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    12. 3. 2021

    Leadership| Current Events

    How Inflation May (or may not) Affect Your Church

    | 2 min read

    Written by Todd Rhoades
    Nov 22, 2021 9:36:57 AM

    There has been a lot of talk in the news about inflation recently. But I’ve not seen much consideration of how this may affect churches.

     

    As a church leader, it’s important to think about how inflation might affect your church in the coming months. To think that there will be no correlation between what’s happening in the overall economy and what happens with your church finances may be a big mistake.

     

    Let’s take a look at how inflation may (or may not) affect your church. (I say "may or may not" because no one really knows what will happen in the future).

     

    Here’s where we need to start. Inflation is real and nearly everyone is starting to feel it, whether it’s at the gas pump, the grocery store, or in our holiday shopping.

     

    Inflation is simply the decrease in the purchasing power of money reflected in a general increase in the prices of goods and services.

     

    Normally, the United Stated Federal Reserve hopes to keep the inflation rate below 2%. This has been pretty typical since 2012. But 2021 (so far) has seen inflation grow at a rate of 6.2%. That’s a 31 year high.

     

    This graph from USInflationCalculator.com shows us a snapshot of what 2021 has looked like so far:

     



    Of course, some items have gone up even more than 6.2%.

    • Gas is up 49.6%
    • Rental cars are up 39.1%
    • Used cars are up 26.4%
    • Hotels are up 25.5%
    • Furniture is up 12%
    • Meat prices are up 11.9%
    • It costs 5.3% more to eat out

     

    For instance, the cost of a Thanksgiving Dinner is up 21% over 2020. And if you opt for ham instead of turkey, that honey-baked will cost you about 62% more this year. The cost of a 10-person Thanksgiving dinner in 2020 was $45.73. This year, the same meal will set you back $55.49.

     

    That might not sound like a lot.  But it all adds up.

     

    If your car has a 15-gallon gas tank, it would have cost you $32.25 to fill up a year ago. If you filled up your tank today, it would cost $48.45. And if you go through a tank of gas each week, your annual increase in cost on fuel alone would be $842.40.

     

    Ouch.

     

    OK, enough of the economics lesson, Todd.  How might this affect my church?

     

    That’s a great question. And to be honest, no one knows for sure. Some churches will probably feel minimal effects, to be honest. Others may be hit hard.

     

    But here’s what you need to keep your eye on for the coming months ... 

     

    Ministry Will Most Likely Cost More

     

    This is almost a certainty.

     

    Your facility costs will probably go up. In fact, they probably already have.

     

    Energy costs are on the rise. Expect to pay 54% more for propane, 43% for heating oil,  and 30% for natural gas. The cost to heat and cool your church will increase significantly. So will your electric bill. And overall electricity costs are up about 4%.

     

    Facility maintenance costs will go up as replacement items and regular maintenance supply costs will rise.

     

    The cost of office supplies and even refreshments (yes donuts and coffee) are going up.

     

    And the cost of personnel will rise as well. You’ll need to consider paying more to keep your staff intact, both in salary and benefits. Inflation costs this year may feel like a 6.2% reduction in pay. In effect, it is. That same $50k salary your staff pastor received last year only buys $46,900 worth of goods and services today. Even if you give a 3% year-end increase, they are still underwater.

     

    No matter how you slice it, the cost of ministry is going up.  Plan on it going up at least the rate of inflation (currently 6.2%).

     

    I like to be practical. Let’s use that 6.2% number. If your budget is 1 million dollars, that’s an increase of about $62,000 to this year to maintain the same level of ministry that you did last year for the same million dollars.

     

    All of a sudden, we’re talking REAL money, right?

     

    Potential Decrease in Giving

     

    The pain and pinch that you may already be feeling as a church is the same pain and pinch that most families in your church are feeling in their own family finances.

     

    Everything costs more. And dollars need to stretch farther.

     

    We’ve already shown examples.

     

    And you’re probably guessing where I am about to go.

