Transparency is no longer an option for churches in today’s culture. A generation or two ago, people had a deep respect for most institutions throughout Western culture. That included the church. People expected that when they donated to their church, their money would be used to honor God and help the community.
But that’s no longer a given. The people in our communities have read too many stories about financial mismanagement in the surrounding institutions — from the government to their churches — to have confidence in the financial management practices of most religious organizations (at least as their default position).
If you want the right to minister to them and their families, you’ll need to show them they can trust you.
But it’s not just what you say. Your community can hear you pledge transparency regularly, but they won’t believe it until you build a culture around it.
What are the things your church can do to build a transparent culture that makes people trust how you handle money?
Start with Your Leadership Team
Culture always starts with leaders. If your leaders haven’t committed to building a transparent culture in finances, it won’t happen. Any effort your church takes toward transparency will stop before it ever gets started.
Transparency among leaders goes far beyond financial matters, including everything from decision-making to succession to personnel matters. But it certainly includes finances.
How do leaders show their buy-in to a transparent culture? They continually talk openly about topics like budgets, expenses, and payroll. You don’t have to share everything with everyone, but no financial question should be off-limits to those who provide accountability.
Modeling transparency also means constantly emphasizing the value of transparency to teams within the church and consistently acting in ways that tear down the silos that naturally develop as churches grow.
Document Everything
You can’t be open about what you don’t document. Transparent churches practice meticulous record-keeping. That means you record every financial transaction, from donations to expenses. Effective accounting software, as you get with Realm, helps with this by allowing you to not only record transactions but to organize and make them accessible so that the people who need to see them can do so securely. Doing this ensures your financial activities are both traceable and transparent.
Create a Whistleblower Policy
A Whistleblower Policy describes a confidential way for a person in your church to report financial discrepancies or unethical behavior. All church staff and church members should have access to how to do this. Not only does this help to stop financial misconduct, but it also shows the commitment of your church’s leadership to financial transparency.
The policy needs to include a clear statement that authority figures (church board, pastoral staff, supervisors) will be subject to discipline if they retaliate against an individual who makes a good faith report through the proper channels. Your policy should clearly define the kinds of information covered and describe multiple ways concerned members can report such actions, such as a web form, phone number, or email address. You can find multiple templates and examples of these policies online, tailored to the specific needs of churches.
Make the Best Use of Tech
The right church technology gives your church access to real-time financial tracking and reporting. The good news is that technology is making transparency easier than ever. Technology democratizes financial information, making it available to a wider number of people.
But you will have to balance transparency and security. Not everyone needs access to all of your church’s financial data. Effective software, like Realm, provides tiered access to information. Role-based security and customizable reporting allow you to provide information to people who need it while still allowing control over who can see the information. This article will explore more about this important balance a bit later.
Foster Open Communication
Open communication is about regularity and consistency. A church committed to being transparent about finances will develop a specific cadence in how it communicates with the congregation. You’ll likely have certain information you share weekly, monthly, quarterly, and annually. It’s best to remind congregants of this cadence in new members’ classes and when giving receipts.
Open communication isn’t just a one-way street. Provide opportunities throughout the year for congregants to ask questions about finances in an open environment. If your church has business meetings, this might suffice. If not, look for a forum that fits. Additionally, remind people in your church bulletin that they can take their questions to a specific person or team on your church staff through email or phone calls.
Engage External Auditors
External audits provide your church with an objective review of your church’s financial practices, which will help show your credibility to both congregants and donors. And it also gives your church the peace of mind that your financial books are accurate and you’re following best practices in the non-profit world.
Audits aren’t cheap, but they can provide tremendous value even beyond transparency, for the church. For example, audits can show your church where you might have future vulnerabilities and opportunities.
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Balancing Transparency and Security
Transparency is incredibly important, but it must be balanced with security. Your donors expect you to be open about how you use their money for kingdom purposes, but they also expect you to protect their personal information carefully.
It’s best to think about your financial data in a system of tiers. Information related to your church’s general financial health, such as budget allocation and major expenses, can be shared broadly without risking personal information. Safeguard any financial information regarding individuals in your congregation and staff to the fullest extent possible.
How your church handles salary information may be the most controversial aspect related to transparency and security. Be consistent and clear about your policy. Spend the time to define your tiers of transparency. Have a publicly accessible document that describes and explains these tiers and why you’ve categorized them as you do.
Transparency = Trust
For good or for bad, financial transparency is no longer an option for your church. Your church must look for ways to grow increasingly more transparent while safeguarding important information.
By implementing the suggestions in this post, you can build a church culture that builds trust over time with your community, congregants, and financial donors. That trust will help propel you further in fulfilling your mission in your community and around the world.
For more information about how to develop more effective accounting practices for your church, download our free ebook, Simplified Accounting: A Church Guide to Financial Clarity and Compliance.
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