How To Build A Church Budget

Most church boards and elder teams vote on next year's budget in November or December. If yours does, your 2027 draft needs to be together by early November, and the work behind it needs to start this month. Whether you've made a few budgets and are looking for tips to streamline the process, or have never made a church budget before, this post will help.

Let's get one thing clear: a church budget is not a ball and chain working against your best ministry ideas. A church budget is just a ministry plan with dollar signs attached. It shows your board what you intend to do next year and what that work will cost. When it's built well, a board member or elder can read it and understand your priorities before anyone explains them.

Many budgets start as a copy of last year's, with a few numbers nudged up or down. Staffing often gets worked out last with whatever room is left. That kind of budget can pass a vote and still leave everyone unsure what the church is planning to do in the year ahead.

This guide walks through six steps for building a 2027 budget from the ground up. Our free 2027 Ministry Budget Worksheet is organized following the same steps, so you can build as you read. Let's get started.

Before You Open the Spreadsheet

A little setup now saves a lot of rework in November.

Work backward from the board meeting. Find the date of the vote and count back from it. Ideally, the final draft should reach the board two weeks before the meeting. Your leadership team should review it a week before that, which means the first draft has to be finished a week earlier still. For a board that votes in mid-December, the first draft is due around the middle of November. Keep in mind, a lot of holidays are mixed into this time period, so be sure to plan around them.

Next, decide who's in the room. We suggeest including your senior pastor, your executive pastor or administrator, whoever manages the finances, and one elder, board member, or finance committee member for early input. Bringing an elder or board member in early could help with perspective and ideas.

Gather four things before you start:

1. Actual income and expenses for 2024, 2025, and 2026 year-to-date

2. Current payroll and benefits costs for every staff position

3. A current giving report (our year-end giving plan walks through how to sort one into useful groups)

4. Your top three to five ministry priorities for 2027

Be sure to settle the priorities first, before getting to the numbers. Every decision in the steps below should get checked against them, and a budget built without them tends to drift toward whoever speaks the loudest about their ministry needs.

Step 1: Start With Three Years of Actuals

Last year's budget was a set of estimates made twelve months ago. Some of them were accurate, and some missed by a lot. Building your 2027 budget using those estimates carries every miss forward, and it doesn't help you identify areas that have run over or under consistently.

Actuals show what happened each year. Before you type a single 2027 number, put your 2024, 2025, and 2026 actuals side by side.

How to lay it out:

List every budget category down the left side. Across the top, add columns for each year's actuals, a three-year average, the 2026 budget, and the variance between the 2026 budget and what you expect to spend.

Handling 2026 in October:

2026 isn't over, but it's still worth looking at. Use actuals through September, then estimate October through December using the same three months from 2025. Label the column "2026 projected" so it's easy to quickly see what is still moving.

What the variances tell you:

• A line that's off three years running is a planning problem. If facilities maintenance has run over budget three years straight, the budget has been wrong, and 2027 should reflect what the line really costs.

• A single large spike is usually a one-time event (like a big repair or special celebration). Note it, then leave it out of your baseline.

• A steady trend in one direction, like insurance or software costs rising each year, is what you want to plan around. Plan for it to continue rising unless you have reason that it won't.

Here's an example:

Step 2: Project Giving From Trends

Your revenue projection sets the ceiling for everything else, so build it from what giving has done, and leave the ministry wish list for later. A projection based on what the church needs will always look better on paper than the year that follows.

Start by separating your income into three kinds:

• Recurring general giving. Regular tithes and offerings.

• One-time gifts. A large estate gift or an unexpected year-end donation.

• Designated gifts. Money given for a specific purpose, such as missions or a building fund. It belongs to that purpose and stays out of the general operating budget.

Project 2027 from the three-year trend in recurring giving, then adjust for what you already know is coming. Big building maintenance, a generous family moving away, or attendance growing in one service all belong here. Write each adjustment down with a one-line reason so your board can follow your thinking.