     

    Families will be forced to make some hard financial decisions. Some are well-positioned to absorb any inflation-related pricing increases. However, lower-income families that attend your church may find it difficult to pay for things like food, housing, and utilities. People on a tight budget will struggle to reallocate funds when there simply aren’t funds left to reallocate.

     

    According to the New York Post, the real cost of inflation to the average American household is about $175/month. That is a substantial number to many families that attend church. Some may make a decision that you would not like them to make: to cut back on their giving to the church.

     

    (They don’t want to make that decision, but feel it may be at least temporarily necessary.)

     

    A Quinnipiac Poll just out found that 68% of Americans say that increased prices have caused them to change their spending habits. Seven in ten are spending their money differently. We’d be negligent if we didn’t consider that tithing and giving levels weren’t on the table as potential areas of decreased spending for many families, at least temporarily.

     

    Many people are feeling the pinch financially. Combine that with a level of uncertainty for the future, and you may find that while your cost of doing ministry is going up, your weekly level of giving may remain flat or even decline in the coming months. A double whammy.

     

    Tony Morgan is getting ready to release his 2021 Unstuck Church Report. His initial findings (that he released this week in a tweet) show that in the churches he surveyed, attendance is down 34% and that churches are now reporting that year-over-year giving is also down 1.5%. Inflation and uncertainty is most likely a factor.

     

    A side note:  I think a good indicator of things to come will be known by January 1.  Many churches depend on end-of-year giving and large financial contributions to boost their overall budget. Be prepared that year-end giving this year may take a dip. For some churches, this may have a huge impact on the 2022 ministry year budget forecast.

     

    So What Should I Do?

     

    I know this is a heaping helping of negativity. I don’t mean for it to be. As I’ve said before, I’m a glass-half-full kind of guy. So maybe take this as a good dose of ‘current reality'.

     

    The truth is, inflation may affect your church in a major way.

     

    But it may not.

     

    Regardless, here are some suggestions on what to start considering:

     

    TODO #1: Talk about it

     

    As we’ve already discussed, some people are really feeling the pinch. Talk about it. Feel their pain. Give personal stories about how it affects your family, and how this all affects your church.  

     

    Mention it from the stage.

     

    Make sure your staff has the tools they need when they talk with families that are struggling.

     

    If you act like none of this exists, that will probably be mistake #1.

     

    TODO #2: Prepare for it

     

    If you haven’t already started looking at how the cost of inflation could impact the cost of doing ministry in your church, do it now. Keeping your head in the sand until there is a crisis will not serve you well. Don’t wait until there is a budget shortfall to look at potential areas of savings or places that can be cut altogether.

     

    For many churches, this is budget season. Consider what your ministry costs will be in 2022, especially in the areas of facilities and personnel. Forecast what will need to change, if anything.

     

    If you prepare a plan that isn’t needed, nothing is lost. But if you find that you needed a plan and didn’t prepare one, you’re toast.  :)

     

    TODO #3: Be Generous

     

    This time is actually a tremendous opportunity for great ministry to happen.

     

    When you can, be generous. As generous as you can be. In fact, be generous until it hurts a little.

     

    Many families may need a little extra help during this season. When you can, help them.

     

    It might be financial. But it might be emotional support or spiritual guidance that they need.

     

    That’s kind of what we do.

     

    Be prepared to see new and growing ways to minister during this time. And if you’re not looking for these opportunities, you may miss them.

     

    This season will affect each church differently. But how you lead will largely determine the impact and even, in some cases, the sustainability of your church moving forward.

     

    Take this seriously.

     

    Prepare for the best-case scenario. And prepare for potential struggles.

     

    Planning and communication are your best friends going into the new year.

     

    So… what is your church feeling? Is inflation having an impact at all on your budget? Have you seen any change in giving patterns over the past few months? What is the word you’re hearing on the street? I’d love to hear what you’re thinking. Email me to start a conversation.

     

    Have a great Thanksgiving!

     

    Todd-Signature-2019

     


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