The unified budget will still dominate most churches’ financial structures, but we are wise to recognize this new financial reality: the rise of designated giving.
—Gary Fenton
One man, whose father was a church treasurer, told me how his father’s responsibility changed rapidly during the late 1940s and early ’50s.
His father had been treasurer for about ten years in a small church. During the ten-year tenure, his task had been primarily to pay the preacher, the custodian, the utility bills, and send money to the denominational office. He kept the church records in a small notebook, with a big rubber band around it, and he stored these records under the bed.
But when the church started to grow, his responsibilities as treasurer changed dramatically. People gave money to furnish the growing nursery, to buy a new organ, and some members began giving to some of the emerging parachurch groups. His father took an accounting class at the local college so he could keep up with the greater complexity.
Gradually, he led the church to put as many of these projects into the central budget as possible. Later he taught treasurers in other local churches how to keep their books.
This, in microcosm, is how the unified budget came into being all across America. It’s an accounting system that influenced church giving patterns for many years.
From Unified to Designated Giving
If this chapter had been written twenty years ago, more than likely the content would have been significantly different. The way church leaders and congregations view and use designated gifts has changed radically in the recent past. Following World War II, many church and other charitable organizations discouraged designated giving and encouraged giving to a unified budget: The organization’s governing body would structure, budget, and then allocate amounts for the various ministries and programs. The contributors’ and donors’ gifts would be placed in one fund to support the many ministries.
The movement toward the unified budget in the early 1950s reflected several changes in our culture. First, our nation had just pulled its resources together and experienced a major victory in the war. Pooled resources and energies were one of the major themes our leaders used in interpreting what we had learned during the war. Much of the rhetoric and strategy planning following the war reflected the crisis vocabulary from the 1941-1945 era.
Second, unified giving provided a simple form of bookkeeping. As the soldiers came home from the war, they started families and many churches experienced biological growth. As the story above suggests, that growth led to a more complex financial picture for the church that unified-budget bookkeeping simplified.
Third, denominational leadership began providing training to local church leaders to help organize the large influx of new members after World War II. At the same time, these denominations often encouraged congregations to use unified budgets, since many denominations used them in their national organizations and financial structures. This also helped form a common financial vocabulary among the churches.
Fourth, uniformity was the mood of the 1950s, just as chain stores and franchises, like McDonald’s, began sprouting up across the United States. Each local outlet looked like the others, and their employees used the same vocabulary. Denominations became the “chain vendors” in the “religion industry,” and uniformity provided the means needed to handle the growing number of “customers.” (This analogy is not intended to describe the intent or the motives of the church leaders but merely the process.)
At the local level, all donors were encouraged to contribute to all the major ministries of a congregation. That way, the donor of the smallest gift could participate in the evangelism, education, and mission ministries of their church. It was a great equalizer.
But times are changing, and designated giving—by which people can indicate where specifically in the church their gifts will go—is becoming more and more common, even though churches sometimes deny it! In many churches, leadership reacts strongly against designated giving as if it were an evil. This is especially true in churches who are now being led or have recently been led in financial areas by people trained in the 1950s.
The church I presently serve is in the process of writing some financial policies regarding designated giving. In researching the issue, we discovered that many churches are seeking to update their policies regarding designated giving. Almost all of those we contacted have written policies that discourage designated giving, but several have indicated that their policies in no way reflect their practice.
One large growing church sent us their policy, which specifically stated that they would receive no designated contributions other than to three mission offerings and one other special fund. Yet a review of the church’s quarterly financial statement indicated that over forty designated funds were active, covering many different ministries and programs!
We now live in the era of the “designer consumer.” Due to a change in technology (which allows for greater choices among consumers) and a new mood, it is important for our people to feel that they are contributing to something they have chosen. Many churches are finding that members are more committed to some ministries and programs than others. Naturally, they like to see their money go to those primarily.
On the other hand, when members find that their designated gifts are discouraged or regarded as less spiritually valid, they may end up giving with less enthusiasm, which continued long enough, may be reduced in quantity as well. In fact, they sometimes find new religious and charitable organizations who will gladly receive their money.
It is a new era in church financing, then. The unified budget will still dominate most churches’ financial structures, but we are wise to recognize this new financial reality. Here are some ways I’ve found to make good use of designated giving.
Remember the Benefits
Having been raised in the unified-budget era, it’s easy for me to see the potential problems with designated giving: for instance, it could undermine a sense of church unity, and it could entice individuals to want to control the program or ministry they give to.
No budget system is perfect, and it’s important to recognize the weaknesses of any system and shore up the church’s defenses at those points. But if I let potential problems with the system preoccupy me, I won’t be able to take advantage of the strengths of designated giving. And strengths it has.
