Budgeting in an economic downturn

Lee Stephenson: Hey, everyone, welcome to the Unfiltered podcast. My name is Lee Stephenson and I have the joy of serving as the executive director of Church Planting for Converge and a local church planter in Orlando.

Danny Parmelee: And my name is Danny Parmelee. And I oversee Church Planting for Converge MidAmerica.

Lee Stephenson: And we’re starting in this podcast, a two-part series, and that I think is prevalent, given kind of where we’re at in our world and kind of some of the things that church planters are facing specific to the economic turndown, or what could be coming around the corner economic turndown. And the first part, we’re going to just talk a little bit about budgeting, how do you budget in the midst of economic hardship? And then the second part will be we’re going to talk a little bit about how to staff accordingly in the midst of that, maybe an economic challenging season with that, and so I’ll be honest, budgeting isn’t necessarily my favorite thing to focus in on Danny out of the year. My guess is, you’re probably kind of similar with that.

Danny Parmelee: Yeah. Not usually liking to do I like to spend the money and do that, but of actually doing all the planning part of it not so much.

Lee Stephenson: No, and I do and yet, it’s such a critical part of the ministry in order to kind of plan and be prepared for when doors open. And, you know, even if doors tend to close, how do we manage the tension? How do we manage the economic challenges that exist? And we’ve talked about in previous episodes, the idea of church planters early on, need to think quarterly, and set up kind of quarterly budgets. What would you recommend? Do you go back to that pattern as economic downfall comes upon a church situation? What’s your inclination to when it comes to just the overarching big pieces of the budget? And then we can whittle it down from there.

Danny Parmelee: Yeah, well, I think one of the things just to speak maybe a little bit, anecdotally, for the most part are majority of churches that church planters that I’ve talked to, they weren’t affected, as much as they kind of were expecting, in the beginning, there was a pretty good amount of, you know, consistent giving, I would say that for your typical suburban, you know, you know, kind of church plant a little bit different if you’re a multiethnic church, or you have a lot of service workers, kind of depending a bit on the demographic, like if you were a church that had, you know, tons of people who are working in the service industry in restaurants, and of course, your hit a little bit more, and there certainly are those stories. The one thing that I haven’t heard yet, because it’s been so close, is how many people were affected end of the year, because I know that even for church plants, and definitely for established churches, they’ll get 30% of their budget income in the last kind of, you know, in December, November and December, just because it’s just how people have kind of given on their on their giving cycle. So just to give that just a little bit as kind of a background of it is to say that I still think the hardest thing about COVID is there is just so much unknown, we don’t know if a huge wave of all sudden, middle class or middle upper class will all sudden all lose their jobs, or there’ll be some sort of crash that way. So again, it goes to that whole thing of question mark. And so I think that just again, as an overarching principle, you’re having to figure out what are the absolutes that literally can’t change? In other words, there’s no change in, you know, your rent, especially if you’re tied into some sort of lease, but then beginning to kind of categorize the things that you’re almost even planning, catastrophic Lee for or if it’s not catastrophic, it’s things that could be weaned down, you know, like, Hey, you know, normally we spend this much on curriculum, or normally spend this much on an Easter outreach and marketing. There’s literally not that money there. So, you know, we’ll have to have to kind of cut it. So I guess they’re probably more creative. Yeah, before we jump in, I would love to know from your personal experience, if some of the end of the year stuff was at the same for you kind of, if you’re willing to share some of your giving or stories that you’ve heard either people saying, you know, what we kind of actually, you know, if you were to kind of look at this 10 years from now, you wouldn’t see that drastic of a giving or if the giving change, like people were now giving monthly instead of weekly or given quarterly because, you know, they were trying to figure it out.

numbers that just came in for: 2020

tch up now how you approached: 2021

tain the budget to finish out: 2020

Danny Parmelee: I know we’re talking so much income side of this, but that’s, you know, the big first step of budgeting. Were you able to parse some of that out? In other words, like, OK, well, you’re giving might have stayed the same as the total amount, but were you able to kind of, even if you were kind of like broadly looking at it to say OK, you know what we had, you know, this many people drop out, but it was really just filled in with new people or we had some wealthier people that really did kick it in. But we have lots of these people drop off, or would you say it, literally, you could take this month and this month, and you’re seeing the same families, essentially just giving the same everyone is just giving the same?

Lee Stephenson: For the most part, it was families giving the same. You know, if I was to give you a quick summary, we did have a few families drop off, but I wouldn’t say it was significant. But I would say we added a couple families in the same season that probably made up that. Yeah, we did engage the conversation of if you do have means would you help us out? If you need help, Let us know.

Danny Parmelee: OK, yeah.

