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FINANCIAL MANAGEMENT IN PENTECOSTAL CHURCHES: A STUDY OF

HOUSE OF MERCY INTERNATIONAL GOSPEL, MAKURDI

BY

DR JANDO, FRANCA SHIMINENGE


DEPARTMENT OF RELIGION AND PHILOSOPHY
BENUE STATE UNIVERSITY, MAKURDI
Email: wantorshimmy@gmail.com
Phone : 08036510552/08073780063

Abstract

Financial mismanagement has become a phenomenon within Pentecostal churches and is


characterized by improper record-keeping, excess or unauthorized spending, embezzlement,
theft and ambiguity of records. Improper management of the churches’ finances usually
results to crisis and breach of trust among members of staff or leaders. This paper looks at
how Pentecostal churches could be proactive in managing their funds generated from their
offerings and tithes above reproach using House of Mercy International Gospel, Makurdi as
reference. This has been done via a phenomenological method in which both primary and
secondary sources of data are employed. Besides, the researcher made several visits to the
church to observe most of their activities. Findings from this field-based research show that
pastors’ monopoly, inadequate monitoring of staff, unqualified staff, fusion of job types, lack
of communication, unrealistic financial projections, lack of budget and financial emergency
plan can lead to mismanagement. The paper recommended that in order to ensure proper
financial management in the church, there should be frequent auditing of the churches’
accounts, monitoring of staff, separation of responsibilities, strategic planning and budgeting,
recording and reporting after events, adequate communication and above all transparency on
the part of leaders.

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Introduction

Financial management has been a problem for many institutions, organizations, governments

and individuals since centuries of human existence. Where it is not put to proper check,

financial mismanagement could lead to crisis, conflict and even violence. It simply involves

the process of estimating the capital required and determining its competition. Financial

management is the process of framing financial policies in relation to procurement,

investment and administration of funds of an organization. Financial Planning therefore helps

in ensuring a reasonable balance between outflow and inflow of funds so that stability is

maintained within the income and expenditure.

Today, management of finance like before remains an issue for all institutions including the

church. Various churches are often faced with financial crisis that usually threatens the

development and spiritual stability of the congregation. The Pentecostal churches that are

often founded by a single individual are the worst hit by this menace. Since they are owned

by one man who is both the overseer and pastor, all financial transactions are solely

controlled by him. Thus, allowing a certain level of monopoly on financial matters. Some

hardly prepare a voucher of expenditures. Some even run financial accounts by faith based on

how money came in. They feel that they are accountable only to God. The simple truth is that

many of the pastors and founders felt that they are accountable only to God since they are

working in His vineyard.

Although, some Pentecostal churches have finance committee, they take instructions from the

overseer who has the overriding decision. Besides, sometimes the problem of financial

management originates with the staff of the church particularly those that are not put under

proper check. This paper discusses financial management in Pentecostal churches using

House of Mercy International Gospel Makurdi as a case study. The crux of this paper is to

identify some of the loop holes that usually lead to mismanagement of the church’s funds.

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Secondly, the paper uses House of Mercy International Gospel, Makurdi to show how finance

should be handled in Pentecostal churches to avoid mismanagement.

Pentecostal churches

Pentecostalism is a fairly modern movement within Christianity that can be traced back to the

Holiness movement in the Methodist Church. A major focus of Pentecostal churches is Holy

Spirit baptism as evidenced by speaking in tongues (https://www.gotquestions.org). The

Pentecostal movement includes a large number of denominations, independent churches, and

para-church organizations that emphasize the work of the Holy Spirit in the lives of Christian

believers. It emerged first in North America at the beginning of the 20th century, when

members of the Wesleyan Holiness Movement began to speak in tongues and identified it as

the “Bible Evidence” that they had been baptized in the Holy Spirit (Acts 1:8, 2:1-4).

This baptism in the Spirit was said to provide power for living an “apostolic” life and

engaging in an “apostolic” ministry that included the charisms of 1 Corinthians 12:8-10. The

movement has gone by such self-designations as “Apostolic Faith”, “Full Gospel”, “Latter

Rain”, and “Pentecostal”. One of the first and most important centres of activity to identify

itself as “Pentecostal”, emerged under the direction of an African-American pastor, William

Joseph Seymour, and the Apostolic Faith Mission at 312 Azusa Street in Los Angeles, in

April 1906 (https://www.oikoumene.org)

All Pentecostals believe in the imminent return of Jesus Christ, and therefore are highly

evangelistic and missionary driven. As a result, Pentecostalism is today found in all the

regions of the world including Africa, and is still growing. It has grown enormously

throughout Nigeria, often giving rise to African Independent or Indigenous churches.