• Designated giving often helps people give their first significant gift. A successful businessman was feeling quite unsuccessful as a husband and father. He had functioned as a parent the same way as he had as a businessman: he rewarded performance and punished failure. While this worked in his business, it had disastrous results in his family.
Due to a ministry of our church, he experienced a spiritual renewal and began changing this destructive pattern of behavior with his family. Soon he became aware that our church provided a counseling ministry for young families. So he offered a designated gift to the church to underwrite this ministry for one year.
I made an appointment with him to thank him for the gift and to explain that this expense had been budgeted. “We could use your gift as you have indicated,” I concluded. “But if you were to give the same generous gift to our budget, you would be able to touch young families for Christ in many ways.”
It was not long before he became a regular contributor to the budget. Still, he continued to designate some to the counseling ministry, which allowed us to expand that program.
• It teaches people the rewards of sacrificial giving. When people give to a unified budget, it sometimes remains vague as to what they are getting for their money. Designated giving helps people give sacrificially because it shows them what they’re getting for their sacrifice. And that one-time sacrifice can blossom into a habit of sacrifice.
A small church that had been static for twenty years purchased a parsonage for their new pastor. The church chose not to put the house payment in the budget and instead proceeded to ask their members to give above their regular offerings to pay off the parsonage. The new pastor brought an excitement and optimism to the congregation, and the church paid off the home in six months. A great amount of excitement had been generated regarding this accomplishment.
The finance committee encouraged the members to continue their giving for six more months, and as a result, a new parking lot was paved and new furniture was purchased for the nursery. Many of the members found they could give and still survive.
At the end of the year-long emphasis, a new budget was presented, and the church budget challenged the congregation to increase its giving by 40 percent in the one year. One of the older members of that congregation says that became a financial breakthrough that forever changed the giving patterns of the church. Although the church paid off their parsonage some twenty years ago, their per capita giving remains one of the highest in their area of the country.
• Non-urgent ministries are enhanced. One church I know of has an extensive library and an outstanding collection of audio and video equipment, yet no budget funds are provided for these things. This church completely funds its library and media center through memorial donations.
One of their pastors started this practice after his mother died; he asked members of the church not to send flowers but instead to give to the library. It was not long before people began giving regularly to this library fund.
It is unlikely that any given church will be financially able to make 5 percent of its budget available for something like a library. For some years now, though, this church, which has a budget of approximately $150,000, has received around $7,500 for its library and media center.
Stay in Control of the Gift
As I mentioned, one of the weaknesses of designated giving is that donors may try to control the ministry or program they give to. That can undermine the leaders’ authority and become divisive to the church.
I’ve found ways, however, to check this potential problem.
• Draw up a policy. A policy regarding how and when designated giving is received can save a great amount of conflict. The policy can be as simple as this:
“Our church will seek to spend all designated gifts for the purpose the donor desires, as long as that purpose is in keeping with the purposes, policies, and philosophy of the church. If the gift is designated to purchase products or secure special services, the appropriate committee reserves the right to select the vendor or the provider of the services. The designated monies and any item or service purchased with these monies is the property of the church.”
This policy can be printed on all receipts for donations or the quarterly contribution statements.
• Anticipate such gifts. With increased designated giving, church leaders are wise to anticipate these gifts. During the budget process, the leaders can try to estimate the amount and nature of designated gifts of the coming year. Several key people can often tell church leaders what special ministries and problems interest people.
This can be done in two ways. You can observe what causes and needs are being publicized and promoted in the community. Many churches have begun ministries to the homeless, to the victims of aids, and the like in just this way.
The leaders can also recall the causes the pastor has mentioned in his sermons. If a pastor preaches on world hunger or uses an illustration about the homeless that creates some interest, it would not be surprising for, let’s say, an evangelized baby boomer to turn that into a flaming passion.
If the church’s leaders can discuss the implications of such ministries ahead of actually receiving the gifts, they are in a better position to either turn down the gift or to expedite its use, depending on how the leaders feel about the ministry or program that the giver wants to underwrite.
In addition, if the board is pretty sure that a pressing need will be funded outside the budget in the coming year, it can deliberately fail to fund that ministry and focus its money elsewhere.
Some churches think about what needs the church has and annually publish a list of designated causes that have the approval of their governing body. Such lists anticipate that money will be given and direct that money to the most needy areas of the church.
• Give donors some choices. In one small church I served, a family sought to give a $40,000 memorial gift to be placed in a trust, with earnings designated to purchase fresh flowers each Sunday in the worship service. Each Monday, the flowers were to be placed on the graves of the deceased family members of the donor. The donating family had specifically named the florist the church was to use and what color of flowers were to be purchased.
Our memorial committee tactfully declined the offer.
Today, after refusing the gift, I would offer the family other avenues to remember their loved ones. That allows both giver and church to retain some control over their giving.
