Applying the Balanced Scorecard and Critical Success Factors to the Context of a Local Church

November, 2013

In 1992 Kaplan and Norton outlined the parameters of the balanced scorecard (BSC), and their approach to the analysis of management strategy has since been applied to organizations of many different types. They set forth four perspectives: Financial, Customer, Internal Business, and Innovation and Learning. It is worth nothing that users of the BSC have taken considerable latitude to adapt it to various organizational contexts. For example, a BSC for a small company cited by Blocher, Stout, Juras, and Cokins (2013) included a fifth perspective, “Employees and Community” (p. 45). The need to adapt the model is even more evident in the case of a nonprofit or public organization (Niven, 2008).

Adapting the Balanced Scorecard to Local Church Ministry

Morgan’s (2004) review of the literature led him to conclude that effective strategic planning practices, and particularly the use of metrics, were not widely found in nonprofits—and that these deficiencies were especially remarkable in faith-based organizations. Nevertheless, at least three authors have attempted to adapt the BSC to the realm of church work, each one crafting a distinctive model. Keyt (2001) proposed that the Financial perspective should be replaced by one focused on the church’s true bottom line, “Ministering” (p. 98). In addition, he proposed alternative names for the Customer and Internal Business perspectives. Boggs (2002) developed a Church Balanced Scorecard wherein the Customer and Internal Business perspectives were labeled as “Constituent” and “Operations” (p. 45). Ronchetti (2006) concluded that the Learning and Customer perspectives were ill-suited to the ministry context and recommended replacing them with “Enablers” and “Community,” respectively (p. 30).

The three models cited above, while quite different from one another, agree on two important counts. First, each model reflects the view that the BSC in its pure form is inadequate for the analysis of local church ministry. Second, each model recognizes that a church-oriented scorecard should place less emphasis on financial performance and strategy than the BSC does in its treatment of a for-profit organization. Figure 1 reflects these two points of consensus by showing a BSC developed in a project conducted with a particular local church. Three of the four perspectives follow Kaplan and Norton’s (1992) nomenclature; the exception is labeled as “Customer (Ministry).” The adapted model is most similar to that of Boggs (2002) and Ronchetti (2006)—not obscuring the critical importance of financial success factors, but acknowledging the dominance of people-related factors.

Critical Success Factors in Local Church Ministry

According to Blocher, Stout, Juras, and Cokins (2013), “Critical success factors (CSFs) are measures of those aspects of the firm’s performance essential to its competitive advantage and, therefore, to its success. . . . The CSFs for any given firm depend on the nature of the competition it faces” (p. 10). Who or what are a church’s competitors? A given local church does not merely—or perhaps even primarily—compete with other churches in its area. In most locales the majority of the population is not actively engaged with a local church; therefore, the environment is rich with potential targets. However, numerous forces compete for the loyalty, time, spiritual commitment, and financial resources of those members of a community whom a local church would seek to engage as disciples of Jesus Christ.

The 15 CSFs contained in Figure 1 flesh out the focal congregation’s mission, as expressed in various documents and articulated by members of its pastoral staff, two of whom were interviewed for this project. In addition, they reflect the reality of the church’s competitive environment. The paragraphs that follow explain why each of the CSFs plays a significant role in determining the congregation’s success.

Financial Perspective

Businesses and nonprofit organizations differ significantly in their view of financial resources and performance. While a business is likely to regard bottom-line profits as a measure of success, a nonprofit does not exist to accumulate money, and the financial means that it has can often be traced to the generosity of a donor. For the nonprofit, finances are a means to an end, not an end in and of itself (Drucker, 1990/2005).

Figure 1. Balanced Scorecard for Unnamed Local Church

Critical Success Factors and Scorecard Measures

The nonprofit’s view of financial resources as an enabler rather than as a motive for existence has important consequences for the measurement of success. According to Ronchetti (2006), “While the success of private sector firms is measured by return on investment and profit margins, success in public and nonprofit organizations is primarily realized through constituent satisfaction and cost containment” (p. 26).

With this context in mind, the BSC for the focal congregation includes three financially-oriented CSFs. Two of these concern increases in contributions—revenues from tithes and offerings. Contributions to the General Fund are essential because they enable the church to meet its General Fund budget, and thus to employ staff, operate and maintain physical facilities, and carry out local ministry operations. Similarly, contributions to the Faith Promise Missions Fund are vital to the church’s stated vision of supporting worldwide missionary activity. Meeting the Missions Fund budget enables the church to support church work around the country and the globe, including church planting, ministry training, Bible translation and distribution, and relief of human suffering.

The third CSF in the Financial perspective relates to the reduction of building debt. Paying off the debt is a major priority for the congregation’s leadership because it signifies the church’s freedom to perpetuate itself and flourish in the future, unhindered by past financial decisions.