Due to the nature of its growth and expansion it has been observed that, Pentecostalism has

been able to meet the needs of many on the margins of society and church. This is why it has

been effective in bringing people into a personal relationship with God through Jesus Christ,

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in the power of the Holy Spirit. It encourages its members to share their personal testimonies

with others, to live their lives with an eye to “holiness”, to embrace good works as part of the

“Spirit-filled” life, to be open to the sovereign movement of the Holy Spirit through charisms,

signs and wonders, and to support the work of the church through regular tithing. In recent

years, some classical Pentecostal groups have begun to downplay the role of speaking in

tongues as evidence of baptism in the Spirit, though they continue to value it as a legitimate

charism of the Spirit. Some Pentecostal churches have embraced what is called a “prosperity

theology”, proclaiming that God wills both the spiritual and physical (including material)

well-being of God's people. Churches such as the Redeemed Christian Church of God, Living

Faith, Dunamis Gospel, House of Mercy International Gospel, Mountain of Fire Miracles

Church, and Church of the Kingdom of God, among others are examples of Pentecostal

churches.

Financial Management

Generally, financial management is the planning, directing, monitoring, organizing, and

controlling of the monetary resources of an organization. It refers to the efficient and

effective management of money (funds) in such a manner as to accomplish the objectives of

the organization. It is the specialized function directly associated with the top management

(https://en.wikipedia.org). Financial Management also 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 (http://www.managementstudyguide.com). Financial management is concerned

with how a governmental unit or agency employs the means to obtain and allocate

resources or money as well as utilisation of methods and control to effectively achieve

publicly determined ends (McKinney, 2004). Moreover, Kautz (2007) is of the view that

financial management is the process of managing the financial resources, including

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budgeting/costing, accounting and financial reporting and risk management. It is impossible

for an organisation to survive without proper financial management (Maritz, 2005).The

main objective of financial management is to ensure optimum funds utilization and to plan a

sound capital structure. Once the funds are procured, they should be utilized in maximum

possible way at least cost.

Financial management in Pentecostal churches therefore mean the overall efforts employed in

the monitoring and directing of the churches’ resources which is usually obtained through

offering, tithes, donations and others sources for the growth and development of the church.

Financial management in Pentecostal churches means appropriateness in the income and

expenditure indices of the churches resources. As such, financial management is antonymous

or the opposite of mismanagement.

The problem of financial management in Pentecostal churches

I have already indicated above that financial management in Pentecostal churches involves all

strategies employed in planning, directing, monitoring, organizing, and controlling of the

monetary resources of a particular church. Thus, the problem of resources mismanagement

entails squandering or excess expenditure, improper record keeping, embezzlement and

unplanned or unauthorized spending of the churches’ finances by either a pastor, his

accountant or whoever is in charge of money. It should be noted here that when it comes to

maintaining financial integrity, Pentecostal churches of all sizes and settings often run into

similar control issues.

Vonna Laue (2014) associates the problem of financial mismanagement with fusion of

responsibility, unmonitored workload, too much trust, limited staff and unqualified personnel

(http://www.churchlawandtax.com). The above suggestions prove true because without

separation of jobs, a dishonest staff will be provided with access to the funds and access to

the information systems. Such a person can manipulate information and cover up changes

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with little fear of detection. Again, unmonitored activities such as collection of offerings,

tithes, and crusade donations; procurement of items and execution of contract or projects can

tempt people to inflate contract sums or embezzle. Similarly, too much trust usually becomes

opportunity for most people to show their true colours.

On the other hand, Vonna warns that “Churches must steer clear of hiring or keeping

unqualified individuals in finance-related roles. Sometimes a church hires out of pity because

someone has been out of work a while; or a church might realize the person isn’t the right fit

but doesn’t have the heart to let that person go. Neither scenario leads to good outcomes

(http://www.churchlawandtax.com).

Following from Vonna observation above, we can scrutinize that the problem of financial

management in Pentecostal churches stems from the employees’ dishonesty, the nature of

work and workload on the staff of the church or even too much trust on the part of the

leadership. Yet, there are other opinions that see mismanagement of church funds from the

perspective of the pastors’ mode of leadership. This can be deliberate by their decisions or

choices to use up the church money; it can also be as a result their mistakes and oversights.

