Quarterly Ministry Trends, Cash Reserves, and Ministry Confidence

SUMMARY

During the first week of June 2012, we asked members of ECCU’s exclusive Ministry Advisory Panel (MAP)** about their financial performance and other key metrics for the first quarter of 2012. In general, revenue results were mixed, with micro and medium churches still reporting negative revenue compared to the Q2 2010 base period. In quarter-over-quarter comparisons, micro churches were the most impacted. Parachurches reported opposite results—revenues were up the most for micro parachurches. And, attendance was up across all size segments except for micro churches.

** The MAP is composed of ECCU member and non-member ministry staff and leaders representing evangelical Christian churches, businesses, schools, and other ministries. This report was produced by ECCU’s research department.

Q1 2012 IN REVIEW

Results are in for the first quarter of 2012, and they raise more questions than answers about the health of ministry organizations, particularly for churches and parachurches. Micro and small parachurches saw quarter-over-quarter revenue increases, while medium and large parachurches suffered significant decreases.

Compared to the Q2 2010 base period, attendance was up across all size segments, except for micro churches, which remain greatly impacted with a continued decline in revenue and attendance.

MINISTRY FINANCIAL TRENDS FOR Q1 2012

Quarterly ministry trends have been captured in this format since the second quarter of 2010 (base period). Ministries are segmented by type and size each reporting period. The type and size segmentation framework used is as follows:

(Every effort is made to ensure a broad representation of ministries by type and size, but seasonality and the overall nature of online survey panels impact our ability to provide statistically significant results. Where statistical significance cannot be achieved, the results are omitted.)

Churches
This is the quarterly revenue change index beginning with the Q2 2010 base period:

  • Although medium churches have experienced lower revenues for seven consecutive quarters compared to the base period, their overall picture seems to be improving. For example, while they ended the first quarter of 2012 at 12% under the base period, this was an 8% improvement over the previous quarter.
  • Large churches saw an increase in attendance (12%), but their revenues dropped by 15% over the base period and by 38% compared to the previous quarter.

Here is another way of looking at the information presented in the table above:

  • This chart makes it easier to appreciate the sharp rise in revenues for mega churches since their lowest point in the second quarter of 2011 and their all-time high achieved in the last quarter of 2010.
  • Micro and medium churches seem to follow a more consistent trend. While small and large churches experienced sharp variances through the second and third quarters of 2011, they tapered into a declining trend over the last two quarters.

The following table represents a running quarterly attendance change index beginning with the Q2 2010 base period:

Opinion:
The movement of attendees (migration) from micro churches to larger churches that we’ve observed over the past year is even more evident with our new size segmentation. In addition, because there are so many micro-sized churches, the small decline observed in their average attendance could be responsible for the greater average increase for larger churches (i.e., more people at fewer churches). But this migration alone does not explain the increased attendance across small, medium, large, and mega church segments. Another possible explanation for these attendance fluctuations could be new people seeking the resources of larger ministries due to hardship. We did not, however, capture any data related to this assumption.

Here is another way of looking at the information presented in the table above:

  • The decline in attendance at micro churches is clearly evident in this view. After a steady climb in attendance (up to 41% in the second quarter of 2011), they are now less than 21% above the base period.
  • Medium and large churches experienced the steadiest increase, improving slightly quarter over quarter since the fourth quarter of 2010.

The following two tables report attendance and revenue averages by church size for the first quarter of 2012. The “Low” figure represents the lowest reported number in its segment. The “High” figure represents the highest reported number in its segment.

This table shows the average revenue per church attendee, the previous quarter’s average revenue per church attendee, and the percent difference between the two.

  • All size segments experienced a significant decline in average revenue per attendee. Mega churches saw the greatest decline as a percentage (93%) from the previous quarter. These declines are mostly due to seasonal fluctuations (i.e., post-holiday giving tends to be significantly lower).

To better represent the metrics that are most indicative of a ministry’s financial health, we captured the average number of giving units in addition to adult attendance. Although the definition of a giving unit varies by ministry, 46% of ministries track giving in this manner. The method least used (7%) is giving per member. The figures below represent the first period of such data and will be the basis for comparison in future reports.

Opinion:
Although some hold the view that the economy is on the upswing, our MAP church attendance and revenue figures over the past two years continue to reflect signs of a struggling economy. These signs are:

  • A steady movement of attendees towards larger churches;
  • The inconsistency between attendance fluctuations and church revenues.

In response to the continuing migration, small and micro churches might want to explore partnership opportunities with organizations that offer the resources their attendees need.


Parachurches
Here is the running quarterly revenue change index beginning with the second quarter of 2010 as the base period:

  • All size segments remained above the base period during the first quarter of 2012. Quarter over quarter, medium and large parachurches saw 19% and 69% declines in revenues, respectively.

The chart below presents a different perspective on parachurch revenue trends. The positive growth (in blue) that started at the beginning of 2011 for micro parachurches is easier to see here:

The following table reports the revenue averages for the first quarter of 2012 by parachurch size. The average revenue per giving unit represents the first period of such data and will be the basis for comparison in future reports. Because this is the baseline, we do not yet have sufficient data to determine if the variances across size segments are normal.

OTHER KEY METRICS: CASH RESERVES (BUDGET VS. ACTUAL)

While our previous MAP survey surfaced a statistically significant negative correlation between the size of a ministry and its budgeted cash reserves goals, that wasn’t evident in the quarterly goals set by churches for the end of the first quarter of this year. Seasonality might be a contributing factor, since ministries traditionally continue to see the effect of year-end (and tax-season) giving through the month of April.

This table highlights how well churches were able to achieve their budgeted cash reserves goals.

  • Of the churches that budgeted for 61 days or more in cash reserves, 100% meet their target.
  • 46% of the respondent churches set their cash reserves goal at 30 days or less of their operational budget.

OTHER KEY METRICS: MINISTRY CONFIDENCE

  • Overall, ministry confidence increased slightly to 83% for the second half of 2011 compared to first six months of 2012.
  • Several ministries moved from being neutral to somewhat not confident as reflected by the 4% increase in this category.

 

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