Financial software and systems - Research church
management/finance software options, bookkeeping systems,
accounting best practices
Introduction
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
In the contemporary digital era, churches and faith-based organizations are
increasingly adopting financial software and computerized systems to
streamline administration, gain efficiencies and maintain proper financial
controls and reporting. Selecting the right financial management software is
crucial for effectively handling finances, record-keeping, donor relationships
and other business functions of the church. This paper explores various
church management and accounting software options available in the
market, essential features to consider, best bookkeeping practices and key
recommendations for financial controls and reporting to adhere to
accounting standards and nurture organizational stability.
Church Management Software Options
There are several church management software packages available
specifically designed for the unique needs of churches, faith-based nonprofits
and ministries. Some top options to consider include:
- ChurchTrac: A comprehensive platform offering modules for contributions,
accounting, events, groups, communication and more. Provides powerful
reporting and integration capabilities.
- ACS Technologies Church Management: An MS SQL-based solution with
finance, membership, facility scheduling, communication modules. Popular
for medium to large size churches.
- ShelbyNext: Cloud-based platform for churches with an all-in-one
donation/CRM system, online services, livecasting features and mobile
access.
- Church Community Builder: Donation and membership management with
event, small group and communication tools. Popular free or low cost option
for smaller churches.
- Church Windows/Breeze: Full featured on-premise suite for all church needs
including accounting, check-in, planning and media. Used widely by larger
mainline denominations.
- Planning Center: Cloud-based worship planning, scheduling and song
licensing tool. Integrates well with other finance platforms for complete suite.
- Pushpay: Mobile giving and text-to-give platform. Works as standalone or
extends other software for additional donation functions.
Key selection criteria when evaluating options include features, cost, support
quality, ease of use, scalability, reporting abilities and integration capabilities
based on current and future needs. Considering long term organization
growth plans and interoperability is important for a software to grow with
changing needs. Demos and free trials help compare different options before
investing.
Essential Features to Consider
Some essential features and considerations for church financial management
software include:
- Contribution/Donor Management - Track pledges, statements, gifts and
amounts by funds. Receipting functionality and integration with accounting.
- Membership/Constituent Database - Track contacts, demographics,
participation data and giving history for cultivating relationships.
- Online/Mobile Giving - Enable online and text-to-give donations via website.
Integrate security and reporting.
- Accounting/Bookkeeping - General ledger, AR/AP modules, financial reports,
payroll features for larger organizations.
- Budgeting - Create, track and report budgets against actual spending for
expenses and revenue lines.
- Facilities Scheduling - Coordinate equipment, room and property
reservations through online access.
- Communication Tools - Blast email, website content management, calendar,
directory for internal/external use.
- Reporting/Analytics - Powerful reporting engine for customized fund
balances, trends, statements and more.
- Integration Capabilities - Sync with accounting software, website, mobile
apps, CRM platforms for efficient workflows.
- Support and Upgrades - Consider ongoing support, training and regular
feature/security updates to leverage platform fully over time.
It is important to ascertain whether a software has all the basic as well as
projected future/custom needs covered before selecting the right solution.
Demos are helpful for hands-on evaluation.
Best Bookkeeping Practices
Adopting proper bookkeeping practices ensures the integrity and
transparency of church finances. Some best practices include:
- Double entry bookkeeping - Record all transactions with a corresponding
debit and credit for accuracy and balance across ledgers.
- Chart of Accounts - Develop standardized numbering systems for
expense/revenue categories, funds to easily track activity.
- Bank Reconciliation - Monthly verification that checkbook balances match
bank statements to catch errors.
- Accounts Receivable/Payable - Track outstanding pledges/contributions as
well as invoices/expenses payable accurately.
- Vouchers/Receipts - Document all income and expenditures with descriptive
receipts filed systematically for auditing.
- Separation of Duties - Different individuals responsible for
receiving/depositing funds, paying bills, bookkeeping oversight for checks
and balances.
- Financial Controls - Enforce approval protocols, access rights based on
position, bank transfer authorizations through software.
- Record Retention - Maintain financial documents securely as per statutory
periods to comply with regulations.
- Regular Reporting - Circulate internally on a monthly/quarterly schedule
financial statements for management/leadership oversight.
- Annual Budgeting Process - Create annual financial plans for
expenses/revenues through inclusive participation for viability.
Following tested bookkeeping practices and financial controls provides
overall financial health through consistency, transparency and compliance.
Accounting Systems & Standards
In addition to specialized church management software, using accounting
systems is imperative to produce required financial reports and statements.
Some systems allow direct integration with church administration platforms
for unified data. Popular accounting systems include:
- QuickBooks Desktop/Online: Most widely used accounting solution for small-
medium organizations with robust features.
- Sage 50/100: Robust accounting suite for growing churches to complex
needs with inventory, payroll modules.
- Microsoft Dynamics GP: Scalable ERP solution for larger multi-location faith
entities with project tracking.
- NetSuite: Cloud-based accounting/ERP primarily for medium-large
organizations with advanced customization.
Regardless of the accounting solution, following Generally Accepted
Accounting Principles (GAAP) produces compliant and standardized
statements including:
- Balance Sheet: Snapshot of assets, liabilities, equity at a point in time.
