Balancing Ministry and Management
Church boards typically focus on two key areas:
- Faith-based governance
- Business and stewardship oversight
Both are essential. A weakness in either can undermine the church’s overall governance.
Too often, boards lean heavily in one direction:
- Some prioritize mission but lack fiscal discipline.
- Others run strong operations but drift from the church’s spiritual vision.
As a former executive pastor, I’ve worked at the intersection of both. In this article, I focus on the business and stewardship responsibilities church boards must manage well.
Who’s Watching the Church’s Finances?
When I met with a new church client through my work at CapinCrouse, one of my first questions was:
“Who’s monitoring the church’s finances?”
The answers varied:
- An elder
- A subcommittee of the board
- Or—alarmingly—no one
In some churches, the bookkeeper or executive pastor is tasked with oversight. But if that person is also producing or receiving the financial reports, they may lack the time or expertise to use the information strategically.
Why This Matters
Without proper review and insight:
- Financial reporting may be incomplete or inaccurate
- The board may lack the data needed for sound decisions
- The church’s financial health could deteriorate silently
What to Do
Churches should:
- Hire skilled accounting staff to manage financial records
- Train staff to prepare reports that meet the board’s needs—timely, accurate, and relevant
What Should the Board Monitor?
Regardless of who handles the day-to-day work, the board holds ultimate fiduciary responsibility.
Key Oversight Areas
Church boards should:
- Monitor overall financial health and trends
- Maintain adequate reserves
- Protect investments
- Enforce internal controls to reduce fraud risk
Ask the Right Questions
Board members should regularly consider:
- Are we using financial resources effectively?
- How do we compare to similar churches?
- What indicators should we monitor—and how?
- Are we financially healthy?
See the “Additional Reading” section for key ratios and measurements to track.
Structuring Financial Oversight
Board structures vary, especially across denominations. Some are fixed by denominational rules; others are more flexible.
But effectiveness depends on who serves—not how many committees exist.
Who Should Serve?
Key qualifications for financial oversight roles:
- Business owners
- CFOs, accountants, or controllers
- Experience with nonprofit financials
- Understanding of internal controls
Finance Committee vs. Audit Committee
Many churches use one committee to handle both roles. But these responsibilities differ—and some states prohibit combining them.
Finance Committee Responsibilities
- Develop and monitor the annual budget
- Ensure regular financial statements
- Set policies for maintaining appropriate reserves
Audit Committee Responsibilities
- Verify that financial policies are followed
- Confirm controls are effective
- Oversee annual budget approvals
- Review financial statements
- Monitor reserve levels
- Work with external auditors
- Address and implement audit findings
Can One Committee Do Both?
In some churches, yes—if state law allows. But combining the roles:
- Increases the workload
- Can deter volunteers
- Reduces checks and balances
Practical Alternatives
If splitting the committees isn’t feasible, consider this approach:
- Create an Audit Committee as a subset of the Finance Committee
- Appoint two to three Finance Committee members to serve on the Audit Committee
- Have the Audit Committee report to the Finance Committee, which reports to the board
Important Note
- Executive pastors and church staff should not serve on the Audit Committee
- Their roles present conflicts of interest
- They may attend meetings to answer questions—but should not vote or serve
Planning for Better Financial Oversight
Establishing effective financial oversight takes time and training. Medium-sized churches, in particular, may need:
- Dedicated training for elders or committee members
- A clear plan for gathering, presenting, and reviewing financial information
Why It Matters
When your board receives the right information—consistently and accurately—it can:
- Monitor reserves effectively
- Make strategic decisions
- Steer the church toward long-term sustainability and growth
Additional Reading
For specific help monitoring and measuring key financial ratios, see these articles by Vonna Laue, CPA and Church Law & Tax senior editorial advisor:
The ratios and measurements in Laue’s article are based on metrics developed for CapinCrouse’s Church Financial Health Index.
For a summary of financial actions the board finance/audit committee should complete during meetings throughout the year, see “Board Monitoring of Church Finances: What to Do—and When.”
We’ve used a combination of AI and human review to make this content easier to read and understand.
Before retiring, Rob Faulk served as partner and church and denomination services director at the accounting firm CapinCrouse LLP, which offers the Church Financial Health Index. Rob has more than 40 years of financial leadership experience in serving both for-profit and nonprofit entities, as well as several more years of direct ministry experience as executive pastor and CFO of large churches. He previously served with a Big Six accounting firm, where he was the lead manager on the project that developed the COSO Internal Control framework. Rob holds an MA in ministry management from Azusa Pacific University Graduate School of Theology.
