Money is one vehicle through which God chooses to do his work in the world. However, it’s also a stumbling block to many. This includes church leaders. A desire for integrity and holiness to pervade all aspects of church life leads healthy churches to institute healthy controls to guard against financial sin.

In yesterday’s post, I noted the astonishing (and intensely depressing) reality that more money (34 billion dollars) will be defrauded from churches by it’s leaders than will be spent on global missions (31 billion dollars). The post stirred up some discussion, and I’m so glad. It’s a discussion that needs to be had. The good news is that we can and must do better.

I told you I would offer some ideas on how to protect your church from financial fraud. But, there are many that take some elaboration so I’m going to split it into two posts. Today’s post features some basic do’s and don’ts. Tomorrow’s post will feature a few more ideas, but it will mostly focus on protecting the church while keeping ministry flowing in a positive church environment. This is far superior to a culture of chronic suspicion and red tape.

I’ve served in churches with budgets from less than 100K to several million dollars. Here are some basic principles that should be followed by any church of any size:

  • No single signatures on checks. Not allowing single signatures on any checks is best. But, it’s also reasonable to say that only checks over a certain amount require double signatures. However, no one should single-sign a check to themselves, ever. EVER. In addition, NEVER allow the preacher or an elder to be a single signer. The reason: both have systemic positions that allow them to avoid accountability. Also, if they do have a moral failing, the collateral damage is much higher. I have never agreed to be a check signer at any church I’ve ever served. When we started New Vintage, I agreed to do it temporarily, and only on checks requiring more than my signature. I’ve always valued the protection of being able to say, if ever accused of anything, “It’s impossible.”
  • No “single Treasurer” system. If you have a church treasurer, they should never be the only one keeping the books or counting offerings. The only system dumber than this is the “pastor only” system of keeping the books. And, that’s dumb for the same reason the single Treasurer model is dumb. It doesn’t matter how trustworthy you think the person is. Remember, Judas was one of the 12 and Jesus’ Treasurer.
  • Have a finance team in place to advise the elders/leadership and audit internally on a quarterly or semi-annual basis. This needs to be done by someone(s) different than whoever keeps the books and spends the money. They should look not only for missing funds, but also inappropriate expenditures. This does not mean a book that an accountant thinks isn’t a necessary spend. It means the purchase of something clearly not for ministry purposes. Also, while many elderships know finance, not all elderships know finance. This is another way churches fall prey to fraud, but it’s a problem with some solutions I’ll talk about tomorrow.
  • Have an annual external audit. This means paying money to someone outside the church to examine the books, noting irregularities and practices that lack soundness. Many churches feel like this is a waste of money. I couldn’t disagree more. It just helps people give knowing someone objective is watching the shop in addition to the shopkeepers. If you literally can’t afford the audit, make sure your internal processes are airtight.
  • Avoid conflicts of interest rigorously. This is where churches get burned the easiest. A life-long friend, business partner, or relative is suspected of something…and rather than looking into it thoroughly, the church gives them a pass. Or, worse, they loosen or don’t follow through with important processes for that person’s sake. I consulted once with a church in the Midwest who let their Church Administrator (the son of an elder) go after they discovered he misappropriated more than $500,000. They were preparing to hire another church administrator–the son of different elder. Thankfully, they saw the wisdom in heading another direction. The point here isn’t to say you should never trust anyone close to you. It’s to say that differentiation and strong processes allow that to happen without becoming a potential hazard. Recusing oneself from important leadership votes based on conflicts of interest is a noble thing to do. For instance, at New Vintage Church, our Treasurer is someone we trust and love working with, but he isn’t related to or in business with anyone else on the Board. He also isn’t the only set of eyes or hands on anything…and wouldn’t want to be. If ever there was a vote that involved him in a way that might cause him to put his own interests first–he would either recuse himself or be recused by the Board. It’s not that we actually think he would do something corrupt. It’s just wise. It keeps things on the up and up. That’s how he would want it as well.¬†Elders, ministers and others need to recuse themselves from situations that might compromise the financial integrity of the church because of how close they are to the situation.
  • Remember that generally people are who they are. They behave the same in or outside of the church. If a person is known to hang ten over the line of ethics in business…they’ll do it in church too. If they are a bulwark of integrity in the business world, there is a better chance they will be proven trustworthy in ministry. If you hear something like, “I know that’s how they are out there…but they would never do that to the church…” you have problems in your future. Ethics don’t suddenly flower in a person’s heart at the church door.
Tomorrow’s post will talk about how to keep ministry flowing while keeping practices sound.
Other best practices you would add? Any heartburn over any of these?