Austerity, or Retrenchment? How Organizations Can Tighten Their Belts with Purpose

If by now you aren't aware of our nation's economic woes and its effect on everything from employment to retail sales, you are probably one who lives in the woods, churns your own butter, and only have access to dialup. You probably don't own the technology to be able to read this blog either.

Yep, its scary out there, and over the past three years, I've watched as the people in the churches I serve have lost their livelihoods, homes, and hope. I've also had a front row seat to the effect of these realities on the churches themselves. And occassionally, I've seen elder boards, finance committees, and pastors hit the panic button when their church started hemmoraging financially. In the economy of the "new normal," everybody is feeling the pinch, and trying to determine how to do more with less.

There is a positive side to this. For years, many churches relied on fat incomes. Now that streams of income have grown fewer and more anemic, churches are learning to depend on the Lord. At the same time, I've seen quite a few knee jerk reactions to a drop in giving. Though these reactions, for the most part, are motivated by a noble desire to "save the church," an over-reactionary approach to what the corporate world calls "austerity measures" can result in a demoralized staff, a culture of panic ministries with no resources to operate, and a church adrift in "survival mode."

With all this in view (and with apparently no end in sight to our economic woes), I'm going to suggest a different approach. In the past year alone I've heard from several pastors who have had their salaries drastically and suddenly cut because of panicking financial administrators. I've seen ministries and mission efforts stopped in their tracks because the "bean-counters" reacted in fear, and I've seen churches unintentionally publicize desparation to the communities they are called to give hope to.

In other words, when you react to bad economic times by simply saying "cut, cut, cut," here is what you are saying to your church, and your community: "We are going to try and keep doing everything we have done before. We just aren't going to do it as well."

To be sure, no organization can continue spending more than it takes in (I'm waiting for the government to learn this lesson--perhaps in vain!) But there is a right way and a wrong way to cut spending. "Austerity measures" without a clear purpose don't communicate that you are responsible. They communicate that you are cheap!

So, how do you "cut with a purpose?"

1. Get ahead of the tsunami! Have good, sharp people on your financial team that can project income/giving trends in a way that allows you to prepare in advance. If you know a storm is coming, you can prepare for it in a way that minimizes the damage. Giving a pastor or staff member 60 days notice that they will have to absorb a huge cut in salary demoralizes staff in a way that can sometimes render them impotent to continue leading. A sudden freeze in spending not only damages effective ministries, but sends shockwaves of panic throughout an organization. People will honestly wonder if their paychecks are the next thing to get frozen!

On the other hand, if projections indicate that austerity measures might be neccesary, communicate the reasons clearly, and communicate the plan as soon as possible. Get ahead of the problem, plan for it before it arrives, and give the people who work for the organization time to plan for it as well!

2. Re-visit your Vision and Mission. This is why I prefer the term "retrenchment" to "austerity." "Austerity" simply communicates that an organization is reducing its spending. "Retrenchment" communicates that an organization is facing tight financial times with its purpose and mission clearly in view.

The first question to ask in tight financial times is not "what do we cut," but instead, "What are we supposed to be doing?" The mission of God's church does not change simply because there isn't as much dough in the offering plate as their used to be. Though cuts must sometimes be made, making those cuts without first reassessing what the organization is called to do can unintentionally sabotage that mission. Every organization can cut spending, but no organization should cut things that will be to the detriment of the mission.

3. Jettison tangential emphases and the expenses needed to maintain them. During more affluent times, churches will often say "yes" to a program or ministry that might not be central to its purpose, but will fund it anway because, well, the money is there.

In leaner times, when a church reassesses expenses in light of its mission and vision, the first things to go should be those things that weigh down the organization rather than help it to accomplish its goals. Most or all of these ministries may be good. But the church as a whole is ALWAYS more important than any of its parts. Don't defund a ministry central to the operation of the church and expect it to continue. Instead, defund ministries not central to the operation of the church, bury them with dignity, and move on!

4. Staff according to the new reality rather than merely reducing staff for the old reality. Too many churches and organizations, when seeking to cut spending in personnel, simply ask "who gets to stay, and who has to go." Both of these are the wrong first questions! Instead, construct a "new normal" in light of the overall purpose of the church, and ask how that "new normal" needs to be staffed. Yes, this may still mean that someone loses their job. But the question of whether someone keeps their job should never be answered only in light of the church's financial situation. Once tangential emphases have been eliminated and the next strategic steps of the church are clear, staffing decisions should be made in light of what it will take for the church to move forward. In one sense, you might call this "zero-based staffing."

Just because you can "afford" to keep someone doesn't mean you should. Conversely, tight financial times, in and of themselves, do not justify demoralizing a solid, faithful, and successful leader.

I believe Jerry Rankin is right: Austerity measures will become the norm in many churches and organizations in the near future. But cutting spending doesn't mean you have to be cheap. Tighten your belt with a purpose!