First Unitarian Church of Philadelphia ~ Welcome home!

Financial Updates: Congregational Budget vs. Operating Budget

What is the difference between a Congregational and Operating Budget

The Congregational Budget is the one voted on and passed by the Congregation at the Annual Meeting in May.  The income and expenses listed on this budget is a conservative projection based on historical data.  This Budget is what the Minister, as Executive Director, is held accountable to.

An Operating Budget is crafted by the Minister to ensure that he does not spend more than we bring in.  This budget gets adjusted throughout the year as necessary to make sure we break even.

The Governance and Ministry Policy Manual on the Minister and Budget

Per section IV.C.5.b.x , the Minister must attain Board approval if he spends “in excess of 10% over the budgeted amount in any major category e.g. property, personnel, etc.”  This means that the approved Congregational Budget sets (within 10% overage) the amount that the executive director is allowed to spend.  The Policy Manual also states in section IV.C.5.i. that the Minister may not “Allow cash balances to fall below the amount needed to meet payroll and short-term debts in a timely manner.”

To make sure expenses are not incurred before we have received the income, Rev. Nate responsibly instituted this idea of the Operating Budget when he first arrived.  This Budget allows him to slowly release spending as income is brought in.  In this manner, he periodically adjusts how much spending is allowed based on realized (or not realized) income.

What did last year look like?

Last year, the Congregation passed the Congregational Budget in May.  In September, Rev. Nate proposed his Operating Budget to the Board which showed a reduction in spending compared to the Congregational Budget.  The Board voted on and approved this budget.  Around January, it was not clear if the external community concerts were going to happen, so Rev. Nate revisited the Operating Budget and preceded to further reduce (by freezing) expenses.  As the end of the year came, it was clear that there was a little excess money, and Rev. Nate unfroze some of the line items, specifically building repairs.  In this manner, Rev. Nate was acting within his rights as outlined in The Policy Manual to ensure that we would successfully end the year even, which we did.

I would like to apologize as I (as well as other people) misunderstood Rev. Nate’s intentions of the Operating Budget.  I thought that when the Board voted on the Budget in September, that the Board was voting to replace the Congregational Budget with a reduced budget.  This affected the language I used to report on the September Budget which was more negative than it should have been. While I incorrectly referred to the September Budget as “The Reduced Budget” or having “Budget Cuts,” this budget was actually Rev. Nate’s Operating Budget.

What will this year look like?

In an effort to make financial discourse more positive, we would like to formally announce the use of an Operating Budget.  Expect to see Norman Fouhy, as acting Executive Director while Rev. Nate is away on sabbatical, propose an Operating Budget in September.  This Operating Budget will be conservative and therefore less than the approved Congregational Budget - and this is a good thing.  This ensures that we don’t overspend right out of the gate.  Also expect to see the numbers fluctuate up and down once or twice during the year as adjustments are made to account for how much income we are (or are not) actually bringing in.  So long as we are on target to end the year even and are working within the approved Congregational Budget, then we are doing great!

As a reminder to church leaders as we start the year, please be sure to check in with Norman Fouhy, Business Administrator, prior to any spending to find out what your Operating budget is that you have to work with.

 

Sincerely,

Eva Baker

Board Treasurer

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