How to Write a Church Annual Report - Sharing Your Finances

At this time of year, your church releases its annual report into the world.

Finances and the church… Could there be a more taboo topic? The minute someone brings up money in church, you can actually hear the eyes roll. 

Many people mistakenly believe that churches rely on external sources for funding and that their donations are unnecessary. Others have had negative experiences that cause them to shy away from giving. Many don’t even know what the word “tithe” means, according to Barna Institute

Recent statistics have shown that 75–90% of church members do not tithe and that 25% or more don’t give to their churches at all. 

All that to say, we know that speaking to your congregation about church finances is intimidating. We’ve got a simple strategy for talking about finances and your church annual report with your congregation in a way that will help them catch the vision and inspire support.

Our top recommendation is this: Do NOT just show your congregation your accounting budget percentages. It’s confusing, misleading, and, quite frankly, a bit of a buzz kill. Each dollar is neatly categorized for optimal accounting clarity, they can be misunderstood and often look like there is less money going to ministry and mission work.

As we said in our article on healthy church budget percentages: The more money you spend on ministry and missions, the better. The purpose of the church should reflect well in your church budget and discussions about finances. Once you’ve ensured that, you can proceed to telling the story.

People give to what matters to them. They support causes they believe in. In short, when communicating about your church finances, it’s important that your congregation catches the vision of where you want to go as a church body. They need to buy into it, knowing that they play a pivotal role in making the vision a reality. Well, how do you do that?

How to Tell the Story of your Church’s Finances on your Annual Report

First, we suggest choosing 3 to 5 priority categories that align with your mission. For example, if your church’s mission is to raise up and prepare the next generation of Christ followers, you could choose to prioritize kids, youth and young adult ministries.

Example of budget categorization based on the church's vision of raising and preparing the next generation of Christ followers. Categorization to be shared on church annual report.

Next, take a look at your budget and distribute your budget percentages based on your priority categories. What do we mean by this? You most likely allocate money from staff, facilities and general operations. Not to mention funding for ministry specific items to each ministry. We recommend you create a visual representation. Specifically, one that enables your congregation to easily see where and how their dollars are working.

Sharing how these funds are allocated with your congregation can help them understand how you are putting their money on mission to accomplish the vision you’ve set forth.

Here’s how to do it. If we stick with the above example, you could share a graphic like the one below and say: We spend 30% of our budget on the next generation (children’s, youth and young adults) when we include staff, building, general operations, and ministry specific items. We do this because our vision is to raise up and prepare the next generation of Christ followers.

Church budget pie chart showing ministry breakdown for your church annual report.

A great example of a church who chose to align their money with their vision is Southbrook Church. Their mission is centered around disciple-making. Consequently, they created the LAUNCH Ministry Residency Program, which is now funded by the church’s daily operating budget. Learn more about how they did this in our latest case study.

As bookkeepers and accountants for churches, we deal with numbers daily. Therefore, we know they mean so much more than what the balance sheet can show. Knowing how to tell the story of what your church’s money can do builds trust and confidence between you and the congregation, and allow your dollars to go further in making that vision a reality.