The McKnight Group’s free i3 webinars are an excellent way to acquire knowledge of the church design and church building process. They are also a valuable opportunity to get your most pressing questions answered.
In our recent webinar focused on funding a church building project, we received so many thoughtful and relevant questions that it is taking two posts to cover them. Read the first, on various church building costs, here. Now, in part two, we address some questions about creative ways to finance a church design.
Q: We’re already in our new facility—how can we sustain funds to meet our loan obligations?
This is an interesting question and a good one. Launching a successful capital campaign, for example, is often what helps get a church into a new building but sustaining that momentum is equally important.
The key lies in maintaining your vision. It’s easy for church members to think, “We’ve moved in, so we’re done.” But church leaders must consistently communicate that the building is simply a tool to continue God’s work. Encourage excitement about the church’s continuing mission, as well as its impact on the community, and remind them that the journey is just beginning. If the focus is only on “paying off debt,” giving often declines. But when the emphasis remains on outreach, ministry, and the lives being changed, people are much more willing to contribute.
Q: What about selling church bonds?
Church bonds, though less common today, are still a method of self-funding that some churches explore. This concept, which became more popular in the 1980s, works like this: a church hires a company to issue bonds, which can then be purchased by church members or outside investors. These bonds represent a promise to repay the amount plus interest at a later date.
However, there are drawbacks. Church bonds typically involve more paperwork and legal restrictions than come with a typical building loan. They can also be confusing for donors when paired with stewardship campaigns. For example, someone may think they’re giving to the building fund but are actually purchasing an investment product.
If your church chooses to go this route, it’s important to work with a trusted financial advisor and communicate clearly with your congregation about the differences between donations, investments, and bonds. Bonds can work, but they aren’t always the most effective option for a church.
Q: Can we sell our current church building to help fund a new one? Any lessons learned?
Yes, but proceed with caution. Unless your property sits on highly desirable real estate, say, a location that developers want for housing, retail, or commercial use, you may not get as much value as you expect. In most cases, churches are lucky to receive 50% of their building’s appraised value when selling, especially if the buyer is another church.
Why? Because most churches are in the same financial situation as you, trying to stretch every dollar. If you do happen to be located in a prime area, there’s a better chance a developer will pay a high dollar value. But even then, the process can be unpredictable.
We’ve seen churches turn down fair offers, thinking that they could hold out for more, only to receive the same offer years later (sometimes with less favorable terms). The lesson: be realistic. Know the limits of your property’s value and don’t let assumptions derail your ministry’s progress.
For more about church financing, and other practical knowledge and real-world examples of church design and building, sign up for our free i3 webinars. They also give you the opportunity to get your questions answered. Visit our website for dates, topics, and registration information.