Two Useful Guides to Church Finances

Review by James W. Murphy


Creating Financially Sustainable Congregations
By James L. Elrod Jr.
Church Publishing, pp.128, $14.95

James Elrod’s Creating Financially Sustainable Congregations and Mark Elsdon’s We Aren’t Broke are filled with useful guidance, and both pose provocations as churches seek to be effective, sustainable, and relevant in the post-COVID world. Both focus on the importance of church leaders gaining basic financial knowledge and insight. And each warns about losing missional focus through the misuse of the church’s capital in all forms. Though essentially complementary, Elsdon’s additional focus on using church assets to create new mission-focused sources of income makes for especially compelling reading.

Elrod writes that capital “is not just cash and investment,” and it includes “inventory, good will, buildings and property.” Elrod’s book is a valuable primer for church leaders on the basics of church finances, reporting, and funds management.

He offers important parameters for measuring success and reframes congregational financial practices in light of what most nonprofit agencies now embrace, due to the intense competition for gifts and easy availability of online charitable comparisons. Elrod challenges church leaders to continual reflection on the missional effectiveness of their work and how that manifests through responsible financial behavior.

“Budgets matter in churches because they articulate the immediate next steps the church plans to take in pursuit of its ultimate goals,” Elrod writes. He makes a strong case for how avoiding deficits, building reserves, and enhancing donor relationships all empower a congregation’s mission.

Though not as extensively reviewed, Elsdon clearly supports the same fiduciary/accountability standards to build trust and confidence among supporters. “If we don’t attend to the business of mission, our mission will not be effective,” he writes. “If the business is managed and run well, the real work of mission is much more fruitful.”


We Aren’t Broke
Uncovering Hidden Resources for Mission and Ministry

By Mark Elsdon
Eerdmans, pp. 239, $18.99

Yet Elsdon’s expansive perspective encourages churches to enhance their reach by imitating many successful nonprofits to create new sources of income from mission-based initiatives. He summons churches to take up both “social enterprise … a venture seeking social impact while also generating revenue” and “redemptive entrepreneurship … a business model to pursue social impact through the lens of God’s work in the world.”

“Let us put money back in its rightful place, as a tool for us to control and not a force exerting control over us,” Elsdon writes. He asks church leaders to consider using assets in a truly mission-focused way through “impact investing” and measuring performance beyond simple financial return. Elsdon promotes reclaiming an ancient approach to resolving “wicked problems” that persist, like drug addition, limited affordable housing, and access to economic opportunity, by addressing their root causes through impact investing and alternative use of property.

Elsdon challenges complacent denominations and congregations that improving human lives is not only the church’s goal but could also lead to new sources of revenue to support its broader mission, such as new housing options, drug treatment centers, affordable loans, and other financial tools that may be unavailable in a local community. Though some impact investments may provide lower-than-market returns, Elsdon argues that the opportunity to enhance societal impact is quite substantial and necessary. His re-envisioning of assets both physical and financial creates new opportunities to empower a new relevant mission in the world, and he provides tools for evaluating current and future ministries and funding sources.

Elrod’s excellent guidance and insights do not venture beyond the traditional model of funding church budgets from philanthropy and enhancing donor trust through transparency and good financial management. Elrod makes the important case that individual giving will remain the primary source of income for most churches and that there is potential risk from unrelated new ventures. “Most churches will remain reliant on household donations for the majority of their revenues,” he writes. “In fact, spending money and time trying to develop alternative revenue sources might send mixed signals about the church’s mission.”

Elsdon also acknowledges that individual giving may remain primary, and discerning particular opportunities that fit context and capacity remains a challenge for numerous congregations. Since coordination and collaboration are lacking among many churches, Elsdon wisely recommends that some congregations and institutions could invest when other congregations have the transformational vision but lack needed assets.

Something not fully addressed by Elsdon is the fiduciary restrictions for investment of “true endowments,” which may limit impact investing due to liquidity and investment requirements. However, many other funds could prove eligible or new gifts might be raised to support these exciting missional endeavors to reinvigorate the church.

Clergy and lay leaders alike would benefit from reading both books. So many congregations remain far from the standards of Elrod’s responsible vision, and need to rise to that crucial level to thrive in the new post-COVID reality. Other congregations need to discern how to recast their assets and be inspired by Elsdon’s vision of a more engaged and resilient church. Thankfully both authors offer numerous examples and useful discussion questions to help individual congregations discern their next steps as fitting their contexts.

James W. Murphy is managing program director of stewardship and resources for the Episcopal Church Foundation.

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