These days, churches are more hesitant about expenditures and are keeping a closer eye on budgets and cash flows. So, church leaders and finance committees are asking more questions about reducing expenses and postponing projects. Increasing accounting regulations for tax-exempt religious organizations are compounding the stress and financial complexity.

While the right financial management software can't make the decisions for you, it can provide you with the most relevant data to make the right decisions with statistical, rather than subjective, proof points.

A multitude of systems in the marketplace can offer you this type of transparency and accountability. Some are tailored to particular markets, while others can offer any organization value and almost immediate return on investment (ROI). There are key features and functions that a church should look for when evaluating a financial management solution.

Financial Business Intelligence Tools
Imagine how tithing-to-attendance ratios would improve if you could provide all your active members with a quarterly e-mail containing a graphic of tithing trends and programs run with that funding. Or, envision opening a screen that shows you cash flow and operational expenses down to the transaction fee that you pay for each automatic tithing bank draft.

"Many organizations are using the business intelligence (BI) tools within their financial management systems to retrieve, organize, use, and share exactly this type of knowledge," said Glenn Stephens, CPA, chief executive officer of ProSoft Solutions in Highland Village, Texas. "With BI tools, complex data is converted into visual, graphic representations, which can be easily understood and communicated to departments, committees, boards, and even church members."

Religious program leaders and ministry administrators can use BI tools to pull financial charts and graphs for presentations and easily show funding statistics, sources, and spending ratios. And, staff and members don't have to be financial experts, or involved in day-to-day operations, to understand the organization's performance or detect potential cost savings.

Proper Allocations Don't Need to be Difficult
Religious organizations have varying levels of complexity and financial reporting requirements. While some merely report on departments within the church, others also focus on international ministries, cemetery management, religious education, and retirement nunneries. Whatever the situation, odds are that separation of funding, spending, and restrictions must occur.

"The appropriate financial management solution should enable you to quickly and easily calculate, review, and generate allocation entries to ensure compliance and accuracy at the lowest level of transaction entry," explained Stephens. "You should also be able to perform complex allocations on virtually any program, grant, department, fund, restriction, or any combination thereof."

General ledger (GL) entries generated by these types of allocations should easily be recalled for review, plus reports should allow you to view the allocation's impact allocation prior to acceptance. Automated allocation parameters allow you to quickly and easily perform complex allocations.

"What-If" Budgeting"
During an economic downturn, budgeting is a must. Maintaining budgets within the same financial management system in which you collect and enter actual transactions enables you to instantly see shortfalls, overages, and areas that must be monitored closely.

According to Q. Johnson, managing member of TeamNFP, LLC in Round Rock, Texas, committee members are not generally given direct access to an organization's accounting system. As a long-time finance council chair for a large Austin parish, however, he knows that committee members can accomplish near miracles if they start from the most accurate budget preparation reports.

A financial management system should provide drill-down functionality, so that you can quickly move from the highest level of financial information to the lowest level of transaction line entry. Religious organizations typically have some level of volunteerism within their finance office, which inherently equates to transactional misclassifications within the GL. Finding those needles within the haystack shouldn't require two days and 500 pieces of paper.

With a good drill-down tool, you can pinpoint mistakes and immediately make corrections. If you need to go a step further, a financial management system with advanced budgeting features can provide you with maximum transparency and control.

Your budgeting process with such a system could look something like this. Ministries, finance office managers, and committee members submit their budget worksheets directly into the system for collaborative planning and review. Once approved, all budget entries are committed to the system and reporting of budget, actual, variances, future forecasts, and historical comparisons begins, all within the set of financial statements you are accustomed to running.

"'What-if' scenarios are difficult to produce in good times, but they are especially tricky when the future is uncertain," said Johnson. "That's why it's so important that reports are easy for busy staff members to supply."

One of the most beneficial aspects of a financial system with advanced budgeting features is the ability to turn on a transaction-level budgeting and encumbrance tool, allowing you to control the transaction entries as they occur, not weeks too late.

Hosted Applications
Remote access allows staff and volunteers to work with a hosted software application from anywhere, without having to be tied to a specific physical location. Once set up, any Internet connection can be used to access the hosted software application directly from the hosted server, ultimately leading to increased productivity, data accuracy, and collaboration across congregations.

You should especially consider hosting your software applications if your hardware infrastructure is in need of replacement. Fully managed hosting services include regular software updates and all hardware maintenance and replacements, so staff can focus on your church's true mission, not its technology. Hosting reduces overhead infrastructure expenses, plus the regular, monthly payments can simplify IT cost budgeting.

The right hosting technology can even satisfy all of your system audit requirements, data recovery, and security compliance needs.

"You don't want to have a security breech, especially one that results in loss of personal information," added Stephens. "Partner with someone who truly knows security, compliance, disaster recovery, and accessibility, so you feel confident that your data – and, as an extension, your church body – is being protected."

In a tight economy, organizations must understand and take advantage of opportunities without straining their resources.

"This is not a time to pull back and circle the wagons," said Stephens. "Reach out now to those in your community who are looking for a new church home. Having the right technology in place will give you more time to do that."

Brooke Huling is product manager for Sage North America's Sage MIP Fund Accounting product, www.sagenorthamerica.com.