Ministry Insights from the Q4 2022 Unstuck Church Report
Every quarter, The Unstuck Group compiles all the data we’ve collected to monitor trends in churches in the United States and around the world.
Given current economic conditions, we decided to focus this quarter’s report on church finance and staffing trends specifically.
This report was created from the survey responses of over 400 churches that ranged in size from under 100 to more than 20,000 in physical attendance for worship gatherings. We only included churches that provided data between October 30 and November 15, 2022. This provides a very current snapshot of ministries of all shapes and sizes.
2022 CHURCH FINANCE & STAFFING DATA
In this episode, Amy and I unpack some of the key findings from the Q4 2022 report, including:
- Current giving trends and staffing budgets
- Projected 2023 budget adjustments
- Current staffing and turnover trends
- Projected 2023 staffing adjustments
It’s our hope that this special edition of The Unstuck Church Report will give the information needed to make better decisions as you shape ministry and budget plans going into the new year!More than one in five churches surveyed is multisite. On average, those churches have three locations, including the original location. [episode 273] #unstuckchurch Click To Tweet On average, attendance at the more than 400 churches surveyed has increased 24% from last year. The fastest growing segment was the portion of churches between 500 and 1,000 in attendance. [episode 273] #unstuckchurch Click To Tweet Churches reported that giving increased by 3.6% since last year. However, that’s well below the U.S. inflation rate of 7.7% as reported in October 2022. [episode 273] #unstuckchurch Click To Tweet In total, 58% of survey respondents indicated that it’s likely that economic conditions will impact 2023 financial health for the church. [episode 273] #unstuckchurch Click To Tweet
This report includes special financial and staffing insights from Jeff Hightower of Church Central Office, such as:
“Eliminate restricted giving. Your budget is how you fund your vision. The more designated giving options you provide, the less investment your vision will receive. If your vision includes a wider reach, such as drilling clean water wells or building churches in other countries, put them inside your budget.”
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This Episode is Sponsored by Church Central Office:
Church Central Office focuses on your finances so you can focus on ministry. The only outsourced and remote church accounting department and CFO team that is founded by a former Executive Pastor, Church Central Office knows what it’s like to juggle the complexities of church budgeting, finance, and operations.
With Church Central Office, you’ll receive dedicated finance management and reporting, advice on budgeting and forecasting, and trusted council for all your accounting needs. Learn more here.
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Welcome to The Unstuck Church Podcast, where each week, we are exploring what it means to be an unstuck church. Each quarter, The Unstuck Group releases the Unstuck Church Report with a focus on the current data and trends in churches. On this week’s episode, Tony and Amy share the findings of a special edition of the report with up to date information on the trends in church finances and staffing. Before we get to today’s episode, though, if you’re new to the podcast, head over to theunstuckgroup.com/podcast and subscribe to get the show notes. When you do, each week you’ll get resources to go along with that week’s podcast, the Leader Conversation Guide and bonus resources, as well as access to our podcast resource archive. That’s theunstuckgroup.com/podcast to subscribe. Before we get into today’s conversation, here’s a word from Tony.
Before we get started, let me tell you about Church Central Office. They focus on your finances so you can focus on ministry. They’re the only outsourced and remote church accounting department and CFO team that is founded by a former executive pastor. Church Central Office knows what it’s like to juggle the complexities of church budgeting, finance, and operations. With Church Central Office, you’ll receive dedicated financial management and reporting, advice on budgeting and forecasting, and trusted counsel for all your accounting needs. Interested in learning more? Visit churchcentraloffice.com.
Well, Tony, I’m looking forward to today’s conversation. We’re gonna do a bit of a deep dive on what the data is telling us about current trends in churches, and we’re hitting this topic today in conjunction with the release of the newest Unstuck Church Report for the fourth quarter. So, Tony, we’re calling this a special edition of the Unstuck Church Report. Why do you want to explain it that way?
