Financial Management In Church Administration (A Case Study Of New Life Gospel Church Zone 6 Osun State)

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Financial Management In Church Administration (A Case Study Of New Life Gospel Church Zone 6 Osun State)


Abstract


The study sought to unearth the financial management in church administration in New Life Gospel Church Zone 6 Osun State. The objectives are to find out the financing decisions of the church, the investment decisions of the church, the reward systems of the church and the challenges faced by the church in achieving the financial obligations. The target population for the research comprised church members (both pastors or general overseers and leaders as well as members of the church) of the five New Life Gospel Church Zone 6 Osun State. Purposive and simple random sampling techniques were used to select forty (40) respondents. Questionnaires were used as an instrument for collecting data. A thorough library search was embarked upon to collect relevant data for the review of related literature to establish theoretical and empirical framework of the study. From the study, it was revealed that the major sources of funds for the New Life Gospel Church Zone 6 Osun State are through fund raising activities, tithes and offerings.

Rewarding or motivating church leaders with Vehicle and maintenance allowances encourages them to work and refusal to pay tithes and other church levy, absenteeism of church members, maintenance of church properties, huge amount of money paid for rented apartment for church service, mismanagement of church funds and purchase of flashy cars by some pastors were the major challenges faced by the church in achieving the financial obligations. Conclusions were drawn from the findings. Based on the above it is recommended that churches should be able to employ the services of a qualified or welltrained accountant to handle the accounting aspect of the church and churches should be encouraged to invest, in the lucrative business to enable the church to make money for developmental projects such as expansion of church or building, providing scholarships etc.


Table Of Contents


Preliminary Page(s)

  • Title
  • Declaration
  • Approval
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of Content

Chapter One

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objectives of the Study
  • 1.4 Research Questions
  • 1.5 Scope of the Study
  • 1.6 Justification/Rationale of the Study
  • 1.7 Limitations of the Study
  • 1.8 Organization of the Study

Chapter Two

Review of Related Literature

  • 2.0 Introduction
  • 2.1 Definition of Financial Management Process
  • 2.2 Basic Challenges of the Process
  • 2.3 Church Budgeting
  • 2.4 Accounting and Internal Control Systems
  • 2.5 Definition of Charismatic Church
  • 2.6 Sources of church funds
  • 2.7 Major Investment Opportunities for the Church
  • 2.8 Reward Systems Available for the Church
  • 2.9 Implications on Rewards for the Church Organization
  • 2.10 Challenges Faced by the Church in Achieving the Financial Obligations and how the Problems are Overcome

Chapter Three

Methodology

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Population of the study
  • 3.4 Sample and Sampling Technique
  • 3.5 Data Collection
  • 3.5.1 Primary Data
  • 3.5.2 Secondary Data
  • 3.6 Instrumentation
  • 3.7 Pre-Test of the Study Instrument
  • 3.8 Data Analysis Procedure
  • 3.9 Ethical Considerations
  • 3.10 History of Charismatic Churches

Chapter Four

Data Presentation, Analysis and Discussion of Findings

  • 4.1 Introduction
  • 4.2 Demographic Characteristics of Respondents
  • 4.3 Sources of Funds for the Church
  • 4.3.1 Keeping Records of Church Funds
  • 4.4 Major Investment Opportunities for the Church
  • 4.5 Reward Systems (motivation) Available for the Church
  • 4.6 Challenges faced by the church in achieving the financial obligations
  • 4.7 Overcoming the challenges faced by the church in achieving the financial obligations
  • 4.8 Assessment of Financial Statements of the Churches using key Ratios

Chapter Five

Summary of Findings, Recommendations and Conclusions

  • 5.1 Introduction
  • 5.2 Summary of Findings
  • 5.3 Recommendations
  • 5.4 Suggestion(s) for Further Research
  • 5.5 Conclusions
  • References
  • Appendix