For instance, Dale Marples (2014) sees mismanagement of church funds from the perspective

of mistakes and oversight from Pentecostal pastors and leaders of the church.

Marples associates some problems or mistakes which Pentecostal pastors make that leads to

financial mismanagement. First, trying to be the financial manager for the church without

knowing how to do the job leads to mismanagement. This first mistake is symbolized by a

term: “Jack of all Trades”. Too many pastors have this syndrome, and think they can do

everything, or that they have to do everything. This leads to improper record keeping of

financial transactions of the church. The second mistake pastors make in handling the church

finances is trying to do a job that is outside of their call. As a pastor, one is called to

evangelize the people for the work of the ministry. In Acts 6, the disciples focused on their

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responsibility of continually being in prayer and ministry of the Word. Pastors are not called

to be financial experts or to express financial expertise. They need to do their calling and find

someone in the church, or hire a consultant to handle the financial responsibilities.

The third mistake pastors make with church finances is, not planning the finances like they

plan other church activities. They need budgets, once there is a budget, then, a plan following

that budget throughout the year becomes clear. A good accounting system is also needed to

track income and expenses. The fourth mistake pastors make is trying to be too spiritual with

the church finances thereby becoming too selfish and extravagant. This is usually backed up

with claims that “God shall provide” (http://www.tonycooke.org).

The subject of church finance is an important aspect of the work of the pastor-in-charge.

Failure in the management of church money may adversely affect one's ministry as much as

moral failure. By ordering his or her life according to the teachings of Scripture on the

subject of stewardship, the minister can avoid bringing reproach on the Name of the Lord

through mismanagement of congregational resources. Charlse Harris (2014) writes that:

Some idealistic young ministers declare they have no intentions of getting


their hands dirty with the business affairs of the churches they pastor. They
plan to hire business administrators to do all of that. None would dispute that
such a person can offer invaluable assistance to the pastor. Many
congregations, however, cannot afford the services of someone to fill that
position. Besides, even with help like that, the pastor must thoroughly
understand the field because he or she must supervise the business
administrator. The pastor is the chief officer in the church and thus, in the final
analysis, is responsible for everything that happens in it (2).
Similarly Dale Marples (2001) clearly affirms that:

As pastor of a church, it is ones’ responsibility to see that the finances are


handled in a professional manner and protect the financial foundation of the
church. Depending upon the size of the church, a pastor may have the direct
responsibility of the finances, or they may be delegated to someone in the staff
or advisory board. But regardless of this involvement, the final responsibility
is lies with the pastor in-charge (1).

Being –in-charge here therefore presupposes that, one must be accountable and transparent.

He must be ready to give account of his stewardship to the congregation and above all to

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God. This will not only encourage more support but will prove the integrity of the minister. A

situation whereby there is financial crisis resulting from theft, misappropriation,

embezzlement and poor reconciliation of financial records, there is bound to be suspicion and

loss interest and spirituality.

It is often said that pastors are the image makers of their congregation. As such, their hands

must be clear in terms of finances. Perhaps all pastors need to examine their preaching

schedules to assure themselves that they are including the concept of stewardship regularly in

their pulpit ministry. This is why Patrick Clements (2002) suggests the following:

If the pastor dusts off his ‘stewardship sermon' only when it's time to raise
money for something, if it's not a regular part of body life and connected to the
church's vibrant vision, then his members will inevitably feel that they are
knuckling under to strong-arm tactics, and they will end up feeling negative
about both the project and the pastor (72).
This entails that, giving account of one’s stewardship has to do with words and action. In the

view of Wayne Pohl (1992), a couple of Sundays per year are sufficient for a stewardship

emphasis in a church. Pohl writes that; “We limit preaching on finances to two weeks out of

the year, I believe that if we do our job well during this emphasis, people will respond

positively and will generously fulfill their financial responsibilities to God for the rest of the

year” (43).

Based on the above arguments therefore, this paper observes here clearly that the problem of

financial management in Pentecostal churches comprises both the pastors, leaders, staff and

even members of the congregation who may from time to time have a responsibility to handle

a particular activity for the church. Thus, eliminating these phenomena requires a wholistic

approach that can address everybody that may be involved.

