of financial management that might require your attention. You most likely already have these policies in place. If not, the section below can be a launching pad to create important financial management policies. Below each area, you’ll find elements that need to be addressed in your policies:

Area one: Financial responsibilities and objectives

  • List who is responsible for developing and reviewing financial policies.
  • List who is responsible for reviewing and approving the budget.
  • List who is on the finance committee.
  • Determine how often financial policies should be reviewed.
  • Set clear short- and long-term financial goals.

Area two: Budgeting process

  • List who is responsible for developing the annual budget.
  • Define the projections and objectives the budget should contain.
  • Determine how often the budget is reviewed.
  • List who is responsible for presenting the budget to the finance committee.

Area three: Financial statements

  • List who is responsible for preparing financial statements.
  • Define what standards the financial statements should follow (e.g. Generally Accepted Accounting Principles).
  • List who is responsible for presenting the financial statements to the finance committee.

Area four: Internal controls

  • Document incoming donations – cash and checks – according to IRS regulations.
  • List who is responsible keeping and reviewing documented donations.
  • Set a timeframe for depositing donations.
  • List who has access to bank accounts and who can make deposits.
  • List who is responsible for receiving and reviewing bank statements.

Area five: Audits

  • Establish an independent review of financial statements and operations.
  • Define how often audits are conducted.

Area six: Investments

  • Develop investment goals and acceptable investment vehicles.
  • Identify tolerance for risk.
  • Set criteria for selecting financial advisers.

Sample scenario

With high attendance Sundays — like Easter or those around Christmas — come a greater likelihood for more tithes. To keep those donations from being stolen, ensure the individuals handling the offering plates are reliable by conducting a background check and personal interview with the pastor. Lock the money in a safety deposit box and deposit as soon as possible.

We encourage you to evaluate other areas of your ministry that could potentially have risk. We’ve created an online tool, Ministry Protection Plan, to help you keep going.

This article is for informational purposes only. It is not intended to be construed as legal advice. Readers should use this article as a tool, along with best judgment and any terms or conditions that apply, to determine appropriate policies and procedures for your church’s risk management program.