Chapter One


Introduction

1.1 Background of the Study

Some history records show that in the early ancient days, recording of financial events was initiated for the purpose of faith based activities in the ancient Greece (Mesopotamia); financial records have been found on clays in Mesopotamia, which show lists of expenditures, and goods received and traded around temples (Biobele, 2008). The development of accounting, along with that of money and numbers, may be related to the taxation and trading activities of temples. During the first millennium BC, there is also evidence for an early form of accounting in the Old Testament of Bible for people of Israel; as the Book of Exodus in the Bible describes Moses engaging Ithamar to account for the materials that had been contributed towards the building of the tabernacle. Around 40 AC, the record on the New Testament also shows that in the early church, there was job segregation on the sacred work versus the secular work; where the apostles appointed committee comprises 7 members to manage the giving and other properties from the church members. (Acts 6:3) The medieval period Church of Scotland had been using financial management decision for the purpose of different investment activities. It is evident that accounting for asset and income was mobilized in order to achieve social aims (Catriona & et al 2010). Practice of working with and using accounting for financial management decision in the faith based in general and in Christian churches in particular is not the recent development. But the practice is seen in either of the following two ways: the first is that churches rely on a great deal of volunteer support, and as a result may not have the professional oversight to adequately monitor the resources of the organization (Thomas & et al, 2017).

The second reason is the ignorance of churches to the accounting and financial management with the reason of the tension between the perceived secular orientation of finance and accounting and the sacred activities of churches. Accounting systems, in this context, for churches, are not part of the sacred agenda and should not interfere with the more important spiritual endeavors of the Church (NiklasKreander& et al, 2004). The sacred and secular divide, separates the legitimate part of the church from the profane support activities. Accounting is seen as a support activity, and is thus profane. It is regarded as irrelevant to the life of the organization and only tolerated to the extent that it supports the sacred (NiklasKreander& et al, 2004). Religious organizational members are increasingly calling upon their churches most especially, the governing body of the church for stricter accountability and transparency. Financing the activities and operations of the religious organizations and churches is serious setback. The organizational activities together with the limited financial resources results in paying particular attention to financial management. With intermittent media reports of financial irregularities in some religious organizations, there is an increasing call for financial accountability.

Church members want to know, and have a right to know, how and where church funds are expended. Not only is the accountability and financial reporting essential but assistance is needed in all aspects of financial management. Establishing prudent Church financial management systems will provide the financial transparency and accountability necessary to solve these difficulties (Wayne, 1989). In recent times there have been several cases of embezzlement which borders on the use of funds and other resources of the church. The issue of financial mismanagement is gradually becoming a major problem area in the church’s management system as it is often the case where the church leaders are day in and day out being accused of using the church’s funds for their own benefit. Thus, while some account clerks are prudently managing their churches finances above reproach others do the opposite. Hence, it is important to examine the procedures put in place by New Life Gospel Church in the management of her finances. This will enable one ascertain perhaps the challenges, if any, that these churches are facing hence their inability to manage their finances above reproach.


1.2 Statement of the Problem

Many studies have been undertaken all over the world aimed at understanding the unique management systems of the church (Leach, 1960; Laughlin, 1988; Harris 1990; Booth, 2019; Gruber, 2004; Agyei &Kusi, 2016; Shaibu, 2017). Most of these studies have however focused on discrete aspects of the financial management scope such as accounting and communication, internal controls, investment policy, among others instead of considering the whole system, hence failed to bring in-depth understanding to how the entire financial system operates. That is, evaluating a single financial management component is not enough to give a true reflection of the efficiency and effectiveness of the financial management practices of an entity. The number of studies carried out to enable the understanding of the financial management in churches, especially in Nigeria, is inadequate compared with the exponential growth the church is experiencing, and the perception of increasing financial mismanagement and malpractices associated with them (Agyei &Kusi, 2016; Ahortor, 2009; Shaibu, 2017; Ahiabor& Mensah, 2017; White & Acheampong, 2017). Justification for the lack of such studies over the years is the difficulty in accessing available and accurate data. The few studies done as stated above also focus mainly on the orthodox churches (especially the Catholic, Anglican, and Methodist and Presbyterian churches). The findings of some studies identified inadequate financial management practices, poor stewardship, lack of internal control systems and generally low interest or investment in financial literacy in the respective churches (Leach, 1960; Laughlin, 1988; Harris 1990; Booth, 2019; Agyei &Kusi, 2016; Shaibu, 2017).


