How Much is Enough?

How Much Is Enough?

On more than one occasion, I have been asked “How much money in reserve is enough?”  The concern is the balance (for those fortunate enough to have this concern) between saving for a “rainy day” and how resources should be employed for mission.  The answer to the question always begins “That depends…” as there are a number of factors that play into finding the “right answer” to this important query. 

The question is a multi-layered one, as it becomes one of understanding both what funds the church holds (and how they may legally be utilized) as well as knowing the various income streams the church receives (and what potentially impacts those steams into the future). 

The process begins with a full and transparent assessment of what funds the church possess.  Transparency is important because church members need to know the true financial picture of the congregation’s financial health.  Transparency also provides the opportunity to clarify how the funds the church has are utilized for ministry and mission and to interpret and educate about the different types of funds the church holds.  These funds may be restricted or unrestricted.  (See our related article on “Understanding The Gifts We Receive” for an additional and more in-depth discussion on this issue). Taking advantage of the opportunity transparency provides to explain the funds and their designation can help address misunderstandings about why the church may be seeking operating dollars when it may possess an endowment and it can even encourage permanent fund giving.

Ultimately, it is the unrestricted funds and those unspent restricted funds that are designated specifically for annual operating costs that count into our basic formula for what constitutes monies that qualify for “rainy day” designation.  It is not enough, however to simply say that we have “X” amount of dollars that can be used for annual operating expenses and stop there, believing we have answered the question faithfully.  

We also need to assess our income streams, which may include member contributions (offerings); interest from savings or investments; permanent fund distribution; income from rent or lease agreements; income from directly sponsored programs (such as a school or day-care); and other “miscellaneous” income your congregation may regularly expect to receive.  This assessment includes not only understanding what we currently expect to receive (and the projected trend of these resources), but what other factors might impact these funds (either positively or negatively) going forward. (See our related article on “Assessing Gifts at Risk” for more information and discussion on this topic.)

Does the church facility itself face short term capital needs for which monies will be needed such as a roof, HVAC, or parking lot maintenance from which there are no other funds to draw?  If the congregation does not want to engage in a capital campaign to fund these types of projects, estimated costs and associated funds to cover these should be set aside in a non-reverting maintenance fund.   These monies will then not be available as operational reserves.  Such factors help to tell us how much we may need to be holding in actual operating reserve and then calculate what may be more readily available for direct investment in mission and ministry.

Yes, this is a detailed and potentially time consuming process!  However, it is also a mark of being fiscally responsible.  When we have a clear understanding of what we truly have available and how we can employ it as well as what we need and how we will resource our ongoing ministry and mission into the future, then we can make solid decisions about utilizing our reserves.

Which brings us to that “qualified” answer about how much to hold for the euphemistic rainy day.  Given the parameters stated above, once you know what is genuinely reserve and not needed for future and ongoing operations, our suggestion is hold a minimum of 90 but not more than 120 days of the current annual operating budget as a temporarily restricted reserve1.  This would allow a congregation to function for three to six months in the unlikely scenario that all income streams ceased at once and no subsequent adjustments were made to expenditures.  The more likely case is that one or more income streams may be impacted at any given time, but not all equally or simultaneously.  In such a case the reserves would thus extend further, as they would by also making adjustments to expenses during that same period.  Another acceptable formula is to take 33% of the operating budget and use that number as a way to determine how much “to bank” for the rainy day.  (Take your operating budget, divide by 365, multiply by 121.)

There is then, of course, the question of what to do with the money we are holding in reserve.  The Center for Faith and Giving is not certified to give investment advice nor do we understand that to be our mission.  However at the same time, we would suggest that a fiscally responsible action would be examine the investment instruments you are employing on behalf of the congregation.  There was a time with Certificates of Deposit (CDs) were paying competitive interest rates and had flexibility in terms regarding the length of time money was tied up without undue penalty for early withdrawal.  Since they are also FDIC insured they were considered very prudent places for congregations to secure their savings.  If you still hold such instruments you may want to reevaluate if they are still best serving the church’s needs due to the very low interest rates they currently pay.  Low risk and high return remain the goals of most investors, and the church should be no different.  It is good stewardship to employ these dollars in a manner that allows their potential to resource mission to increase in a way that is also consistent with our values.

And that becomes the final point – it is good to have resources and a genuine blessing to have a safety net should difficult fiscal times become a reality.  At the same time, most people do not (and did not) give money to the church just so it can have a large balance at the local bank!  Even gifts to permanent funds are made with an understanding that the earnings from these gifts will do ministry!  The people who made these gifts have chosen to invest some of the resources they have been blessed with because they believe in the church and its mission.  In the end, mission and ministry are the only reason we ask people to share their money with us – and congregations that are intentional about deploying financial and spiritual gifts into the community are the very ones most successful in finding the resources they need.

If you need help with policy and procedural issues or investments relating to permanent funds, contact the Christian Church Foundation for assistance (  For options relative to capital needs (or prudent short term investment opportunities), contact Church Extension ( ). 

1 The practice of the Office of General Minister and President is to hold six months in reserve.  The organization Board Source also uses six months as a recommended margin for reserve. Visit for additional information on the faithful management of non-profit organizations.