Well, Amy, every edition of The Unstuck Church report a special to me. That’s right. But this one is especially timely for everyone listening today. And let me just share kind of the foundation for the report. Again, it’s focused on surveys that we’ve completed and just recently. In fact, the survey data for this report was completed between late October and mid-November, but we wanted to give some, just a focused look to the current economic conditions that churches are facing as they’re planning for their 2023 budgets. So this quarter’s Unstuck Church Report and today’s podcast episode are gonna focus specifically on financial and staffing trends, because staffing obviously impacts finances as well. I was encouraged. We had over 400 churches take the survey in about a 15 day window. Those churches, by the way, were under a hundred in attendance all the way over to 20,000 in attendance. So it’s a wide range of churches, of different church sizes, that are represented in this data. And the report will also look at some of the differences between small and large churches when it comes to financial and staffing trends. That information, we’ll hit on a little bit of that today, but we aren’t going to be able to take a look at all of the data and trends that we’re seeing. And so if you haven’t already, you will want to subscribe to our quarterly Unstuck Church Reports. By the way, Amy, more than 10,000 church leaders are subscribed to that now.
And if you wanna subscribe, you can do that at theunstuckgroup.com/trends.
Over 10,000. Tony, that’s amazing. Hey, Tony, the last I checked, we have, what, like 25 people on our team at The Unstuck Group? And I think one of the advantages to being a smaller team is that we can quickly pivot, right? When circumstances or our mission demands it. So focusing on the financial and staffing trends in this quarter report was an example of a recent pivot. Do you wanna explain how that came about?
Well, I mentioned this in the report itself, but the recent conversations I’ve been having with pastors and church leaders have changed in recent weeks. You know, when I was talking with pastors at the end of 2021, there was often a sense of relief in the tone of their voices. Pastors felt like they had navigated the worst of the convergence of the pandemic, social justice crises, political division, and all of that obviously had impacted churches so much over the previous 24 months. But on top of that, many churches were in a strong financial position at that point about a year ago. And expenses were down through the heart of the pandemic. Some churches had taken advantage of the government loan grant programs and giving throughout that period remained strong. So in many instances, giving actually increased. And because of all of that senior pastors were generally optimistic about what was coming next for their ministries. These were the common themes I was hearing maybe through Easter of this current year, Easter of 2022. And then the conversations began to change. And I started to hear from pastors that giving was beginning to slow down. Many began to acknowledge that the offerings hadn’t matched the forecasting that they had used to prepare their 2022 budget. And then inflation reports started to trickle in. And then first it started to impact the cost of living for people in our congregations, but then obviously it began to be reflected in the giving patterns as well. So that brings us to today. And the genesis of this special edition of The Unstuck Church Report came from a string of recent conversations I had with pastors through the last several weeks. And in these more recent conversations, pastors seemed to be more concerned about giving declines. They started talking about the challenge of retaining key staff while knowing wage adjustments needed to take place to help families facing higher living expenses. And many churches, just to be honest, they didn’t adjust spending during the pandemic. So now they’re dealing with the combination of rising costs and declines in giving. And as I reflected back on these most recent conversations I’d had with pastors, almost all of them were hinting at the need to reduce staff to overcome giving declines while trying to appropriately increase the wages of staff who they’re hoping to retain. And, Amy, that’s what I was hearing, and that’s why we changed our plans and invested the time we have over these last several weeks to do this research. So I hope this report and today’s episode helps you prepare for the conversations that you’re probably having with your staff and lay leaders. I hope this helps you to make better decisions to set up your churches for health and greater kingdom impact in the new year.
Well, before we get to the financial and staffing trends, what did you learn about the churches that participated in the survey within the last several weeks?