1.3 Objectives of the Study

The major aim of the study is to examine the financial management in church administration. Other specific objectives of the study are;

  1. To examine the financing decisions of the church.
  2. To examine the investment decisions of the church.
  3. To examine the reward systems of the church.
  4. To examine the challenges faced by the church in achieving the financial obligations.

1.4 Research Questions

  1. What are the sources of funds for the church?
  2. What are the major investment opportunities for the church?
  3. What are the reward systems available for the church?
  4. What are the challenges faced by the church in achieving the financial obligations and how are the problems overcome?

1.5 Scope of the Study

The study is on financial management in church administration, a case study of New Life Gospel Church Zone 6, Osun State.


1.6 Significance of the Study

The study would be of immense importance to church management in Nigeria as it would enhance church growth, expansion and development by examining the New Life Gospel church principles of financial management and administration. The study would also benefit students, researchers and scholars who are interested in developing further study on the subject matter.


1.7 Limitations of the Study

Financial constraint:

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint:

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.


1.8 Organization of the Study

The research work has been grouped under five (5) chapters.

  • Chapter one represents an introduction to the study, Background of the study, statement of the problem, objectives of the study, research questions, justification or rational of the study, research limitations, scope of the study and organization of the study are included.
  • Chapter two deals with review of related literature on financial management in the church system which includes a brief definition of financial management process, basic challenges of instituting financial management process in the church system, budgeting in the church, accounting and internal control mechanisms.
  • Chapter three reflects on the the methodology used in the research. It discusses where the study will be conducted, the various research methods used , research instrument and study strategy.
  • Chapter four deals extensively with data presentation, analysis of results and detailed discussion. This is where the responses gathered by means of the questionnaires that were sent out and the interviews conducted are organized and properly analyzed.
  • Chapter five which is also the final chapter highlights the summary of findings, recommendations and conclusion.

1.9 Operational definitions of terms

Finance:

A body of principles and theories dealing with raising, investing, managing and employing funds by individuals and organizations in the private and public sectors. Financial managers can take three main decisions; finance, investing and dividend decisions.

Funds:

This is regarded as cash or its equivalent, example cheques, drafts, money orders, etc. The term may be used to include securities which have a ready market and can be quickly liquated.

Financial Management:

This means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.

Church Administration:

Church administration is spiritual service to the Body of Christ which involves the wise stewardship of God’s resources for the accomplishment of the work of ministry. Church administration or management has to do with the organization of church ministry, and with the operations that govern that organization. Administration is not an end in itself, but rather it is a means for serving people effectively, while making efficient use of resources in a manner that glorifies God.

Church:

Church is commonly defined as a building used for public worship. However, many people refer to a church as an organization. Examples are the Catholic Church, the Church of Christ, and the Southern Baptist Church amongst many others.


Chapter Five


Summary of Findings, Recommendations and Conclusions

5.1 Introduction

This chapter presents the summary of the research findings, and conclusions from the results and finally the implications and recommendations for further studies.


5.2 Summary of Findings

The purpose of the study is the financial management in New Life Gospel Church Zone 6 Osun State. A number of findings were made after a discussion of the responses. They are summarized as below;

