Dan Busby, president of the Evangelical Council for Financial Accountability and an Editorial Advisor for Christianity Today's Church Law & Tax Group, sat down with us to talk about trends he's seeing in churches, and which financial errors he sees most often. See what your church can learn from a man whose organization has accredited nearly 1,900 Christian churches and nonprofits in their governance, financial management, and stewardship/fundraising practices:
What areas do churches struggle most to stay above reproach in finances?
Churches generally struggle with the same few issues, over and over again. They play out in different ways, but the biggest questions they need to answer in order to assess the health of their financial administration are these three:
1. Does your church have fair compensation?
Is that compensation approved independently of the individuals who receive that compensation? You need to make sure that your staff members aren't directly or indirectly helping determine how much they will be paid. Another question in this area is, Is all of the compensation that is taxable reported as taxable? Or are you giving the pastors a pass and not reporting taxable compensation? How are fringe benefits being reported? Are they taxable, tax-deferred, or tax-free? Dealing with issues of financial reporting is a large task, but it's necessary to have guidelines in place in order to protect your pastors, your staff, and yourself.
2. Is anyone at your church challenging your senior pastor's expense report?