Yeah, so some interesting things popped out to me. One of them, I don’t know if this is gonna be a surprise to you or not, and we can talk in a minute about why this may be so, but large churches were twice as likely to be non-denominational when compared to small churches. And so there’s something about the size of the church that because of the connection or a lack of connection to the denomination helps them. I think it’s possible that larger churches maybe have more freedom when they’re not tied to the denomination that may be at play. Another interesting fact about the churches that participated of those churches that were 1000 or larger, two thirds of those churches now are multisite. And what was even maybe more fascinating to me, one third of churches a thousand or more, are planning to launch a new multisite campus in the next year, in 2023. And so I’ve had pastors ask the question, you know, has what we’ve experienced over these last few years impacted multi-site in any way? And my response, based on the data that I’m seeing and the conversations I’ve had, if anything, what we’ve experienced is accelerating the churches moving forward with multi-site, because they’re starting to see the benefits of what that strategy can offer, especially in today’s current climate. The other positive news, and this is very encouraging, is that overall, the data shows that churches are growing again on this side of the pandemic. In fact, churches reported they have experienced a 24% increase year over year, and so that’s good news. Certainly, of course, it’s primarily a reflection of some of the constraints as ministries that we’re facing a couple years ago with the pandemic. But now it’s just good to see attendance growth is happening again. And again, fascinating difference here between larger and smaller churches. Larger churches seem to be growing faster right now than smaller churches. And again, it does kind of make me wonder if there’s a correlation with growth and not being tied to a denomination.
Yeah. A couple of observations there, Tony. Just in my experience, I mean, I think I just said it a few minutes ago. At our team size, we can pivot really quick. And non-denominational churches can pivot really quick. Often I find churches I work with that are a part of a denomination, it just takes some more time. And unfortunately, that may be part of that correlation. The other thing I just wanna emphasize, because you and I work with a lot of multi-site churches, I love how you put the information out there that there’s a third of the thousand plus in attendance that are planning to launch a new multi-site campus. That’s the number we encourage churches to get to before they launch multisite. So multisite is a great strategy, but you do have to have a size and a mass in order to do it right in a healthy way. Otherwise you can end up stuck due to being multisite. Anyways, going back to the last series we did on church governance. It’s not unusual for churches to have a complex governance structure. So where I was just hinting at, do you think that may be a factor, governance itself, for smaller churches as well?
Yeah, I do think the issues are certainly integrated, Amy, between some of the challenges of working in a denominational structure and having some of that flexibility to pivot. And then especially in recent years, to respond to what we’re seeing in culture and economic conditions and things like that. And then let’s just face it. Stuck churches, when you look at them, there are common reasons why they’re stuck. They’ve become inward focused. They tend to lack vision clarity, so there’s not a sense of direction for the ministry. Lots of complexity, which you just referred to a moment ago. They haven’t defined a clear spiritual formation strategy. So once they connect people to the church, there’s not an intentional strategy to encourage people to take their next steps towards Jesus. And this is a big one. They are not empowering leaders to lead. And what I’ve seen is non-denominational churches tend to have more freedom to address those specific challenges. And that, I think, is one of the reasons why in this current climate we’re seeing larger churches growing faster than some of the smaller churches. But I will say this. Even though connection to the denomination creates some constraints, I’ve seen healthy, thriving churches that are connected to denominations. And I think the difference is that they seem to be more committed to the mission that they’re about and navigating some of the challenges of connection to their denomination. And in many ways they’re structured and they act like non-denominational churches while remaining part of their denominations.
A hundred percent. I’ve seen that same thing, Tony. Well, let’s jump into the financial and staffing trends beginning first with finances. What stood out to you, Tony, from the data we collected from those more than 400 churches?
Yeah, so, let’s talk a little bit about the current trends that we’re seeing, and then we’ll look at what church leaders are projecting for the new year. So, as far as current trends: Giving in the last 12 months is up, but it’s not keeping pace with inflation. I mean, not much is keeping pace with inflation right now.
Not much. They are in the lead.