- Income Statement: Revenues and expenses over a period of time showing
change in net assets/income.
- Statement of Cash Flows: Inflows/outflows of cash from operating,
investing, financing activities.
- Statement of Functional Expenses: Displays spending by ministry program
types for grant proposals.
Filing taxes promptly as per requirements (Forms 990, 1099, W2), tracking
restricted funds and conducting independent audits or reviews further
enhances transparency and trust with members/leadership. Adherence to
standard practices instills credibility in financial processes.
Accounting Best Practices
Some best accounting practices specific to faith-based nonprofits include:
- Separate tithes/offerings from other revenue sources clearly in accounting.
- Record pledges as receivables only upon cash receipt due to no legally
enforceable right on future pledge amounts.
- Track unfulfilled ministry program expenses separately from general
operational expenses each year.
- Capitalize long term assets purchased over certain threshold per IRS rules
(ex. vehicles, equipment, property).
- Account depreciation expense of capital assets over appropriate timescales
complying with GAAP.
- Handle member donations of goods/services/time at fair market value using
receipting policies.
- Record earned income from business activities/rentals as revenue in
accounting rather than designated funds.
- Maintain adequate internal controls (e.g. authorization matrix) to separate
duties for money handling within the church.
- Use restricted/unrestricted fund accounting to track donor intent on gifts
towards special purposes.
Following accounting best practices ensures full accountability and reporting
compliance to maintain integrity in financial operations and build confidence
within the congregation.
Internal Controls
Strong internal controls refer to procedures implemented to safeguard
assets, check for accuracy and transparency in financial dealings. Essential
internal controls for churches include:
- Separation of Receiving/Disbursing: Different individuals responsible for
counting offerings, making bank deposits and writing checks/approve
spending.
- Approval Authorizations: Enforce dollar thresholds as per position (e.g.
pastor under $500, board over $3000) with software set limits.
- Banking Security: Dual custody of bank bag contents until deposit, online
access restrictions. Restrictive bank signatories.
- Record Management: Secure storage and remote backup of financial data
with version control and file safety.
- Budget Oversight: Management team regularly monitors actuals vs. budget
with variance explanations.
- Reconciliation Review: Timely monthly bank and accounting book matching
verified by an individual not involved.
- Payroll Controls: Careful reviews of timecards, payroll processing, handling
of sensitive data.
- Inventory Controls: Periodic counts of equipment assets compared with
records to detect theft/loss.
- Reporting Hierarchy: Establish clear roles and responsibilities for
preparation and approval of reports.
Documented internal control policies create accountabilities that safeguard
assets while allowing responsibilities to be fulfilled through team efforts
without sacrificing oversight. Controls are an investment in building trust
within the congregation.
Internal Financial Reporting
Providing insightful periodic reporting ensures church leadership and
management have accurate information to guide decision making. Key
reports to generate include:
- Monthly Financial Statements: Balance Sheet, Income Statement and other
metrics presented regularly at board/council meetings.
- Budget vs. Actual Report: Detailed variance analysis for revenue and
expense accounts compared to approved budgets on quarterly basis.
- Fund Progress Report: Track status of restricted/designated funds raised
towards special projects or capital plans.
- Prior Year Comparison Report: Compare current year financials to past
years’ activity for trend analysis.
- Designated Expenses Report: Breakdown and status of ministry programs
or outreach efforts’ spending.
- Past Due Receivables Aging: Monitor outstanding pledges, grants or other
receivables overdue to follow up promptly.
- Cash Flow Projection: Forecast short term inflows/outflows to monitor
liquidity for upcoming quarters.
- Statistical Analysis: Non-financial metrics like attendance, participation,
membership demographical changes.
Customized internal reports developed through financial system dashboards
empower leaders to discharge stewardship duties through informed decision
making and strategic visioning.
External Financial Reporting
Beyond internal needs, churches must also fulfill external reporting
obligations as tax-exempt entities. Key external reports include:
- Form 990: Annual information return submitted to the IRS with detailed
financials, compensation practices and other governance disclosures.
- Reports to State: Specific annual registration and filing requirements vary
per state of organization/operation.
- Audited/Reviewed Financial Statements: Independent verification of
financial statements and internal controls recommended for larger entities.
- Lender/Donor Reports: Specific compliance or project reports may be
required for loans/grants received.
- Transparency Portal Listing: Voluntary listing on sites like e-Guidestar
sharing key financial highlights.
Completing all statutory disclosures and submitting on time avoids penalties
while maintaining legitimacy by subjecting operations to public
accountability standards as applicable. Consulting professional advisors
ensures full compliance.
Conclusion
Instituting robust financial management software and systems, following
accounting and bookkeeping best practices as discussed are crucial for
churches to stay administratively efficient, financially stable and compliant
with regulations. Proper accounting, tailored internal and external reporting
keep leadership well informed to effectively steward resources and fulfill
mission driven work. Documentation of internal controls creates
accountability while building trust and transparency within the greater
church community. With care and consistency, these practices promote
overall organizational effectiveness and sustainability over the long run.