Financial Management in House of Mercy International Gospel Makurdi

Financial management is of paramount importance in House of Mercy International Gospel,

Makurdi. As such, there are procedures guiding the income and expenditure of funds in the

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ministry. According to Vero Aluma (2017, Oral interview), first and foremost, receipts are

issued when transactions are made or when they pay for programs such as outreaches and

crusades. Again, partners of the ministry are issued with cards that have duplicate copies that

capture the details the person. These details include the amount in which one pledges to be

paying to the ministry. In case of crusades, the programmes of events alway contain the bank

account number of the ministry to which donations are directed. Besides, there is a standing

directive by the founder that mandates all money realized from any activity to be taken to the

bank immediately. By this directive, offering from the crusade is taken to the bank the

following day to curtail unnecessary expenditure.

Furthermore, Evangelist Vero Aluma who is the founder, is the only person that is signatory

to all the ministry’s bank accounts. Thus, when she signs, the accountant Patience Okoja now

goes to the bank and withdraws and keeps it. However, all the ministry’s needs are

channelled to the ministry’s Administrator, Pastor Mark Eti Chucks’ office. When such

request comes to his table, he examines them, approves and forwards them to the founder for

scrutiny and final approval before any payment is made. When final approval is made, the

cashier releases money and keeps proper records of such payments.

In terms of payments of salaries, voucher is prepared in the ministry and sent to the bank for

payments. Other expenditures such as fuelling of vehicles and generators, light bills and

kitchen allowances take a similar process. Before any expenditure is done, the ministry’s

accountant takes the record in her ledger. This ledger is usually audited by the founder

Evang. Vero Aluma twice very week, precisely on Mondays and Fridays (Vero Aluma, Oral

interview). Thus, going by this arrangement, there is separation of duty amongst the ministry

staff. This is in order to checkmate excess workload on staff. Checks and audits are ensured

to curtail financial mismanagement. Proper record keeping of financial transactions is

instituted to facilitate reporting, accountability and transparency in the church.

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To ensure all time financial efficiency and transparency in the ministry, reports of events are

usually properly captured and documented. For instance, reports of outreaches, crusades,

thanksgiving masses, donations, and all other activities that demand financial sponsorship

have written reports at the end of the events. These reports capture all incomes within the

period and in the process of organizing such programmes; the amount of expenditure incurred

and the purpose for such expenses; deficit if any, and the balance. A report of Income and

expenditure for each programme of the ministry is usually prepared by the accountant who is

always part of any planning committee that needs to spend money. In this way, all items

bought and services paid for are captured by the accountant for onward reporting.

Finally, Pastor Mark Eti (oral interview) reports that, Planning for programmes is solely

dependent on the kind of funds the ministry is able to realize. Their plans for any proposed

project is already incorporated in the proposal that they submit for grants. Also, the main

deciding factor for embarking on projects is availability of funding.

How to improve Financial Management in Pentecostal churches

The unpredictable economic climate has created budgeting challenges for many

organizations, and the church is no exception. This creates the need for churches to find help

figuring out the best way to manage their sometimes limited resources. Church leaders are

often challenged with ensuring there is continued funding to support current programs and

fixed operational costs. This can be difficult because the financial needs of a church can be

significant, and juggling limited resources can be stressful.

Demarcation of responsibility: Pentecostal churches must make certain that at least two of the

following three specific duties are split between at least two unrelated staff namely;

authorizing transactions, Recording transactions and custody of assets. It is observed that

without separation of these job types, there is a tendency for someone with access to the

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funds and access to the information systems to manipulate information and cover up changes

with little fear of detection.

Strategic Planning: Developing a strategic plan is one of the first steps to strong financial

management. Taking the time to set a course of action, and develop church goals proves

relevant to effective financial management practices. The beauty of developing a strategy and

plan is that it takes every area of church operations into consideration, and allows for

designating resources toward those critical areas that will sustain and grow the ministry.

A well thought out plan also takes into considers those financial policy and reporting

measures that are necessary for responsible financial management as obtainable in House of

mercy International Gospel, Makurdi.

Budgeting and Realistic Revenue Projections: Budgeting is critical for successful financial

management and church budgets are tools that help leaders achieve objectives and help to

curtail unplanned spending. Investing the time, and committing the resources, to creating a

budget can have a significant impact on the financial health of the church and can provide the

necessary finances to support church strategy and goals. Again, many churches are trying to

operate with uncertain revenues and should be making realistic projections of donations.

One way to address this is to consider bi-annual or quarterly review of projections to

ensure accurate financial targets for the year.

