For What It’s Worth: Inflation-Adjusted Dollars and Your Church
By Ken Sloane
In my workshops and webinars over the past ten-plus years, I’ve been a big advocate of churches tracking their progress in giving by looking at the current year compared to the previous two to four years. Reviewing the past several years can help your church identify patterns, and when shifts may indicate other problems that arise.
Listening recently to a talk by my friend Joe Park, CEO of Horizons Stewardship, to a group of United Methodist Foundation directors and staff, I heard data and reminders that he was using “inflation-adjusted dollars” in his comparison. I knew what the term meant, but I realized that I never really spoke about church offering dollars in that way. Joe was right on target: the dollars your church received three, four, or five years ago do not “buy” the same amount of ministry today that they did in the past.
This point was driven home when I recently read a story in the United Methodist News Digest about a church in Louisiana. The Algiers United Methodist Church was planning a celebration of the one-hundredth anniversary of the consecration of the church sanctuary. However, the church’s Diversity Taskforce had discovered in a newspaper article about the consecration back in 1922 that a donation of $100 had been received from the Ku Klux Klan. Affirming that “white supremacy was never a part of who God had called us to be,” the church announced that a gift of $1,675 had been “committed for the next twelve months to organizations that strengthen people of color and work to eradicate racism.” That amount ($1,675) was equivalent to the $100 donation received in 1922, in inflation-adjusted dollars.
This is a dramatic and emotional example of the difference that inflation makes in dollars over the years. It seems that it has been quite a few years since inflation has been on our minds and on our radar, though we know that is changing right now. What are some of the ways that looking at the value of inflation-adjusted dollars might be important in analyzing financial situations in your church?
1. WHAT IS HAPPENING WITH YOUR CHURCH BUDGET?
A church budget that has been kept flat for a period of years may be hiding a shrinking ministry and impact. If your church budget was $500,000 in 2012, it would need to be almost $618,000 in 2022 to maintain the same amount of ministry impact. A $200,000 budget in 2012 would need to be $247,000 in 2022 to maintain the same level of ministry. If your church budget exceeds the value of the inflation-adjusted dollars, your funding of mission and ministry is growing!
If your church budget exceeds the value of the inflation-adjusted dollars, your funding of mission and ministry is growing!
2. WHAT IS HAPPENING WITH CLERGY/STAFF COMPENSATION?
If your pastor’s salary was $50,000 five years ago (2017), and that salary is less than $58,000 for 2022, that pastor’s income has decreased in inflation-adjusted dollars and in the ability of that salary to meet the pastor’s needs. The same examination should be applied to other church staff as well. If your pastor is leading and empowering great ministry in your church, you may want to examine the numbers to possibly do more than just keep up with inflation.
3. WHAT IS HAPPENING WITH BUILDING MAINTENANCE AND REPAIRS?
A church that twenty years ago provided for “endowment earnings” of $15,000 per year to do maintenance work on its buildings and parsonage is doing a whole lot less work, since it would take around $26,655 in 2022 to provide that same level of upkeep.
4. WHAT IS HAPPENING TO CONTRIBUTION INCOME?
If your contribution income was level through the past two years of the pandemic, you are doing better than most church experts expected. Praise God and thank you for those efforts – adapting and innovating! However, even in this short time, we know it would take an eleven percent increase in contributions just to match the inflation-adjusted dollars of 2019! This could be helpful as your church begins to focus on budgets and annual campaigns.
5. WHAT IS HAPPENING WITH INDIVIDUAL GIVERS?
I’ve been an advocate for communicating stewardship and generosity in a congregation with different messages to different groups in the church. Those who are new givers understandably would need a different message than those who have been your long-time givers and your high-capacity givers. A pastor friend of mine mentioned that his church identified a group that had been giving at the same level for five years or more. With sensitivity to those in your congregation whose personal income has not kept pace with inflation or other factors of the economy, messaging to this group could include encouragement to “continue to grow.” The pledge of $400 per month five years ago has shrunk by inflation-adjusted dollars to about $345 in 2022. Being creative in reminding people of the needs of the church in meeting inflating costs may jog some of your donors to review whether their giving has kept pace.
There are other ways you can use the idea of inflation-adjusted dollars to get new insights into your church. All my observations in these scenarios are based on an “inflation calculator,” and there are many available online to help you assess the health of your congregation’s finances. If we are going to accomplish our mission of making “disciples of Jesus Christ for the transformation of the world,” we need to be aware of the funding realities that are present. If we are content with a goal of “keeping things level from year to year,” we need to understand that our budget’s bottom line will provide less mission and ministry impact, and our contribution level will be in decline as well.
Ken Sloane is the Director of Stewardship & Generosity for Discipleship Ministries of The United Methodist Church.