TL;DR: This is meant to be the third post in my three-part series on what churches can learn from business. When I first thought up this series, I had another idea in mind for Part 3, but alas, I’ve forgotten what that third article was actually supposed to be. In the meantime, opportunity costs, specialization of labor, and scalability are some things I’ve been thinking about in real time, so here we are.
Time costs have to be one of the most overlooked expenses in churches and nonprofits.
And I think this happens because churches and nonprofits often treat time as free.
And, in treating time as free, they repeatedly make bad decisions.
Economists, of course, have a name for at least part of this: opportunity cost.
Every choice we make with a limited resource means giving up something else we could have done with that resource. Money is a limited resource, but so is time. And while churches and nonprofits tend to track money quite carefully, we’re often terrible at accounting for time.
A brief aside on “abundance.” I need to pause here because “abundance” is a term I’ve repeatedly heard throughout my ministry years and now increasingly within political conversations. While I understand the ethos behind it, I sometimes think appeals to abundance can become blissfully ignorant of material realities.
Humans are not unlimited. Time is finite. Resources are finite. And even if we rightly point out that there is enough food in the world to feed everyone, that food still has to be grown, gathered, transported, organized, and distributed. All of that requires human time, energy, and resources. That’s precisely the kind of problem economics exists to think about.
Even Jesus feeding the 5,000 required this. Whether you understand the event as a supernatural multiplication of five loaves and two fish or as Jesus inspiring those gathered to share what they had, Jesus still had to organize the disciples to distribute the food and then gather what remained. And while Jesus was feeding the 5,000, he wasn’t simultaneously somewhere else healing someone.
Abundance doesn’t eliminate opportunity cost. That’s the point I think churches sometimes miss.
“We Can Save $500 by Doing It Ourselves”
I’ve worked for several different types of nonprofit organizations—churches, traditional nonprofits, governmental organizations, among others.
Because all of these organizations have limited budgets—much the same as traditional businesses do, which sort of proves my point—they often try to do everything in-house, using the same employees they already have.
Salaried staff time feels free. There’s no new invoice when you add another task.
In other words:“We can save $500 by doing it ourselves.”
Maybe.
But if three staff members collectively spend 30 hours doing it, you haven’t simply saved $500. You’ve exchanged $500 for 30 hours of organizational capacity.
The question then becomes: What else could those three people have accomplished with those 30 hours?
That’s what economics call opportunity cost.
And often, it’s not even a one-to-one comparison.
Do What You’re Good At
There’s another basic economic principle at work here: specialization of labor.
Generally speaking, people become more efficient when they specialize in work they are particularly equipped and trained to do—this is why so many churches hire a youth pastor or children’s ministry director for instance. Yet churches and nonprofits routinely violate this principle in the name of saving money.
In one job I had in the social work field, we hauled plant seedlings, lugged bags of soil, and made runs to the hardware store because it APPEARED cheaper to do these things ourselves.
Never mind that having those things delivered might have added only a marginal fee.
The delivery fee was visible. Our time wasn’t.
More importantly, the people hauling bags of soil had presumably been hired because they had skills and expertise that were more valuable to the organization than their ability to haul bags of soil.1
Every hour we spent doing that was an hour we weren’t doing the work we had actually been hired to do.
That doesn’t mean organizations should outsource everything. Sometimes doing something yourself really is the most efficient choice.
But doing it yourself isn’t free simply because no money changes hands.
When Volunteer Time Is “Free”
This problem becomes even more pronounced with volunteers because, if salaried staff time feels free, volunteer time feels REALLY free.
Volunteers can be both the BEST and WORST thing in churches and nonprofits.
Of course, volunteers are in many ways the lifeblood of these organizations. But conversely, it’s often easy to find someone who can do something for free when that very task really needs to go to someone who has the qualifications to do it well.
I see this trend in chaplaincy.
Anybody who is or was a pastor or ministry leader may think they can be a chaplain and may even be willing to do it for free as a ministry. But chaplaincy is a specialized discipline. Getting someone willing to do the work for free doesn’t necessarily mean you’re getting someone qualified to do the work well.
And while the cost of that decision may not immediately show up on a financial statement, it can still negatively affect the quality and effectiveness of the organization’s work.
Which is another reason specialization matters.
Sometimes paying someone who can accomplish a task better and faster is actually less expensive than finding someone willing to do it for free.2
What Didn’t Happen?
And I think this is the bigger point.
The most important cost isn’t necessarily payroll.
It’s what didn’t happen because someone’s finite attention was consumed by lower-value work.
That’s why I think opportunity cost is such a powerful lens for church and nonprofit management.
Don’t ask only: “What does this cost?”
Also ask: “What won’t we be able to do because we’re doing this?”
Or, to put it another way: “How much organizational capacity does this consume?”
Those are very different questions.
Every hour spent hauling soil, fixing something around the building, designing a flyer, or doing any number of other things is an hour that can’t be spent doing something else.
And this is where another business concept comes into play: scalability.
If every new program requires more of the pastor’s time, every new initiative requires existing staff to absorb additional responsibilities, and every attempt to save money means doing more ourselves, eventually the organization hits a ceiling.3
Shameless plug—I talk about scalability of church ministries in my forthcoming book The Church as Community Hub available for pre-order now!
There are only so many hours in the day.
This is where opportunity cost and specialization of labor come together. If an organization wants to expand its impact, eventually it has to stop asking simply: “Can we do this ourselves?”
And start asking: “Should we be doing this ourselves?”
Sometimes the answer will still be yes.
But sometimes paying someone else, outsourcing a task, developing another leader, or simply deciding not to do something at all creates the capacity for your people to focus on the work they are particularly equipped to do.
And that, ultimately, is what scalability requires.
You cannot continually expand an organization by asking the same finite group of people to do more.
Sometimes spending money actually saves resources.
Sometimes “free” is surprisingly expensive.
And sometimes the cheapest option is precisely what keeps an organization from growing.
One could argue I was the lone exception!
Also, you MUST be able to “fire” volunteers.
Or, more often, this leads to employee burnout.