Operating without a formal, written accounting and management policy manual
In addition to a budget, a formal management document is a must to help insure that the church makes appropriate and effective short-term decisions. Written policies and procedure documents assist churches in the administration of activities by helping to set forth in clear, unmistakable terms the mission of the church and how it will be carried out. The manual will also establish and reinforce the organizational structure of the church by providing a clear delegation of duties and responsibilities. It also will serve as a guide to direct and oversee the carrying out of Church activities.
One of the purposes of written policies is to head off problems before they arise. And, in cases when problems do arise, having policies in place makes navigating the choppy waters manageable. For instance, suppose your church is offered a gift of land of a sizeable dollar value. (According to the donor…) The church accepts the land, transfers the title, and later learns the land has significant environmental issues. (For example, the land was the site of a former gas station, dairy, or dry cleaners, etc.) Unfortunately, accepting the land also results in accepting the liability for cleaning up the mess. A good contribution policy could help prevent this from happening by requiring all gifts of property be approved by the appropriate committee prior to acceptance. Contribution acceptance is just one of the topics to be included in a policy manual. Here are a few more.
Organizational structure
Budget development
Cash management
Offering counting, recording and reporting
Bill approval and payment
Vendor approval
Investments
Financial statement presentation
Personnel and employee benefits
Insurance
Conflicts of interest
Fundraising
Building and property use
Restricted funds
Intellectual properties
Short-term mission trips
KEY: A church accounting and management policies and procedures document is another brick in the wall of risk management. The goal of establishing clear policies is to anticipate problems before they arise and having a suitable response should they occur.