As mentioned above, many church memorial committees annually identify a half dozen tangible needs that are not in the operating budget and would be appropriate memorials. This not only anticipates giving, it also gives people choices. When people offer an inappropriate memorial, they can be encouraged to consider the other options on the list.
• Make sure it’s deductible. In one church I served, a man gave money to the pension fund of a staff person nearing retirement. The staff member had served the church nearly thirty years, and for the first twenty the church had provided no retirement benefit. Now the person was edging into his sixties without adequate retirement provision.
An auditor found that this gift was in violation of the irs regulations, and the donor could not be given a receipt for a tax-deductible gift. The church could correct the inequity, but a donor could not.
One church prevents such potential embarrassment by having a committee review each designated gift. In addition to determining if donors’ gifts are in keeping with the philosophy of the church, they also inform donors if the gift can legally become a tax deduction.
Thanking the Giver
Once a church has received a designated gift for an appropriate item, the church needs to thank the donor appropriately and quickly. If it is a memorial gift, then the family of the person in whose memory the contribution was made needs to be notified that a gift has been received.
If our church receives a memorial gift, we send a letter going to both the donor and the family the day after receiving the gift. If I know the gift is going to a ministry or program about which the deceased felt strongly, I mention this in the letter.
This practice is not only simple courtesy, it’s also a way to encourage the giver. On several occasions, I have had donors give additional amounts when they realized that the person they were memorializing was deeply involved in the life of the church.
On one occasion an employer gave one hundred dollars to the church’s building fund in lieu of sending flowers. Upon receipt of the gift, I sent a letter thanking the company for their contribution, and I mentioned that the deceased had served on the building and grounds committee of the church for several years and had been chairman at the start of the last project.
The employer had not been aware of the man’s heavy involvement in the church. Consequently, rather than putting $5,000 in their company’s educational trust fund on behalf of the man, as was their custom upon the death of an employee, the employer sent the additional money to the church.
Some churches publicize designated gifts in the church newsletter. If it’s a memorial gift, the names of the person in whose memory a gift has been received is also mentioned. One newsletter uses the following statement in their publicity, “Gifts above tithes and weekly budget donations have been given in memory of the following …” This not only publicly honors the deceased, it also encourages memorial giving by others.
The Pastor’s Role in Memorial Giving
Since the pastor works so closely with the family and friends of the deceased, he or she plays a vital role when a family wants to give a memorial gift. I have found it helpful to follow these practices.
• Make clear the church’s policy on memorial gifts. When people ask about making a memorial contribution, I immediately send them a letter explaining our church’s policy regarding memorial gifts. This prevents some common misunderstandings up front.
A pamphlet we are preparing to put in such a letter will include a list of the ministries and items our memorial committee has identified as especially appropriate for gifts, and explanations of how the church acknowledges memorial gifts and why the church does not attach memorial labels or markers on memorial gifts. This pamphlet will also give the name of the staff member to call if people have further questions.
If the family has asked for suggestions before I’ve had a chance to talk with them ahead of time, I’ll confer with the memorial committee to find out if what they have determined would be appropriate and then list those in my follow-up letter.
• Help the family time their giving. On occasion, I’ve encouraged the family to wait until a later time to make the memorial gift.
A local pastor ministered to a family who had lost a son in a well-publicized tragedy. Prior to the funeral, the family wanted immediately to establish a memorial fund at the church in memory of the boy. They were willing to make an initial contribution of several thousand dollars and asked the pastor to mention it at the funeral.
The pastor, however, encouraged them to wait. He knew making such a gift would be difficult for the family and would also manipulate the congregation at the funeral. Several months later, the church received a small but more appropriate gift from the family. Although his church could have used the money, the pastor and the church’s integrity remained intact.
• Encourage memorial giving. Not everyone is tuned into the idea of giving memorial gifts. It’s not been a part of their experience, or they’ve not been aware of what a difference it can make. Since so much good can come from memorial giving, I consider it one of my duties to encourage it.
One way I do this is by taking the honorariums I’ve received for officiating at funerals and giving them to the church in memory of the deceased. I write the family thanking them for the honorarium and explaining what I have done with it and what types of things their memorial may end up doing for the church. The financial secretary also sends notification to the family that a memorial gift has been given by the pastor in their loved one’s memory.
Many people are grateful not only for my gift but also for the idea I’ve planted in their heads—that the life of their loved one can count for one thing more. That can lead to further gifts that benefit the work of the church.
Designated giving cannot take the place of a good budget, but I doubt that the growing church in the postscript decade to the twentieth century can ignore this funding source. Even though the bulk of funds will remain in a unified budget for years to come, these donor-directed gifts can be used to enhance ministry significantly.
Copyright © 1992 by Christianity Today