The good news is giving is up by about three and a half percent, but, here in the US anyways, in October, the reported inflation rate was 7.7%. So it’s less than half of what we’re experiencing as far as rising cost here, at least in the US. And then, related to that, per capita giving is flat over these last five years if you look at inflation adjusted data. So, first of all, let me explain how we calculate per capita giving. You may calculate it different, but we calculate it this way so that we can look at apples to apples data across all the churches that we’re working with. We take a look at the number of adults and students that are attending services every week. Then we take a look at the offering totals, and essentially we divide the annual giving amount by 52 so that we get to a weekly amount, and then we divide that weekly amount by the weekly average attendance of adults and students. And when we do that, the average per capita giving across all churches is $65 per adult and student per week. And again, what’s fascinating is if we look at that number and compare it to where we were five years ago, factoring in inflation, it’s exactly the same amount. So, the challenge here is that our expenses are growing. There’s no doubt about it. They’re growing faster than the giving is coming in. And so that’s a challenge that we’re currently dealing with. You may also be interested in knowing that churches invest about 70% of their budget in both staff and facilities, and the specific breakdown for staff expenses: they’re spending on average 52% of their budget. And then related to buildings and facility expenses, they’re spending 17% of their budget. And Amy, generally, I was encouraged by that data. Both of those percentages are within the recommended ranges that we encourage churches to monitor on an ongoing basis when it comes to how they manage their money.
And if that’s what churches are currently experiencing, what does the data tell us about how churches are preparing for 2023?
Well, it’s probably no surprise, but church leaders are expecting that economic conditions are going to impact financial health for their ministries. In fact, of all the survey respondents, 58% said it’s likely that economic conditions will impact financial health. And just to give you a sense, that was five times the number of respondents who predicted the economy would not have an impact on their ministry’s finances. So, it is certainly the case that church leaders are aware of the financial constraints, challenges that we’re facing, and how that may impact their ministries. So with that, churches are projecting though that they will experience a 5% increase in giving in 2023. It’s interesting though, here again, differences between the largest churches that responded and the smaller churches. The largest churches were much more pessimistic about giving in 2023. They only are assuming, projecting a 2% increase. And, personally, if I was a betting man, which I’m not, because I’m very shrewd with my money, and I don’t like to let go of it, especially if I think I’m just giving it away.
Yes, you are.
But I would, if I were a betting man, I would put my money on the more conservative projections from the larger churches. But either way, the projected increase is still below where we are with current inflation rates. So churches are going to experience what we’re all experiencing. You know, I think every one of us, we’re thankful when we get the pay raise that we’ve just received, but in today’s climate, with inflation where it is, that pay raise still feels like a pay cut. And I think that’s what churches are going to feel in the coming months. And so with that in mind, here’s what I would encourage you to do. Don’t use those projections. Instead, use your actual giving numbers that you’ve experienced over the last 12 months. So if you’re planning your ministry budget for 2023, I recommend you skip the forecast for 2023 and instead plan to spend 90% of what you actually received over the last 12 months. That’s a practice by the way that we see the healthiest churches we serve use every year, not just in times of economic uncertainty like we’re experiencing right now. And then, let’s say giving exceeds that 90% number and you end up with more money than you budgeted, well then you are in the enviable situation of having to decide how to invest that extra money in the mission of the church, either right now or into the future. And so I know jumping from where you are today to budgeting just 90% of what came in the last 12 months, that’s a big leap. And many churches aren’t able to do that in just one budget cycle. But maybe let’s just say over the next three budget cycles, we’re gonna take baby steps to get to that place. But if you start to do that over time, when we hit our next economic downturn and giving starts to decline as well, you will be in a better financial position to be able to navigate the challenges of the current financial season that we’re in.
That’s really good advice, Tony. Well let’s go ahead and take a look at the staffing trends in churches then. Tony, what stood out to you here?
