Accountants love spreadsheets, and most accounting software programs can generate dozens of options.
You’re probably not an accountant and all those reports might look like they were written in an ancient forgotten language!
Have faith! We want to help.
The good news is that you don’t need to become an accountant to stay informed. In fact, by reviewing just a handful of reports each month, pastors can gain valuable insight into the financial health of their church and identify potential concerns before they become major problems.
Here are the five financial reports every pastor should review regularly.
1. The Balance Sheet: How Healthy Is the Church?
The Balance Sheet, often called the Statement of Financial Position, provides a snapshot of your church’s financial health at a specific point in time.
This report shows:
- Cash balances
- Savings and investments
- Outstanding loans and liabilities
- Designated fund balances
- Overall net assets
Think of it as your church’s financial “vital signs.”
When reviewing this report, ask yourself:
- How much cash do we currently have available?
- Are our reserves growing or shrinking?
- Is our debt increasing or decreasing?
- Are designated funds being tracked appropriately?
Always compare month versus month and month versus prior year.
A quick glance at the Balance Sheet each month can help you identify trends long before they become financial emergencies.
2. The Income Statement: Are We Living Within Our Means?
The Income Statement, sometimes called the Profit and Loss Report or Statement of Activities, shows how much money came in and how much money went out during the month.
This report answers a simple but important question:
Are we spending more than we are receiving?
As you review the report, pay attention to:
- Total giving and other income
- Payroll expenses
- Ministry expenses
- Facility costs
- Monthly surplus or deficit
One month of overspending may not be a concern, but several months in a row could indicate that adjustments need to be made.
3. Budget vs. Actual: Are We Following the Plan?
Every church should create a budget with the expectation that it will serve as a financial roadmap for the year.
The Budget vs. Actual report shows how closely reality is matching that plan.
This report helps answer questions such as:
- Are ministry departments staying within budget?
- Is giving meeting expectations?
- Are insurance, utilities, or payroll costs higher than anticipated?
- Do we need to make adjustments before year-end?
Many church leaders find this report to be one of the most useful tools for making informed financial decisions. It allows leadership to address concerns early instead of discovering them after the budget year has ended.
4. The Giving Report: What Are Giving Trends Telling Us?
Weekly giving fluctuations are normal. Looking at a single Sunday rarely tells the whole story.
A Giving Report helps pastors focus on trends rather than isolated events.
When reviewing giving reports, consider:
- Year-to-date giving compared to last year
- Average weekly giving
- Seasonal trends
- Whether giving is keeping pace with ministry growth
Many churches benefit from reviewing a rolling 12-month giving trend. This provides a clearer picture of where the church is headed financially and helps leadership plan accordingly.
Giving trends often reveal opportunities and challenges long before they appear elsewhere in the financial reports.
5. The Designated Funds Report: Are Restricted Funds Being Managed Properly?
Churches often receive donations designated for specific purposes such as missions, building projects, benevolence, youth ministry, or special outreach efforts.
A Designated Funds Report helps ensure these resources are being tracked and used appropriately.
Reviewing this report helps answer questions such as:
- Do fund balances match donor intent?
- Are any designated funds sitting unused for extended periods?
- Are restricted gifts being spent appropriately?
- Are we maintaining proper accountability?
It is not uncommon to see funds not being used simply because they were forgotten or funds spent on the wrong purpose.
Because designated funds involve donor trust, reviewing this report regularly is an important stewardship responsibility.
Keep It Simple
Many pastors assume financial oversight requires hours of review every month. In reality, spending just 15 to 20 minutes reviewing these five reports can provide tremendous insight into the financial condition of your church.
Doing so gets easier each month as you begin to understand the reports and recognize trends.
If you only review five reports each month, make them these:
- Balance Sheet
- Income Statement
- Budget vs. Actual Report
- Giving Report
- Designated Funds Report
These reports will help you understand where the church stands financially, identify concerns early, and make better-informed leadership decisions.
PRO-TIP: I always reviewed monthly credit card and bank statements. You can clearly see who is spending money on what using these documents.
Good stewardship doesn’t require becoming an accountant. It simply requires paying attention to the right information on a regular basis.
When pastors and financial leaders stay informed, churches are better positioned to fulfill their mission, care for their people, and prepare for the future.
Have any questions about your financial reports? Give Your Church Admin a call!