Be Realistic About the Future Growth of the Church
Churches typically seek new or improved facilities as a result of membership growth. Many churches estimate future growth patterns based on the past. Then they overbuild and find themselves burdened with too much debt. Pastors should understand the natural laws of growth and realistically assess the potential for their church’s expansion.
Oftentimes, the major factor in church growth (or the lack of church of growth) is not how dynamic a ministry is. Rather, it is the location and demographic makeup of the neighborhood where the church is located.
For this reason, pastors should carefully study census tract data for the church location to determine average age, income level, housing values, etc. Before purchasing or adding to a building in an older or declining neighborhood, a church should look realistically at their growth potential.
Cash Accumulation is Necessary in the Purchase of a Building
Banks expect churches to have a cash down payment when borrowing for a new building project. This reinforces the importance of beginning a “building fund” with accumulated cash long before a new facility is needed.
Bond Financing May be an Option For Larger Churches
Larger churches that have needs in excess of one million dollars for a new facility may consider bond financing as an option to traditional bank financing. In bond financing, less down payment is typically required, but there are significantly higher fees and pilfering costs.
Conclusion
A church that plans well and is aware of financial constraints can most efficiently carry out its ministries and further Christ’s Kingdom. As a church leader, a pastor should recognize the role of a knowledgeable banker in helping to maximize the church’s effectiveness.
A trusted banker can help obtain financing for needed assets. Perhaps more importantly, he can serve as a financial advisor to a pastor who must make important financial decisions affecting the future of his church.
A pastor should take seriously the choice of a bank and a lending officer, realizing that much time will be invested in developing a strong working relationship. Close communication, accurate recordkeeping, and prudent planning on the part of the church can cultivate a banking relationship that is beneficial and lasting.
by Gary L. Tipton President and CEO, Inwood National Bank of Dallas.
Excerpt permission granted by Faith Library Publications