Customer (Ministry) Perspective

As mentioned above, the local church’s identity as a nonprofit organization means that its success is largely to be measured in terms of its impact on people. For this simple reason, the Customer perspective is here defined to include measures of the church’s success in attracting stakeholders whose lives it can seek to change for the glory of God. Ronchetti (2006) explained: “For the profit-driven private sector, the Customer perspective supports the critical Financial perspective. However, for nonprofits, it is appropriate that the Customer perspective assumes primacy over the Financial perspective due to the critical need for constituent satisfaction” (p. 28). One important implication is that a nonprofit’s strategy map should invert the position of the Financial and Customer perspectives.

Critical success factors in the focal congregation’s Customer (Ministry) perspective include attracting visitors to church services; increasing church attendance; and ministering to children, youth, and couples in ways that are appropriate to their life circumstances. The measures associated with these CSFs represent a progression of increasing engagement in the life of the church, ranging from an individual’s first recorded visit and to his or her participation in demographically targeted programming.

All four of the Customer (Ministry) measures are based on church attendance. While attendance may not seem to be particularly profound, it can be construed as a form of customer loyalty, with constituents demonstrating their identification with the church’s message and mission—its brand, so to speak—through the investment of their time. In conjunction with other forms of assessment, attendance-based measures can shed light on the church’s health.

Internal Business Perspective

This is perhaps the most challenging perspective to analyze in relation to a local church, perhaps because ministry seems difficult to reduce to repeatable processes that can be measured or assessed objectively. A visitor-oriented success factor is logical inasmuch as the church needs constantly to assimilate new constituents to mitigate losses attributable to death, relocation, transfer of membership, and other factors. The second CSF in the Internal Business perspective relates to members’ financial engagement with the church—surely a strong indicator of its capacity to implement strategy, achieve targets, and accomplish its mission. The last two CSFs are measures of the congregation’s effectiveness in making converts and compelling them to identify with the Lord and his people through baptism; these are core dimensions of the church’s mission.

Innovation and Learning Perspective

There is a clear association between Christian ministry and learning. The Christian community is called to “proclaim the gospel to the whole creation” (Mark 16:15 English Standard Version) and to “make disciples of all nations, . . . teaching them” (Matt. 28:19-20 English Standard Version). Furthermore, the church’s work expands through successive generations of teaching and learning (2 Tim. 2:2). To some extent, then, propagating the faith is a matter of maintaining tradition (Rom. 6:17; 2 Thess. 2:15).

To the casual observer this may imply that there is no room for innovation in ministry, but this is far from the truth. The Apostle Paul adapted his ministry practices to suit his audience (1 Cor. 9:19-23). As a result, as Schaeffer (1970) noted, churches have substantial freedom to innovate within the boundaries of New Testament commands and the Holy Spirit’s direction. Thus the work of a local church involves the perpetual sharing of an established body of tradition, but it also requires constant innovation to communicate effectively under changing circumstances.

Critical success factors related to innovation and learning essentially have to do with building the church’s capacity for present and future generations of ministry. This includes inculcating a deeper understanding of biblical truth in the membership at large; providing for the development of both lay and vocational church leaders; and cultivating commitment to worldwide missionary enterprise.

Closing Thoughts on Critical Success Factors

In conclusion, it is worth nothing that the CSFs discussed above may not fully capture the breadth of the focal church’s ministry and values. The project timeline did not allow the evaluator to identify measures for two promising success factors: the quality of corporate worship and cost containment in ministry operations. Additionally, late in the project the evaluator discovered Boggs’s (2012) reference to the “number of new ministries” as a potential measure of Innovation and Learning. Such a measure could well prove to be valuable as an indicator of the tension between tradition and adaptation that is essential in church ministry.


Blocher, E. J., Stout, D. E., Juras, P. E., & Cokins, G. (2013). Cost management: A strategic emphasis (6th ed.). New York: McGraw-Hill/Irwin.

Boggs, W. B. (2002). An exploratory study of the relationship between organizational culture types and a Balanced Scorecard of effectiveness measures in the church (Doctoral dissertation). Available from ProQuest Dissertations and Theses database. (UMI No. 3055392)

Drucker, P. F. (2005). Managing the non-profit organization: Principles and practices (Collins Business ed.). New York: Collins Business. (Original work published 1990)

Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard—measures that drive performance. Harvard Business Review, 70(1), 71–79. Retrieved from

Keyt, J. C. (2001). Beyond strategic control: Applying the balanced scorecard to a religious organization. Journal of Nonprofit & Public Sector Marketing, 8(4), 91–102. doi:10.1300/J054v08n04_08

Morgan, J. R. (2004). Business strategic planning practices and mission achievement in faith-based organizations (Doctoral dissertation). Available from ProQuest Dissertations and Theses database. (UMI No. 3151312)

Niven, P. R. (2008). Balanced scorecard step-by-step for government and nonprofit agencies (2nd ed.). Hoboken, NJ: John Wiley & Sons. Retrieved from

Ronchetti, J. L. (2006). An integrated balanced scorecard strategic planning model for nonprofit organizations. Journal of Practical Consulting, 1(1), 25–35. Retrieved from

Schaeffer, F. A. (1970). The church at the end of the twentieth century. Downers Grove, IL: Inter-Varsity Press.

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