Again, let’s start with the trends that churches are experiencing, and then we’ll take a look at some of the forecast for 2023. Smaller churches, we’ve seen this time and time again, smaller churches have more staff than larger churches when compared to attendance. And so small churches, under 200 in attendance, have one full-time equivalent staff person for every 34 people in attendance. And by the way, when we calculate that number, we’re looking at all staff. That would include pastors, other ministerial staff. It would include administrative support, staff facilities, full-time, part-time. We calculate that based on the total staffing for the church. So again, small churches, it’s one full-time equivalent to every 34 people in attendance. Large churches, and here I’m talking about churches of 500 or more. Those churches have one full-time equivalent for every 46 people in attendance. And Amy, you know this to be the case. Even that number is well below.
That’s low. Yeah.
So will you share what we encourage churches to be shooting for when it comes to staffing ratios?
Yeah, it just kinda makes me sad to see that number continue to drop. I think think pre-pandemic, the average church was at 51:1, and that’s low. We encourage churches to get to 75:1. That’s right. Because it’s in that space when we actually give ministry away, when we equip the body. And when I see those low numbers, I just know our ministry leaders are moving from leaders to ministry doers, and then there’s not a spot for someone to serve.
That’s right. This, I think, is some positive news. Churches are experiencing less staff turnover when compared to other organizations. So the average turnover rate in churches was 14% over the last 12 months. When you compare that to where businesses, government organizations and so on are, those organizations outside of church, are it’s over 20% turnover since the pandemic. So, no surprise there. I think a lot of us have seen reporting on the fact that there’s just a lot of turnover happening now in other organizations. I will tell you, before the pandemic too, when looking at staff turnover, it was about a two to one ratio. In other words, for every two people that left voluntarily, an organization, one person was an involuntary turnover in position. In other words, the employer was initiating that. It’s interesting. I actually think and those are the numbers from marketplace, if you will, inside the church. Honestly, I would guess that 14% is almost all voluntary departure.
That’s what my guess would be too.
And fascinating, again, here. Smaller churches tend to be experiencing more turnover than larger churches. And related to all of this, though, more than half of churches have staff openings that they’re currently trying to fill. And more than half of churches are indicating they’re having difficulty filling those positions based on the data we collected. But if you’re curious, here are the most common strategies that large churches are using to fill open positions. And it’s in this order. Large churches are using internal promotion. In other words, they’re promoting openings either to their current staff or within their congregations. They’re using word of mouth. And so they’re probably talking to friends in ministry outside of their church. They’re taking advantage of advertising online in different places. And number four on the list of strategies to fill open positions was internships and residency programs, which I will say for larger churches, we’re starting to see more and more of that.
And I think that’s a good thing. I’ve challenged several churches in recent months. I would encourage you within your community or network of churches, rather than trying to create internship and residency programs on your own, I wanna encourage churches to start to consider doing this in relationship with other churches. I think if we can start to partner on this, I think we will start to better prepare, certainly, young leaders for ministry in the future. But also I think it will help the church broadly begin to look for who are those next generation leaders that are gonna start to fill some of these positions that we’re trying to fill, not only now, but into the future.
Tony, I didn’t even think about that whole voluntary-involuntary leaving. I mean, the turnover rate’s higher than normal. We’ve heard a lot, you know, written about people leaving their jobs. So I just can’t help it with my staffing and structure hat on to encourage lead pastors. If you have people on your team that you are really glad are on your team, you need to pay attention to. I coach managers all the time, please spend your best time with your best people. It’s so normal to spend most of your time with the challenges or things that aren’t going well, but this is a great time. If you’ve got some stars on your team, people who are really modeling your culture and getting the results that you want, pay attention to them. Spend time with them. Reward them, because it is pretty easy right now to change jobs. I’m working with churches every week that have critical openings on their team, and it’s such an energy drain when they’re looking for new people. So for what that’s worth, you don’t want voluntary departures for people that you want to stick around. All right off my box. All right. By the way, we included in this survey of more than 400 churches, a question about how many staff positions these churches are currently allocating to different ministries and roles. And you know, Tony, this data’s been a long time coming. I know that this is something that many churches are interested in. How do we allocate our staff compared to other churches? Like for example, you know, we asked how many staff do you have in children’s and student ministries? How many do you have in adult ministries? And so on. And we don’t have time unfortunately, to dig into all of that data today. But for our listeners, you may be interested in downloading the full report to see how your staffing and structure compares with how other churches are structuring on their teams. Well, Tony, let’s wrap up today by talking about some of the projections for staffing in 2023. Maybe a good place to start is with the projected wage increase that churches are considering for the new year.
