Communicating financial information to governing boards and finance or audit committees is an important task for management—but it’s also not an easy one. There are several factors that can complicate the process, and those factors lie both with those who receive the information and those who provide it.
Common Challenges Church Leaders Face
- They don’t really understand how the church operates.
- They are too involved or not involved enough to know what is really happening.
- They don’t care how decisions affect the staff.
- Board composition changes frequently, making continuity a challenge.
It’s important to remember that the responsibilities and expectations for church boards are greater now than ever. Staff must provide accurate and timely information to help boards make informed decisions.
Build a Strong Foundation
Many board members are willing but untrained. Consider implementing a robust orientation process to help new members understand:
- The church’s organizational structure and history.
- Past board minutes, policies, and governing documents.
Additionally, financial leaders should review financial statements with new members and conduct annual retreats or evaluations to identify training opportunities.
Provide Focused, Useful Information
When communicating financial information, ensure the focus remains on key data. Consider these three principles:
1. Accurate
Your credibility is crucial. Repeated errors can erode trust. Make accuracy a priority as the information will guide strategic decisions.
2. Timely
Delays in providing information can be as harmful as inaccuracies. Aim to close financial statements within two weeks of month-end and address delays promptly.
3. Relevant
Understand what your audience values most and tailor reports to their needs. Avoid overwhelming them with unnecessary details.
Create Dashboard Reports
Dashboard reports are effective tools for summarizing key data. These one-page reports often include:
- Visuals like graphs for trends (e.g., attendance and giving).
- Both financial and non-financial metrics (e.g., baptisms).
Dashboards engage all board members, even those without financial expertise, and help focus discussions on strategic issues.
Establish a Process and Adjust as Needed
Providing accurate, timely, and relevant information ensures sound financial decisions. Regularly refine your process by:
- Understanding what information the board needs.
- Adapting as the composition of the board changes.
Start with key metrics, adjust over time, and remember that less is often more when it comes to understanding and relevance.
FAQs
- What is the best way to introduce new board members to financial information? Use an orientation process covering church structure, history, policies, and financial basics.
- How can dashboard reports help church boards? They simplify complex data into visual summaries, focusing on key metrics and trends.
- Why is timeliness important in financial reporting? Delays can render information useless, making it harder for boards to make informed decisions.
- What are common mistakes when sharing financial information? Overloading reports with irrelevant data and failing to focus on accuracy, timeliness, and relevance.