5.2.1 Identify the Sources of Funds for the Church
  • The result suggests that the major sources of funds for the New Life Gospel Church Zone 6 Osun State are through fund raising activities, tithes and offerings. A large percentage of males respondents representing 68% opined that fund raising activities was a major source of church funds
  • In addition, the findings show male in the church contribute huge amount of money during fund raising and offering.
  • This is evident that most New Life Gospel Church Zone 6 Osun State keep proper records of their accounts. Majority of the church leadership representing 85% attested that church in the Zone 6 Osun State keep proper accounts of receipts and payments in the church.
  • It was found out that churches do not pay tax on the incomes and this was attested to by 90% of the study respondents.
5.2.2 Major investment opportunities for the church
  • The results indicate that investment is very important in achieving financial obligation of New Life Gospel Church Zone 6 Osun State
  • The finding shows that the major investment for the New Life Gospel Church Zone 6 Osun State are credit union, partners for common good loan fund, affordable housing and acquisition of lands.
5.2.3 Reward Systems (motivation) Available for the Church
  • The results indicate that rewarding/motivating church leaders with Vehicle and maintenance allowances encourages them to work. Also wages/ salaries for church leaders a reward mechanism for motivating them.
  • The results indicate that payment of apartments/ accommodation for pastors is a major motivational factor in the New Life Gospel Church Zone 6 Osun State, bringing the percentage to 70.0%.
5.2.4 Challenges faced by the church in achieving the Financial Obligations
  • The findings indicate that refusal to pay tithes and other church levy, absenteeism of church members, maintenance of church properties, huge amount of money paid for rented apartment for church service, mismanagement of church funds and purchase of flashy cars by some pastors were the major challenges faced by the church in achieving the financial obligations.
  • The findings show that to overcome the challenges faced by the church in achieving the financial obligations, the following variables need to considered; encouraging church members to pay tithes and other church levy, avoiding mismanagement of church funds and churches should engage in lucrative business and investments.

5.3 Recommendations

Upon the observations made during the survey and the responses gathered from the questionnaires, the following recommendations are made with the hope that if taken into consideration it will help improve upon financial management in the charismatic churches and perhaps in other church denominations as well.

The churches should be able to employ the services of a qualified or well-trained accountant to handle the accounting aspect of the churches to which books of accounts are to be kept and the financial statements to be prepared in accordance with the accounting standards.

The accounts ought to be audited on regular bases say on quarterly bases in order to avoid a situation where fraud and misuse of funds and other resources go unchecked for a long time before being detected or in some cases go undetected.

Church should be encouraged to invest, in the lucrative business to enable the church to make money for developmental projects such as expansion of church or building, providing scholarships, etc.

Financial committees set up to manage the financial resources of the church must be given the freedom to operate effectively without any interference. They must be assigned the responsibility of the allocation of resources as and when needed. They must be responsible for fixing ministers and other staff members’ remunerations taking into account the financial strength of the church and the current economic situation. They must be well represented and should be balanced in terms of its membership having people with firm knowledge in financial management to make well informed decisions which will ensure the efficient use of financial resources in the church.

The three functions of authority, custody and recording must be separated in the church. This will ensure a situation where different persons are responsible for carrying out different duties. For instance one person may be responsible for appointing staff and arranging terms of agreement (authority) and another person will be in charge of wages of the staff (custody) and perhaps another person in charge of recording of transactions relating to staff activities. This will help ensure efficiency in the management of resources and avoid a situation where absolute authority lies in the hands of one person.

Monies and other resources must be used for the purpose for which they were contributed and the leadership must render accounts on regular bases to the members to inform them of the operations of the church and more especially, how their contributions are being utilized.

A situation where church finances are being used for the personal gain of one person or for other benefits other than for the overall benefit of the church must be avoided as much as possible.

Undue interference in the church’s budget must be avoided; budgets must be very flexible and must be adhered to in order to avoid any unnecessary spending.

Some of the elders in the church may need to devote part of their time and energy to ensure that the right thing is done and that the head pastor does not have all the freedom in the world to do what he likes. This is important because in some cases the church elders may be older than the pastor and as such the pastor may honour them the due respect and take their advice all thing being equal.

It is recommended that churches should pay taxes on the net incomes generated and the margin of payment could be monthly or quarterly.


5.4 Suggestion(s) for Further Research

The variables used in the study were not exhaustive. Future research could look at the financial management in New Life Gospel Church Zone 6 Osun State.


5.5 Conclusions

Sound administrative systems with effective internal control procedures are lacking to a larger extent in most charismatic churches. The power and authority of the head pastor or the leadership of the church is unlimited. In order to promote and ensure effective administration and the efficient use of resources in the church, it will be appropriate that these charismatic churches do everything possible to adhere to the provisions of their constitutions and allow responsible committees a free hand to operate or perform their assigned roles. Sound accounting and management procedures must be employed with the services of professionals or qualified personnel and this will help ensure the smooth running of the church and the efficient use of resources in the church.


Financial Management In Church Administration (A Case Study Of New Life Gospel Church Zone 6 Osun State)


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