Lee Stephenson: And that really did make a difference, because our designated giving towards benevolence grew significantly in that season. Now, that did make it challenging, because we had a lot of money coming into benevolence, and not necessarily towards the general budget. And I’m like, rent didn’t change. We’re still paying rent guys, even though we’re not meeting in person. So I had to kind of explain that to people. But people did step up those that have the ability to do a little bit more. And then even on the personal, like just personal conversations skyrocketed, where people came to me and said, Hey, do you know a family that’s hurting right now we have a little bit extra, we’d love to be able to give directly to them. And I was able to kind of play the middleman on some of those kind of conversations, which is fun.

Danny Parmelee: Did you just tell them, Give it to me?

when we came to budgeting for: 2021

in: 2020

Lee Stephenson: Yeah, it was, it was we definitely took a look at I wouldn’t call it that simple. But we took a look at what do we really believe are the most important drivers right now in the life of our church. And we don’t want to defund those to the point that it hurts our ability to maintain momentum or grab new momentum. So for instance, like, let’s say worship, in production of what we do on Sunday morning, that’s still a driver for us. Even if it’s captured online and sent out and so there’s still a certain quality is like, we’ve got to maintain that quality and for us just to maintain that quality. This is what’s going to cost, camera repairs, sound repairs. A few hired special technicians, you know, some of that kind of stuff. We were like, We can’t cut that, that just is what it is for us. You can’t cut rent, rent is what it is. And another non-negotiable was we’re not going to cut the money that we send outside the doors of the church. So towards church planting and missions and those type of things like we set 10%, that we’re going to continue that we’re going to set that as an example for everybody else that, you know, we’re living by faith and that process is all, but some of it was kind of going, OK, honestly, we can probably get away with this for children’s ministry, and we won’t feel the pinch. It would be ideal, but this is reality. We’re gonna live with reality. And they’re just forcing us to be a little bit more creative in that.

Danny Parmelee: Yeah. Was there anything on your list that was the kind of really hoping for at some point that you literally had to cut it completely? In other words, we were really planning this cool I don’t know, worship night outreach, something that it’s like it’s gone, you know?

us of what we invested in for: 2020

Danny Parmelee: Were you doing that through Victory or kind of your own thing?

Lee Stephenson: Victory Sports. Yeah.

Danny Parmelee: Little shout out to them.

Lee Stephenson: Yeah, so if you’re listening, and you’re wanting to do that and your schools allow you, take a look at Victory Sports out of Melbourne, Florida. And let them know that you know Danny and Lee, and they’d love to be able to connect with you.

Danny Parmelee: And give you a discount. And maybe like, we’ll get some I don’t know kickbacks from it or something. I don’t know.

Lee Stephenson: They probably don’t even listen to this.

Danny Parmelee: But, well, anyway, any other big things from even your experience of budgeting into the pandemic that you think are just must for pastors to be planters to be thinking about?

Lee Stephenson: I think you’ve got to know your numbers. And you’ve got to watch your numbers on a weekly basis when things are challenging economically within your context. I would even work with your accountant to begin to put projections of if this giving continues, where will we be at 3, 4, 5, 8 weeks down the road. And so that gives you time to be able to flex and change without all of a sudden showing up on a Sunday morning and going guys, we don’t have any money we’re closing down. Or you know what I had a fire all our staff because we couldn’t have afforded this this week to pay the payroll. And so you want to try to figure out ways to buy your time. And I mean, both churches that I planted Danny, we walked through, we planted the first church right in the middle of the housing crisis. And then the second time was now we hit COVID 18 months in it, those projections have been incredibly helpful in making key decisions before it actually hits a nuclear option to put it that way.

Danny Parmelee: Yeah, very cool.

Lee Stephenson: How about for you?

Danny Parmelee: Yeah, I just think same thing, keeping an eye on even if you say you’re not a money guy, or you don’t like it or burying your head in the sand doesn’t do any good. And so um, you know, again, having other people that are running the actual finances, but you have got to have a pulse on it and they need to make sure that you know that you’re OK with bad news. Because just because you don’t know it doesn’t mean it doesn’t exist. And that’s what I think a lot of pastors think like, hey, just don’t tell me if also the giving is dipping, or if this large donor who usually gives at the end of the year hasn’t given I’m just gonna, you know, keep pushing forward because it is it’s an exercise of faith to know that information and to still trust God with it and at times to make the hard decisions to do it, but that’s part of the reason why God has called you to be in that place. And in that position is to make some of those hard calls. Maybe you won’t get all of them right. But you’re going to have to do that.

Lee Stephenson: You won’t get them all right. But you do your best and I agree 100% like that’s why you’re in that position and trust the Lord’s wisdom and guidance and seek out advice and wisdom from others as well as you make some of those key decisions. Well, friends, this is part one of our economic downturn, budgeting, staffing conversation, and thanks for tuning into the Unfiltered podcast. Until next time, keep it real.