Yeah. So, we, again, surveying all of these churches, the feedback we got was that churches are anticipating that they’re going to provide a 4% increase in wages for 2023. And I hope this is encouraging for you because that’s actually on par. It’s about the same as the projected wage increase that I’m seeing for US businesses for the new year. Again, that’s still below our current inflation rates, but I’m not seeing any indication that businesses are going to try to keep pace with inflation when it comes to compensation adjustments for the new year. Amy, this is going back to courses I took in my college experience a few decades ago, but this difference between wage increases and where inflation is, it’s actually what needs to happen in order for inflation to come down in the long term. It sounds crazy, but we actually need our wage increases to begin to lag behind the cost of living increases we are experiencing, because that will eventually trigger a slow down in price increases. If prices go up as an example, and my business is not able to sell to people whatever the product or service is that I’m selling, I’m going to be forced then to decrease the price of my product or service so that it will increase demand. And so the problem is, if all employers continue to increase their wages to keep up with inflation, inflation would never come down then. Prices would never come down. And so it would just continue to compound the challenge that we’re facing more broadly in our economy. And so with that, I mean, my encouragement for you is you need to take care of your staff. You, especially, as Amy alluded to earlier, need to take care of those people that you could not imagine losing. But we can’t, especially as ministries, there’s no way that we could continue to keep pace with where inflation is currently. So because of that, it’s good to make sure we have a sense of where the economy is. We have a sense of what other churches are doing. Hopefully that will help you as you’re planning for 2023. Now, that’s what churches are planning for, anticipated wage adjustments. This is maybe the most surprising thing that I saw in the data. Even with where we are, many churches are still planning to add staff positions in 2023. In fact, about two out of five churches are planning to add staff, which was four times more churches than were planning to reduce staff in the new year. And let me just say, I think that’s a very bad idea. I mean, given the forecast for how economic conditions will likely impact financial health and the fact that giving is expected to lag behind inflation…
And the fact that most churches are already staffed.
Thank You. I really would caution churches to pause any hiring plans they have for the new year where possible, at least hold non-essential positions open until we get a clear sense of how economic conditions are going to impact both giving and expenses. I mean, many marketplace organizations are implementing or considering staffing reductions right now. And this may be an opportune time for churches to consider similar staff right-sizing strategies, because that will begin to prioritize volunteer engagement, which Amy, as you alluded to earlier, that when we prioritize volunteer engagement, it is always a positive strategy for improving the overall health of the church. And what we see is when the church is healthy, the church is not only thriving as a ministry, but more importantly, the church is growing because we’re reaching more people for Jesus.
Well, Tony, what a timely conversation. I know many churches are in the middle of budgeting decisions for this next year. And I know this was a pivot for us, with this quarter’s Unstuck Church Report, but we may need to consider doing this every year, actually, to help churches through planning around budgets and staffing. Everything is changing so much.
But any final thoughts, Tony, before we wrap up today’s conversation?
Well, really, the full report has a lot of information that Amy and I were not able to cover in today’s conversation. So I do, I would encourage you join the more than 10,000 church leaders that are subscribed to receive our quarterly Unstuck Church Report. And again, you can do that today at theunstuckgroup.com/trends.
Well, thanks for joining us on this week’s episode. At The Unstuck Group, our goal is to help pastors grow healthy churches by guiding them to align vision, strategy, team, and action. In everything we do, our priority is to help churches help people meet and follow Jesus. If there’s any way that we can serve you and your church, reach out to us today at theunstuckgroup.com. Next week we’re back with another episode of the podcast. So until then, have a great week.