Oversight and Accountability: Once a budget is set, oversight and accountability for adhering

to the budget is important because it keeps the church from spending resources that are not

allocated. The Church Finance Committee, coupled with a strong performance management

process, is a great way to ensure accountability for budget oversight and spending.

Communication: Commit to financial transparency and solicit feedback from church

members on cost saving ideas, strategies for raising funds and make them aware of any

financial challenges. For example, if an unexpected major facility repair has occurred, let the

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church know about the unexpected cost. Create a consistent communication process, share

budget information and provide avenues to answer any financial questions that members may

have.

Financial Emergency Plan: the finance committee must make sure the church has a plan in

place in the event of a financial emergency and use positive profit margins to fund an

emergency account. When they budget for an emergency it create a financial shock absorber

that buys the time needed to make adjustments and spending changes in the event of a true

financial emergency.

Above all, it is the submission of this paper that many church financial problems can be

avoided by good planning, consistent budgeting and accountability for spending, proper

record keeping, consistent reporting after events, monitoring, separation of responsibility and

timely communication. Church leaders should embrace structured processes to ensure the

resources are available to keep the church moving forward, regardless of the economic

ambience.

Recommendations

Based on the findings, this paper recommends the following;

i. Pentecostal churches should make certain to review the compensation of the

personnel handling church finances. Low pay can serve as a trigger for rationalizing a

fraudulent act, so it makes sense to periodically make certain the compensation for

these leaders appears fair.

ii. There should be demarcation of responsibility for the staff to avoid overworking staff

iii. There should be monitoring and periodic auditing of the financial records of the

church

iv. Churches must also have Realistic Revenue Projections and Budgeting to authenticate

their financial management

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v. There should be strategic planning as well as emergency financial plan for the church.

vi. Finally, Pentecostal churches must cultivate the habit of effective communication

with the congregation on financial dealings.

Conclusion

From the findings of this paper, the House of Mercy International Gospel, Makurdi is fully

aware that there are risks involved in the management of cash and they have adopted

varying strategies to cope. The question that comes to mind particularly is whether

other Pentecostal churches have adopted such similar options or effective strategy to cope

with financial irregularities. Although Pentecostal churches are not established for

commercial purposes (they are non-profit organisations), it is more encouraging that they

should embark on proper financial management practices to justify their funding by their

congregations. This in line with the suggestion of Denison and Beard (2003) that managers

should keep administration lean and build reserve funds to cushion against financial shock.

Moreover, attempts should be made to address areas of value creation. This includes:

redefining their vision and mission, adopting the best financial practice within the

church, invest in high impact humanitarian and service based projects, innovation and active

partnering with for profit to widen their scope for social value creation. Finally, the

Pentecostal pastors and church leaders generally need to always have discussions with

experts who have backgrounds related to financial management in order to discuss the

management strategy for improving the financial performance of their church.

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References

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Retrieved, 27/4/2017

“What is the Pentecostal Church and what do Pentecostals believe?”


https://www.gotquestions.org/Pentecostals.html Retrieved, 27/4/2017

“World council of Pentecostal churches” https://www.oikoumene.org/en/church-


families/pentecostal-churches

Clements, Patrick L (2002). Proven Concepts of Church Building and Finance. Grand
Rapids: Kregel Publications.

Douglas W. Johnson (1986). Finance in Your Church (Nashville: Abingdon Press.

Harris Charles (2014) “Church Finance Part 1: The Biblical Concept of Stewardship”
http://globalchristiancenter.com/administrative-leadership/strategy Retrieved,
27/4/2017

“Financial Management” https://en.wikipedia.org/wiki/Financial_management Retrieved,


27/4/2017

John Warren Johnson (1981). How You Can Manage Your Money. Minneapolis: Augsburg
Publishing House.

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ww.smallbusinessnotes.com/operating/fin mgmt.html, Retrieved, 27/4/2017

Maritz, M. (2005) “Financial management handbook series for community-based


organisations”. Published by the Institute for Democracy in South Africa (IDASA).

McKinney, J.B (2004) “Effective Financial Management in Public and Nonprofits agencies”.
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Pohl, Wayne. (1992). Mastering Church Finances. Portland, Ore.: Multnomah Press.

List of Respondents

s/n Name Sex Age Occupation Date interviewed Location

1 Vero Aluma F 65 Evangelist 17th Feb, 2017 Makurdi

2 Patience Okoja F 36 Accountant 8th March, 2017 Makurdi

3 Eti Mark M 49 Pastor 8th March, 2017 Makurdi

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