Step 3: Settle Staffing First

Staffing is usually the largest expense in a church budget. Generally, most churches spend an average of 45 percent of their budget on staff, and larger churches usually spend more.

The largest decision in the budget should be made first. When you're filling a container with different-sized objects, you put the largest in first and fit the smaller ones around it. The same is true for your budget. Your staff are the largest budget line and the most consistent.

What belongs in your staffing line:

• Salaries, including any cost-of-living or merit adjustments

• Housing allowance for ministers. The 2027 designation has to be approved in advance by board action and recorded in the minutes, so put it on the next board agenda. Confirm the details with your CPA or tax professional.

• Employer payroll taxes for non-ministerial staff

• Health insurance and retirement contributions

• Planned changes, such as new hires, open positions you intend to fill, and roles moving from part-time to full-time

Decide compensation adjustments together as a leadership team, write down the reasoning, and bring staffing to your board as its own decision. A written rationale protects your staff and helps your elders vote with confidence.

Behind every row on the staffing tab is a person and a household. When pay stays flat while prices rise, your team takes home less each year, even if nobody intended it. Settling staffing first gives those decisions the time and care they deserve.

Once the staffing number is set, build everything else around it.

Step 4: Build the Rest Around Your Priorities

With staffing settled, fill in the remaining categories in this order:

1. Facilities and operations. Utilities, insurance, maintenance, and office costs. Include deferred maintenance if possible.

2. Ministry areas. Children, students, worship, adults, and any other ministry with its own line.

3. Missions, outreach, and benevolence.
   Contingency or reserve contribution.
   

Each ministry should connect to one of your 2027 priorities. If some lines don't connect to any priority, take a second look. A few will turn out to be essential for reasons a priority list doesn't capture. Others will be there because they were there last year.

A contingency line in the operating budget gives your team room for the unexpected without pulling from savings. The right reserve target depends on your church's size, debt, and facilities, so set it with your finance team or an advisor who knows your numbers. If you don't have either, our finance team can help with this (and everything in this post).

Step 5: Build A Second Scenario

A single budget gives your board one plan and assumes giving will follow it. When giving slows in the middle of the year, leaders end up deciding what to cut under pressure, often in a hurry.

Build a one-page second scenario at roughly 10 percent below your projected giving. Then name what you would delay/cut, and in what order:

• First: purchases and projects you can pause without affecting people, like new equipment or facility upgrades that aren't urgent

• Second: new initiatives and program expansions planned for later in the year

• Third: hiring for open or new positions

Elders who have already seen a plan that makes the most of less make steadier decisions when giving dips. This also builds trust between you and the board.

Step 6: Bring It to Your Board or Elders

Bring two pages to the meeting: a one-page summary and your second scenario.

The summary should cover:

• The total 2027 budget and how it compares to 2026

• Reasoning behind big changes

• The staffing total and any compensation adjustments
  

• The ministry priorities the budget funds

• Anything you chose to delay or leave out

Walk through the priorities before the line items. Boards and elders approve plans they understand, and the story behind the budget is what makes the numbers make sense. Connecting your budget to your mission is the first step of good biblical stewardship.

Send both a week before the meeting so everyone has time to read them and bring real questions.

Free 2027 Ministry Budget Worksheet

The worksheet follows the six steps in this guide, so you can build your budget one tab at a time. It works in Excel or Google Sheets.

What's inside:

• Start Here: instructions, a countdown from your board meeting date, and a document checklist.

• Revenue Projection: recurring, one-time, and designated giving, with a trend-based 2027 estimate.

• Staffing Plan: one row per position, with room for your reasoning.

• 2027 Budget: the full budget with a priority column for every line.

• Second Scenario: the 10 percent version, your delay order, and your trigger

The Bottom Line

A budget is a ministry plan with dollar signs attached. If it doesn't read like your priorities, it isn't finished yet.

Building one well takes time, honest numbers, and intentional conversations. You don't have to have them alone. Kingdom One's Finance and Business Administration teams help ministries build the plan, set up the second scenario, and walk into the board meeting prepared. Looking for support? We're here to help.