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Ask Dave

The Church's Emergency Fund

David leads a small church, and his church is debt-free. He wants to save an emergency fund for the church, but he isn't sure what's considered an expense.

QUESTION: David in Alabama leads a small church, and his church is debt-free. He wants to save an emergency fund for the church, but he isn’t sure what’s considered an expense. Dave tells him he can compare it to a small business when it comes to determining expenses.

ANSWER: From a financial standpoint, we look at it the same as we would a small business in terms of the mathematics. The goal, first and foremost, is to stay open with this cash in case something bad happens. The secondary goal would be to pay the bills on time for the reputation of the church, and in this case, your witness. The third goal is to do all of that without putting a strain on the organization. In business, we would call that retained earnings. Technically, a church does not have earnings, but you have income. We’re going to retain some of that because the Bible says, “In the house of the wise are stores of choice food and oil.”

You have an overhead nut that you have to crack each month. You look at that and you might not offer free donuts if you were in a hurt. You might not do the youth trip, and the mission trip might be frozen if you were in a hurt. Those aren’t necessities to stay open. We don’t have to fund those. The basics, though, like payroll, utilities, insurance and taxes need to be covered. You ought to be running a monthly and an annual budget on the church anyway. Then separate necessities, and multiply that by the three to six months figure. I lean toward six months.

There’s a huge level of wisdom for a church to be debt-free, in control of the money, and managing it well with a budget system and a system for saving for worst-case scenarios. All of those things say to the community that you’re steady and your faith has led you to wisdom. It makes your faith attractive.