When most of us think about church finances, we think of the operating budget. That is the day-to-day finances that must be planned for and executed.

But a congregation that is financially healthy actually has five such “financial pillars”. Leaders who would also be good stewards always have these five pillars in mind when planning for the future and when exercising due diligence as stewards of church resources.

1.) The Operating Budget. This pays the day- to-day bills. Allocated funds are designated for staff compensation and operating expenses.  It may include payments into other funds. Operating funds are not “fair game” to pay other requirements.

2.) The Operating Reserve. At any given time cash flow for the operating budget could be disrupted. This rarely happens; when it does, may be only for a short period, but timely payment of salaries, workman’s compensation, etc. could be at risk.  An emergency operating reserve, perhaps equal to a month’s operating expenses, ensures employees have no worries and that other time sensitive payment are not at risk. Funds are not to be used whenever someone sees another need.

3.) The Major Maintenance and Replacement Fund. Buildings age, appliances break, roofs leak – all predictable, and yet we often are unprepared when it happens. Plan for contingencies by ensuring a careful assessment is made of the life-cycle of the components of the campus, projecting reasonable wear out times, and amortizing to ascertain what funds are needed to deal with expected replacements. Add to this a contingency amount for unseen failures or disasters. How much is allocated for the unforeseen is a judgment call based on the realities of each situation. The amount is less important than the mindset that a set aside is required, and it is funded. Could such funds be used for other contingency needs in a tight situation? Ideally, no. Realistically, yes, and congregations do make this decision sometimes. It is only a problem if it is treated as other than a loan, to be replaced over a set time period. Otherwise, you have “robbed Peter to pay Paul,” and consequences will come.

4.) The Endowment Fund. This fund represents the congregation’s legacy, its “seed corn,”, and its investment in long-term, major endeavors. For the most part, the endowment principle should never be used; exceptions should be treated as specific term loans, approved by exceptional processes such as a congregational super majority.  The rules as to what endowment funds may be used for, what terms mean (for example, does “income” mean what is earned by the fund or what is earned plus increased asset value?), and what approval processes are required to use any such funds.

A portion of the income may be used for whatever purpose the congregation has approved, once a threshold value has been reached (normally at least 3 times the annual operating budget). There are many good guidelines available for calculating what may be used.  A common formula is to average income and net asset value of the past 16 quarters and then authorize spending about 4.5% of that total in any fiscal year. Such an approach gives predictability in funds that will be available and protects capital over the long term.  The distribution remains relatively stable because it is based on a 4-year history.

Once an endowment begins providing available funds, it can help the congregation do highly desirable things, such as scholarships, funding attendance at GA, etc. allocated If the fund is large and secure enough to have reasonably assured cash flow, some proceeds could be used in the operating budget, but this is the least desirable use; if the fund has a poor performance period and can no longer generate available funds, an additional problem of an unforeseen shortfall for the operating budget results, creating yet another problem.  Endowment generated funds are best used for one time allocations.

5.) The Emergency Fund. Not so many congregations have this fund, but it’s highly desirable. This is the “rainy day” fund, set aside for either a problem or an opportunity that could not have been foreseen that does not fall into the categories of major maintenance or regular operations.  This need not be an especially large fund, it is the last to be funded, and may have the easiest rules for appropriate use. Having such a fund means the pressure to use other funds inappropriately is much reduced.


Having your finances supported by all five pillars yields strength, stability, and predictability. This offers management by thoughtful planning and contingency preparedness instead of emergency management and unpleasant tradeoffs.  Transparency is the norm. Be clear as to what funds are in which accounts, for what purposes, and who may authorize use, according to set procedures and crosschecks. If your congregation is missing any pillars, begin now to put them in place.  The first step is acknowledging the requirements. Even if it takes longer than hoped to have all pillars functional, the congregation is better off knowing what is required and understanding their gifts do more than fund the operating budget.

We are all stewards – what we have was built by others and we hold it in trust for those who will follow us. Having the five pillars in place supports that stewardship.

About the Author
Bill Clontz
UUA Stewardship Consultant


  1. Nell Matthews

    5) Rainy Day fund. Can you give some examples? Is this for special activities like hosting a district meeting or to buy new art work for sanctuary?
    Nell Matthews, UUC Little Rock
    Facilities Liaison

  2. Jesse


    Nell, you pose an excellent question; thank you. This is often the fund congregations do not have or if they do, its not as well defined as the others, so you speak for a lot of people with your query. Apologies for the slow response – I have been off line for a bit.

    In brief, the emergency fund is properly set up and used to address any contingency – good or bad- that could not have been reasonably forecast and does not clearly belong to one of the other pillars. Your example of hosting a district meeting is an excellent example of using this fund for an opportunity. An example of using it to address a problem might be consulting a lawyer or an accountant for an especially difficult or complex issue before the Board. Buying artwork for the chapel could work, especially if time was short to make a decision, but I would suggest the buildings fund might reimburse the emergency fund in the next budget cycle for such a purchase.

    This is normally a pretty small fund and the rules for its use are generally not as strict and detailed as for the Endowment, for example. I would not get too agitated about specific usage, so long as it meets those criteria of (1) Justifiably unforeseen, (2) Should be acted on sooner rather than later, and (3) Doesn’t really fit with any other pillar.

    Hope that helps.

  3. Errol Quintel

    Fundraising ideas are really tough to determine particularly if it’s your 1st time undertaking a fundraising campaign. I hope the fundraising ideas that me and my team have formed can help us elevate lots of money for our university this 12 months.


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